diff --git a/lib/checkleakautovar.cpp b/lib/checkleakautovar.cpp
index 4df223d69..c8e93a3b2 100644
--- a/lib/checkleakautovar.cpp
+++ b/lib/checkleakautovar.cpp
@@ -311,6 +311,10 @@ void CheckLeakAutoVar::checkScope(const Token * const startToken,
                 continue;
             }
 
+            // Don't check reference variables
+            if (var && var->isReference())
+                continue;
+
             // allocation?
             if (Token::Match(tok->tokAt(2), "%type% (")) {
                 const std::map<std::string, std::string>::const_iterator it = allocFunctions.find(tok->strAt(2));
diff --git a/lib/checkmemoryleak.cpp b/lib/checkmemoryleak.cpp
index f1e81cbf3..f951b876b 100644
--- a/lib/checkmemoryleak.cpp
+++ b/lib/checkmemoryleak.cpp
@@ -2237,7 +2237,7 @@ void CheckMemoryLeakInFunction::check()
         if (!var || (!var->isLocal() && !var->isArgument()) || var->isStatic() || !var->scope())
             continue;
 
-        if (var->isArgument() && var->isReference())
+        if (var->isReference())
             continue;
 
         if (!var->isPointer() && var->typeStartToken()->str() != "int")
diff --git a/test/testleakautovar.cpp b/test/testleakautovar.cpp
index b45c38720..14436c5c4 100644
--- a/test/testleakautovar.cpp
+++ b/test/testleakautovar.cpp
@@ -85,6 +85,7 @@ private:
         // General tests: variable type, allocation type, etc
         TEST_CASE(test1);
         TEST_CASE(test2);
+        TEST_CASE(test3);  // #3954 - reference pointer
 
         // Possible leak => Further configuration is needed for complete analysis
         TEST_CASE(configuration1);
@@ -471,6 +472,14 @@ private:
         ASSERT_EQUALS("", errout.str());
     }
 
+    void test3() {	// 3954 - reference pointer
+        check("void f() {\n"
+              "    char *&p = x();\n"
+              "    p = malloc(10);\n"
+              "};");
+        ASSERT_EQUALS("", errout.str());
+    }
+
     void configuration1() {
         // Possible leak => configuration is required for complete analysis
         // The user should be able to "white list" and "black list" functions.
diff --git a/test/testmemleak.cpp b/test/testmemleak.cpp
index 1390a7bc0..bf4bbb2a0 100644
--- a/test/testmemleak.cpp
+++ b/test/testmemleak.cpp
@@ -163,6 +163,7 @@ private:
 
         TEST_CASE(staticvar);
         TEST_CASE(externvar);
+        TEST_CASE(referencevar);  // 3954 - false positive for reference pointer
 
         TEST_CASE(alloc_alloc_1);
 
@@ -1005,6 +1006,13 @@ private:
         ASSERT_EQUALS("", errout.str());
     }
 
+    void referencevar() {  // 3954 - false positive for reference pointer
+        check("void f() {\n"
+              "    char *&x = get();\n"
+              "    x = malloc(100);\n"
+              "}\n");
+        ASSERT_EQUALS("", errout.str());
+    }
 
 
     void alloc_alloc_1() {