diff --git a/lib/compress.js b/lib/compress.js
index 05c7fb65b0e..91e3c388f97 100644
--- a/lib/compress.js
+++ b/lib/compress.js
@@ -4220,7 +4220,7 @@ merge(Compressor.prototype, {
             }
         }
         if (is_func_expr(fn) && !fn.is_generator && !fn.async) {
-            var def, scope, value;
+            var def, value, scope, level = -1;
             if (compressor.option("inline")
                 && simple_args
                 && !fn.uses_arguments
@@ -4233,9 +4233,9 @@ merge(Compressor.prototype, {
                         && fn.is_constant_expression(exp.scope))
                 && !self.pure
                 && !fn.contains_this()
-                && (scope = can_flatten_args(fn))
+                && can_flatten_args(fn)
                 && (value = flatten_body(stat))) {
-                var expressions = flatten_args(fn, scope);
+                var expressions = flatten_args(fn);
                 expressions.push(value.clone(true));
                 return make_sequence(self, expressions).optimize(compressor);
             }
@@ -4268,10 +4268,9 @@ merge(Compressor.prototype, {
         return self;
 
         function can_flatten_args(fn) {
-            var scope, level = 0;
             var catches = Object.create(null);
             do {
-                scope = compressor.parent(level++);
+                scope = compressor.parent(++level);
                 if (scope instanceof AST_SymbolRef) {
                     scope = scope.fixed_value();
                 } else if (scope instanceof AST_Catch) {
@@ -4288,10 +4287,10 @@ merge(Compressor.prototype, {
                         && !catches[arg.name]
                         && !identifier_atom(arg.name)
                         && !scope.var_names()[arg.name];
-            }) && scope;
+            });
         }
 
-        function flatten_args(fn, scope) {
+        function flatten_args(fn) {
             var decls = [];
             var expressions = [];
             for (var len = fn.argnames.length, i = len; --i >= 0;) {
@@ -4325,8 +4324,7 @@ merge(Compressor.prototype, {
                 expressions.push(self.args[i]);
             }
             if (decls.length) {
-                for (i = 0; compressor.parent(i) !== scope;) i++;
-                i = scope.body.indexOf(compressor.parent(i - 1)) + 1;
+                i = scope.body.indexOf(compressor.parent(level - 1)) + 1;
                 scope.body.splice(i, 0, make_node(AST_Var, fn, {
                     definitions: decls
                 }));
diff --git a/package.json b/package.json
index c83a7953264..71e0b421932 100644
--- a/package.json
+++ b/package.json
@@ -4,7 +4,7 @@
   "homepage": "https://github.com/mishoo/UglifyJS2/tree/harmony",
   "author": "Mihai Bazon <mihai.bazon@gmail.com> (http://lisperator.net/)",
   "license": "BSD-2-Clause",
-  "version": "3.3.0",
+  "version": "3.3.1",
   "engines": {
     "node": ">=0.8.0"
   },
diff --git a/test/benchmark.js b/test/benchmark.js
index 8b20ec13c78..593836061dd 100644
--- a/test/benchmark.js
+++ b/test/benchmark.js
@@ -21,6 +21,7 @@ var urls = [
     "http://builds.emberjs.com/tags/v2.11.0/ember.prod.js",
     "https://cdn.jsdelivr.net/lodash/4.17.4/lodash.js",
     "https://cdnjs.cloudflare.com/ajax/libs/d3/4.5.0/d3.js",
+    "https://raw.githubusercontent.com/kangax/html-minifier/v3.5.7/dist/htmlminifier.js",
 ];
 var results = {};
 var remaining = 2 * urls.length;
diff --git a/test/compress/functions.js b/test/compress/functions.js
index 0b564aa5238..1ba9b3dcbd2 100644
--- a/test/compress/functions.js
+++ b/test/compress/functions.js
@@ -1548,3 +1548,27 @@ issue_2647_3: {
     expect_stdout: "PASS"
     node_version: ">=4"
 }
+
+recursive_inline: {
+    options = {
+        inline: true,
+        reduce_funcs: true,
+        reduce_vars: true,
+        sequences: true,
+        toplevel: true,
+        unused: true,
+    }
+    input: {
+        function f() {
+            h();
+        }
+        function g(a) {
+            a();
+        }
+        function h(b) {
+            g();
+            if (b) x();
+        }
+    }
+    expect: {}
+}