diff --git a/Cakefile b/Cakefile
index 89b1af6..5b25ad4 100644
--- a/Cakefile
+++ b/Cakefile
@@ -60,7 +60,7 @@ task "dist", "Generate dist/eco.js", ->
       "strscan":          read "node_modules/strscan/lib/strscan.js"
       "coffee-script":    stub "CoffeeScript"
 
-    package = for name, source of modules
+    pkg = for name, source of modules
       """
         '#{name}': function(module, require, exports) {
           #{source}
@@ -89,12 +89,12 @@ task "dist", "Generate dist/eco.js", ->
           }
         };
       })({
-        #{package.join ',\n'}
+        #{pkg.join ',\n'}
       })('eco');
     """
 
     try
-      fs.mkdirSync "#{__dirname}/dist", 0755
+      fs.mkdirSync "#{__dirname}/dist", 0o755
     catch err
 
     fs.writeFileSync "#{__dirname}/dist/eco.js", "#{header}\n#{source}"
diff --git a/lib/command.js b/lib/command.js
index 6fa10e8..2f29916 100644
--- a/lib/command.js
+++ b/lib/command.js
@@ -1,6 +1,7 @@
+// Generated by CoffeeScript 1.4.0
 (function() {
-  var compile, compileToFile, each, eachFile, eco, exec, fs, indent, mkdir, parseOptions, path, preprocessArgs, printUsage, printVersion, read, stripExtension, sys;
-  var __slice = Array.prototype.slice;
+  var compile, compileToFile, each, eachFile, eco, exec, fs, indent, mkdir, parseOptions, path, preprocessArgs, printUsage, printVersion, read, stripExtension, sys,
+    __slice = [].slice;
 
   fs = require("fs");
 
@@ -20,20 +21,20 @@
   };
 
   printVersion = function() {
-    var package;
-    package = JSON.parse(fs.readFileSync(__dirname + "/../package.json", "utf8"));
-    console.error("Eco version " + package.version);
+    var pkg;
+    pkg = JSON.parse(fs.readFileSync(__dirname + "/../package.json", "utf8"));
+    console.error("Eco version " + pkg.version);
     return process.exit(0);
   };
 
   preprocessArgs = function(args) {
-    var arg, char, match, result, _i, _j, _len, _len2, _ref;
+    var arg, char, match, result, _i, _j, _len, _len1, _ref;
     result = [];
     for (_i = 0, _len = args.length; _i < _len; _i++) {
       arg = args[_i];
       if (match = /^-([a-z]{2,})/.exec(arg)) {
         _ref = match[1].split('');
-        for (_j = 0, _len2 = _ref.length; _j < _len2; _j++) {
+        for (_j = 0, _len1 = _ref.length; _j < _len1; _j++) {
           char = _ref[_j];
           result.push("-" + char);
         }
@@ -88,7 +89,9 @@
         }
       }
     }
-    if (option) printUsage();
+    if (option) {
+      printUsage();
+    }
     return options;
   };
 
@@ -116,13 +119,19 @@
     var traverse;
     traverse = function(root, dir, done) {
       return fs.readdir(dir, function(err, entries) {
-        if (err) return callback(err);
+        if (err) {
+          return callback(err);
+        }
         return each(entries, function(entry, proceed) {
           var file;
-          if (entry == null) return done();
+          if (entry == null) {
+            return done();
+          }
           file = path.join(dir, entry);
           return fs.stat(file, function(err, stat) {
-            if (err) return callback(err);
+            if (err) {
+              return callback(err);
+            }
             if (stat.isFile() && /\.eco$/.test(file)) {
               return callback(null, file, root, proceed);
             } else if (stat.isDirectory()) {
@@ -135,10 +144,14 @@
       });
     };
     return each(files, function(file, proceed) {
-      if (file == null) return;
+      if (file == null) {
+        return;
+      }
       return fs.stat(file, function(err, stat) {
         var root;
-        if (err) return callback(err);
+        if (err) {
+          return callback(err);
+        }
         if (stat.isDirectory()) {
           return traverse(file, file, proceed);
         } else {
@@ -156,7 +169,9 @@
   compile = function(infile, identifier, name, callback) {
     return fs.readFile(infile, "utf8", function(err, source) {
       var template;
-      if (err) return callback(err);
+      if (err) {
+        return callback(err);
+      }
       template = indent(eco.precompile(source), 2);
       return callback(null, "(function() {\n  this." + identifier + " || (this." + identifier + " = {});\n  this." + identifier + "[" + (JSON.stringify(name)) + "] = " + (template.slice(2)) + ";\n}).call(this);");
     });
@@ -178,10 +193,14 @@
     }
     outfile = path.join(outdir != null ? outdir : root, name + ".js");
     return mkdir(path.dirname(outfile), function(err) {
-      if (err) return callback(err);
+      if (err) {
+        return callback(err);
+      }
       return compile(infile, identifier, name, function(err, result) {
         return fs.writeFile(outfile, result + "\n", "utf8", function(err) {
-          if (err) return callback(err);
+          if (err) {
+            return callback(err);
+          }
           return callback(null, outfile, name);
         });
       });
@@ -190,29 +209,45 @@
 
   exports.run = function(args) {
     var infile, name, options;
-    if (args == null) args = process.argv.slice(2);
+    if (args == null) {
+      args = process.argv.slice(2);
+    }
     options = parseOptions(args);
     if (options.stdio) {
-      if (options.files.length || options.output) printUsage();
+      if (options.files.length || options.output) {
+        printUsage();
+      }
       process.openStdin();
       return read(process.stdin, function(source) {
         return sys.puts(eco.precompile(source));
       });
     } else if (options.print) {
-      if (options.files.length !== 1 || options.output) printUsage();
+      if (options.files.length !== 1 || options.output) {
+        printUsage();
+      }
       infile = options.files[0];
       name = stripExtension(path.basename(infile));
       return compile(infile, options.identifier, name, function(err, result) {
-        if (err) throw err;
+        if (err) {
+          throw err;
+        }
         return sys.puts(result);
       });
     } else {
-      if (!options.files.length) printUsage();
+      if (!options.files.length) {
+        printUsage();
+      }
       return eachFile(options.files, function(err, infile, root, proceed) {
-        if (err) throw err;
-        if (infile == null) return;
+        if (err) {
+          throw err;
+        }
+        if (infile == null) {
+          return;
+        }
         return compileToFile(infile, options.identifier, root, options.output, function(err, outfile, name) {
-          if (err) throw err;
+          if (err) {
+            throw err;
+          }
           console.error("" + (JSON.stringify(name)) + ": " + infile + " -> " + outfile);
           return proceed();
         });
diff --git a/lib/compiler.js b/lib/compiler.js
index 0eff0e5..75eabbb 100644
--- a/lib/compiler.js
+++ b/lib/compiler.js
@@ -1,3 +1,4 @@
+// Generated by CoffeeScript 1.4.0
 (function() {
   var CoffeeScript, indent, precompile, preprocess;
 
diff --git a/lib/index.js b/lib/index.js
index bca5ac8..7c6b9c4 100644
--- a/lib/index.js
+++ b/lib/index.js
@@ -1,3 +1,4 @@
+// Generated by CoffeeScript 1.4.0
 (function() {
   var compile, eco, precompile, preprocess, _ref;
 
@@ -6,9 +7,9 @@
   preprocess = require("./preprocessor").preprocess;
 
   module.exports = eco = function(source) {
-    var _base, _ref2;
+    var _base, _ref1;
     if (eco.cache) {
-      return (_ref2 = (_base = eco.cache)[source]) != null ? _ref2 : _base[source] = compile(source);
+      return (_ref1 = (_base = eco.cache)[source]) != null ? _ref1 : _base[source] = compile(source);
     } else {
       return compile(source);
     }
diff --git a/lib/preprocessor.js b/lib/preprocessor.js
index 5a33c64..dba8303 100644
--- a/lib/preprocessor.js
+++ b/lib/preprocessor.js
@@ -1,3 +1,4 @@
+// Generated by CoffeeScript 1.4.0
 (function() {
   var Preprocessor, Scanner, util;
 
@@ -38,6 +39,7 @@
 
     Preprocessor.prototype.printString = function(string) {
       if (string.length) {
+        string = string.replace(/\s+</g, '<').replace(/>\s+/g, '>');
         return this.record("__out.push " + (util.inspectString(string)));
       }
     };
@@ -47,6 +49,7 @@
     };
 
     Preprocessor.prototype.recordCode = function(code) {
+      code = code.replace(/\s+/g, ' ');
       if (code !== "end") {
         if (this.options.print) {
           if (this.options.safe) {
@@ -71,7 +74,9 @@
 
     Preprocessor.prototype.dedent = function() {
       this.level--;
-      if (this.level < 0) this.fail("unexpected dedent");
+      if (this.level < 0) {
+        this.fail("unexpected dedent");
+      }
       if (this.captures[0] === this.level) {
         this.captures.shift();
         return this.dedent();
diff --git a/lib/scanner.js b/lib/scanner.js
index cd7258d..ebac68c 100644
--- a/lib/scanner.js
+++ b/lib/scanner.js
@@ -1,3 +1,4 @@
+// Generated by CoffeeScript 1.4.0
 (function() {
   var Scanner, StringScanner, trim;
 
@@ -9,8 +10,8 @@
 
     Scanner.modePatterns = {
       data: /(.*?)(<%%|<%\s*(\#)|<%(([=-])?)|\n|$)/,
-      code: /(.*?)((((:|(->|=>))\s*))?%>|\n|$)/,
-      comment: /(.*?)(%>|\n|$)/
+      code: /([\s\S]*?)((((:|(->|=>))\s*))?%>|$)/,
+      comment: /([\s\S]*?)(%>|$)/
     };
 
     Scanner.dedentablePattern = /^(end|when|else|catch|finally)(?:\W|$)/;
@@ -95,22 +96,24 @@
 
     Scanner.prototype.scanCode = function(callback) {
       var code;
-      if (this.tail === "\n") {
-        return callback(["fail", "unexpected newline in code block"]);
-      } else if (this.tail) {
+      if (this.tail) {
         this.mode = "data";
         code = trim(this.flush());
-        if (this.arrow) code += " " + this.arrow;
-        if (this.isDedentable(code)) callback(["dedent"]);
+        if (this.arrow) {
+          code += " " + this.arrow;
+        }
+        if (this.isDedentable(code)) {
+          callback(["dedent"]);
+        }
         callback(["recordCode", code]);
-        if (this.directive) return callback(["indent", this.arrow]);
+        if (this.directive) {
+          return callback(["indent", this.arrow]);
+        }
       }
     };
 
     Scanner.prototype.scanComment = function(callback) {
-      if (this.tail === "\n") {
-        return callback(["fail", "unexpected newline in code block"]);
-      } else if (this.tail) {
+      if (this.tail) {
         this.mode = "data";
         return this.buffer = "";
       }
diff --git a/lib/util.js b/lib/util.js
index 80fed3e..a895a63 100644
--- a/lib/util.js
+++ b/lib/util.js
@@ -1,3 +1,4 @@
+// Generated by CoffeeScript 1.4.0
 (function() {
   var repeat, specialCharacters;
 
@@ -42,7 +43,9 @@
         return specialCharacters[character];
       } else {
         code = character.charCodeAt(0).toString(16);
-        if (code.length === 1) code = "0" + code;
+        if (code.length === 1) {
+          code = "0" + code;
+        }
         return "\\u00" + code;
       }
     });
diff --git a/src/command.coffee b/src/command.coffee
index 7c44283..e9e9ed4 100644
--- a/src/command.coffee
+++ b/src/command.coffee
@@ -22,8 +22,8 @@ printUsage = ->
   process.exit 1
 
 printVersion = ->
-  package = JSON.parse fs.readFileSync __dirname + "/../package.json", "utf8"
-  console.error "Eco version #{package.version}"
+  pkg = JSON.parse fs.readFileSync __dirname + "/../package.json", "utf8"
+  console.error "Eco version #{pkg.version}"
   process.exit 0
 
 preprocessArgs = (args) ->
diff --git a/src/preprocessor.coffee b/src/preprocessor.coffee
index f698dd1..f2b376b 100644
--- a/src/preprocessor.coffee
+++ b/src/preprocessor.coffee
@@ -25,12 +25,16 @@ module.exports = class Preprocessor
 
   printString: (string) ->
     if string.length
+      string = string
+          .replace(/\s+</g, '<')
+          .replace(/>\s+/g, '>')
       @record "__out.push #{util.inspectString string}"
 
   beginCode: (options) ->
     @options = options
 
   recordCode: (code) ->
+    code = code.replace /\s+/g, ' '
     if code isnt "end"
       if @options.print
         if @options.safe
diff --git a/src/scanner.coffee b/src/scanner.coffee
index 2b6e94a..4c14eb7 100644
--- a/src/scanner.coffee
+++ b/src/scanner.coffee
@@ -4,8 +4,8 @@
 module.exports = class Scanner
   @modePatterns:
     data:    /(.*?)(<%%|<%\s*(\#)|<%(([=-])?)|\n|$)/
-    code:    /(.*?)((((:|(->|=>))\s*))?%>|\n|$)/
-    comment: /(.*?)(%>|\n|$)/
+    code:    /([\s\S]*?)((((:|(->|=>))\s*))?%>|$)/
+    comment: /([\s\S]*?)(%>|$)/
 
   @dedentablePattern: /^(end|when|else|catch|finally)(?:\W|$)/
 
@@ -73,10 +73,7 @@ module.exports = class Scanner
         callback ["beginCode", print: @directive?, safe: @directive is "-"]
 
   scanCode: (callback) ->
-    if @tail is "\n"
-      callback ["fail", "unexpected newline in code block"]
-
-    else if @tail
+    if @tail
       @mode = "data"
       code  = trim @flush()
       code += " #{@arrow}" if @arrow
@@ -86,10 +83,7 @@ module.exports = class Scanner
       callback ["indent", @arrow] if @directive
 
   scanComment: (callback) ->
-    if @tail is "\n"
-      callback ["fail", "unexpected newline in code block"]
-
-    else if @tail
+    if @tail
       @mode   = "data"
       @buffer = ""
 
diff --git a/test/fixtures/newlines.coffee b/test/fixtures/newlines.coffee
new file mode 100644
index 0000000..7bdebb5
--- /dev/null
+++ b/test/fixtures/newlines.coffee
@@ -0,0 +1,2 @@
+func { foo: bar }
+__out.push '\n'
diff --git a/test/fixtures/newlines.eco b/test/fixtures/newlines.eco
new file mode 100644
index 0000000..e179a89
--- /dev/null
+++ b/test/fixtures/newlines.eco
@@ -0,0 +1,3 @@
+<% func {
+    foo: bar
+} %>
diff --git a/test/test_express.coffee b/test/test_express.coffee
deleted file mode 100644
index 7dda9d1..0000000
--- a/test/test_express.coffee
+++ /dev/null
@@ -1,30 +0,0 @@
-eco     = require ".."
-express = require "express"
-http    = require "http"
-
-module.exports =
-  "registering eco in an express application": (test) ->
-    test.expect 2
-
-    app = express.createServer()
-    app.register ".eco", eco
-    app.set "views", __dirname + "/fixtures"
-    app.get "/hello/:name", (req, res) ->
-      res.render "hello.eco", name: req.params.name, layout: false
-
-    app.listen ->
-      host   = "localhost"
-      {port} = app.address()
-      path   = "/hello/Sam"
-
-      http.get {host, port, path}, (res) ->
-        test.same 200, res.statusCode
-
-        body = ""
-        res.setEncoding "utf8"
-        res.on "data", (data) -> body += data
-        res.on "end", ->
-          test.same "Hello, Sam.\nI\'M SHOUTING AT YOU, SAM!\n", body
-
-          app.close()
-          test.done()
diff --git a/test/test_preprocessor.coffee b/test/test_preprocessor.coffee
index 58b79c0..31d9df2 100644
--- a/test/test_preprocessor.coffee
+++ b/test/test_preprocessor.coffee
@@ -14,6 +14,10 @@ module.exports =
     test.same fixture("helpers.coffee"), preprocess fixture("helpers.eco")
     test.done()
 
+  "preprocessing fixtures/newlines.eco": (test) ->
+    test.same fixture("newlines.coffee"), preprocess fixture("newlines.eco")
+    test.done()
+
   "unexpected dedent": (test) ->
     test.expect 1
     try
@@ -27,17 +31,6 @@ module.exports =
       test.same "Parse error on line 4: unexpected dedent", err.toString()
     test.done()
 
-  "unexpected newline in code block": (test) ->
-    test.expect 1
-    try
-      preprocess """
-        <%= item.price if
-              item = @items?[0] %>
-      """
-    catch err
-      test.same "Parse error on line 1: unexpected newline in code block", err.toString()
-    test.done()
-
   "unexpected end of template": (test) ->
     test.expect 1
     try
diff --git a/test/test_scanner.coffee b/test/test_scanner.coffee
index cfde7a8..cd3942d 100644
--- a/test/test_scanner.coffee
+++ b/test/test_scanner.coffee
@@ -76,11 +76,11 @@ module.exports =
     test.same ["recordCode", "'<%%'"], tokens.shift()
     test.done()
 
-  "unexpected newline in code block": (test) ->
-    tokens = scan "foo\nhello <% do 'thing'\n %>"
+  "newlines in code blocks": (test) ->
+    tokens = scan "foo\nhello <% func {\nfoo: bar\n} %>"
     test.same ["printString", "foo\nhello "], tokens.shift()
     test.same ["beginCode", print: false, safe: false], tokens.shift()
-    test.same ["fail", "unexpected newline in code block"], tokens.shift()
+    test.same ["recordCode", "func {\nfoo: bar\n}"], tokens.shift()
     test.done()
 
   "unexpected end of template": (test) ->