diff --git a/kerboscript_tests/user_functions/functest29.ks b/kerboscript_tests/user_functions/functest29.ks
new file mode 100644
index 000000000..af4c00fee
--- /dev/null
+++ b/kerboscript_tests/user_functions/functest29.ks
@@ -0,0 +1,14 @@
+print "Testing default function scoping rules".
+
+run once "functest29_lib.ks".
+
+print "Should say Func1: " + func1().
+if (func1() <> "Func1") print "!!!!!!!!!! ERROR ERROR ERROR !!!!!!!!!!!" + char(7) + char(7).
+local f2 is getfunc2().
+print "Should say Func2: " + f2().
+if (f2() <> "Func2") print "!!!!!!!!!! ERROR ERROR ERROR !!!!!!!!!!!" + char(7) + char(7).
+
+local f3 is getfunc3().
+print "Should say Func3: " + f3().
+if (f3() <> "Func3") print "!!!!!!!!!! ERROR ERROR ERROR !!!!!!!!!!!" + char(7) + char(7).
+
diff --git a/kerboscript_tests/user_functions/functest29_lib.ks b/kerboscript_tests/user_functions/functest29_lib.ks
new file mode 100644
index 000000000..ad3354c3e
--- /dev/null
+++ b/kerboscript_tests/user_functions/functest29_lib.ks
@@ -0,0 +1,17 @@
+function func1 {
+  return "Func1".
+}
+
+function getfunc2 {
+  function sameName {  // <--------+--- These two innner functions have the same name
+    return "Func2".    // <-----+--|--- But have different effects when called.
+  }                    //       |  |
+  return sameName@.    // <--+--|--|--- These should return the 2 different versions.
+}                      //    |  |  |
+                       //    |  |  |
+function getfunc3 {    //    |  |  |
+  function sameName {  // <--|--|--'
+    return "Func3".    // <--|--'
+  }                    //    |
+  return sameName@.    // <--'
+}                      //
diff --git a/kerboscript_tests/user_functions/functest30.ks b/kerboscript_tests/user_functions/functest30.ks
new file mode 100644
index 000000000..f34a8145d
--- /dev/null
+++ b/kerboscript_tests/user_functions/functest30.ks
@@ -0,0 +1,17 @@
+print "Testing explicit function scope keywords override.".
+
+run once "functest30_lib.ks".
+local del is outer().
+
+print "Should say global1: " + global1().
+if (global1() <> "global1") print "!!!!!!!!!! ERROR ERRROR !!!!!!!!!!" + char(7) + char (7).
+print "Should say global2: " + global2().
+if (global2() <> "global2") print "!!!!!!!!!! ERROR ERRROR !!!!!!!!!!" + char(7) + char (7).
+print "Should say global3: " + global3().
+if (global3() <> "global3") print "!!!!!!!!!! ERROR ERRROR !!!!!!!!!!" + char(7) + char (7).
+print "Should say local2: " + del().
+if (del() <> "local2") print "!!!!!!!!!! ERROR ERRROR !!!!!!!!!!" + char(7) + char (7).
+
+print " ".
+print "PROGRAM SHOULD NOW FAIL WITH 'local1' NOT FOUND.".
+print local1().
diff --git a/kerboscript_tests/user_functions/functest30_lib.ks b/kerboscript_tests/user_functions/functest30_lib.ks
new file mode 100644
index 000000000..78cbbfb7a
--- /dev/null
+++ b/kerboscript_tests/user_functions/functest30_lib.ks
@@ -0,0 +1,11 @@
+global function global1 { return "global1". }
+function global2 { return "global2". }
+local function local1 { return "local1". }
+
+function outer {
+  function local2 { return "local2". } // local by default
+  global function global3 { return "global3". } // explicit global keyword despite being nested
+  function local1 { return local2(). } // Note this local1 should mask the outer local1
+
+  return local1@. // via this delegate, it actually will call local2().
+}
diff --git a/src/kOS.Safe/Compilation/KS/Compiler.cs b/src/kOS.Safe/Compilation/KS/Compiler.cs
index ad30140da..f85a53c93 100644
--- a/src/kOS.Safe/Compilation/KS/Compiler.cs
+++ b/src/kOS.Safe/Compilation/KS/Compiler.cs
@@ -2775,14 +2775,21 @@ private StorageModifier GetStorageModifierForDeclare(ParseNode node)
             ParseNode lastSubNode = node.Nodes[node.Nodes.Count-1];
 
             // Default varies depending on which kind of statement it is.
-            // locks are default global, and functions declared at file
-            // scope are default global, while everything else is default local:
             StorageModifier modifier = StorageModifier.LOCAL;
-            if (lastSubNode.Token.Type == TokenType.declare_lock_clause ||
-                lastSubNode.Token.Type == TokenType.declare_function_clause)
+            // locks are default global:
+            if (lastSubNode.Token.Type == TokenType.declare_lock_clause)
             {
                 modifier = StorageModifier.GLOBAL;
             }
+            // functions declared at file scope are default global. inner functions are default local:
+            else if (lastSubNode.Token.Type == TokenType.declare_function_clause)
+            {
+                ParseNode containingNode = GetContainingBlockNode(node);
+                if (containingNode != null && containingNode.Token.Type == TokenType.Start) // file scope
+                    modifier = StorageModifier.GLOBAL;
+                else
+                    modifier = StorageModifier.LOCAL;
+            }
 
             bool storageKeywordMissing = true;
             
@@ -2817,7 +2824,6 @@ private StorageModifier GetStorageModifierForDeclare(ParseNode node)
                 LineCol location = GetLineCol(node);
                 throw new KOSCommandInvalidHereException(location, "GLOBAL", "in a parameter declaration", "in a variable declaration");
             }
-
             return modifier;
         }