diff --git a/lib/tokenize.cpp b/lib/tokenize.cpp
index db5a62fd7..286e61ad6 100755
--- a/lib/tokenize.cpp
+++ b/lib/tokenize.cpp
@@ -2598,6 +2598,7 @@ void Tokenizer::setVarIdPass1()
     scopeStack.push(VarIdScopeInfo());
     std::stack<const Token *> functionDeclEndStack;
     bool initlist = false;
+    bool inlineFunction = false;
     for (Token *tok = list.front(); tok; tok = tok->next()) {
         if (!functionDeclEndStack.empty() && tok == functionDeclEndStack.top()) {
             functionDeclEndStack.pop();
@@ -2625,6 +2626,8 @@ void Tokenizer::setVarIdPass1()
                 scopeInfo.push(variableId);
             }
         } else if (Token::Match(tok, "{|}")) {
+            inlineFunction = false;
+
             const Token * const startToken = (tok->str() == "{") ? tok : tok->link();
 
             // parse anonymous unions as part of the current scope
@@ -2682,7 +2685,7 @@ void Tokenizer::setVarIdPass1()
              Token::Match(tok, "[;{}]") ||
              (tok->str() == "(" && isFunctionHead(tok,"{")) ||
              (tok->str() == "(" && !scopeStack.top().isExecutable && isFunctionHead(tok,";:")) ||
-             (tok->str() == "," && !scopeStack.top().isExecutable) ||
+             (tok->str() == "," && (!scopeStack.top().isExecutable || inlineFunction)) ||
              (tok->isName() && endsWith(tok->str(), ':')))) {
 
             // No variable declarations in sizeof
@@ -2717,6 +2720,9 @@ void Tokenizer::setVarIdPass1()
                 syntaxError(errTok);
             }
             if (decl) {
+                if (tok->str() == "(" && isFunctionHead(tok,"{") && scopeStack.top().isExecutable)
+                    inlineFunction = true;
+
                 const Token* prev2 = tok2->previous();
                 if (Token::Match(prev2, "%type% [;[=,)]") && tok2->previous()->str() != "const")
                     ;
diff --git a/test/testvarid.cpp b/test/testvarid.cpp
index 445503c69..a4822735f 100644
--- a/test/testvarid.cpp
+++ b/test/testvarid.cpp
@@ -91,6 +91,7 @@ private:
         TEST_CASE(varid58); // #6638: for loop in for condition
         TEST_CASE(varid59); // #6696
         TEST_CASE(varid60); // #7267 cast '(unsigned x)10'
+        TEST_CASE(varid61); // #4988 inline function
         TEST_CASE(varid_cpp_keywords_in_c_code);
         TEST_CASE(varid_cpp_keywords_in_c_code2); // #5373: varid=0 for argument called "delete"
         TEST_CASE(varidFunctionCall1);
@@ -1050,6 +1051,16 @@ private:
                       tokenize("a=(x y)10;", false));
     }
 
+    void varid61() {
+        const char code[] = "void foo(int b) {\n"
+                            "  void bar(int a, int b) {}\n"
+                            "}";
+        const char expected[] = "1: void foo ( int b@1 ) {\n"
+                                "2: void bar ( int a@2 , int b@3 ) { }\n"
+                                "3: }\n";
+        ASSERT_EQUALS(expected, tokenize(code, false));
+    }
+
     void varid_cpp_keywords_in_c_code() {
         const char code[] = "void f() {\n"
                             "    delete d;\n"