diff --git a/CMakeLists.txt b/CMakeLists.txt
index 8e044d3d0..52704c2bc 100644
--- a/CMakeLists.txt
+++ b/CMakeLists.txt
@@ -171,7 +171,8 @@ endif (APPLE)
 option(BUILD_MWCOMPILER "build standalone Morrowind script compiler" ON)
 
 if (BUILD_MWCOMPILER)
-set(TOOLS_MWCOMPILER ${COMPILER} apps/mwcompiler/main.cpp)
+set(TOOLS_MWCOMPILER ${COMPILER} apps/mwcompiler/main.cpp apps/mwcompiler/context.cpp
+    apps/mwcompiler/context.hpp)
 
 add_executable(mwcompiler ${TOOLS_MWCOMPILER})
 endif()
diff --git a/apps/mwcompiler/context.cpp b/apps/mwcompiler/context.cpp
new file mode 100644
index 000000000..72e3aa490
--- /dev/null
+++ b/apps/mwcompiler/context.cpp
@@ -0,0 +1,11 @@
+
+#include "context.hpp"
+
+namespace SACompiler
+{
+    bool Context::canDeclareLocals() const
+    {
+        return true;
+    }
+}
+
diff --git a/apps/mwcompiler/context.hpp b/apps/mwcompiler/context.hpp
new file mode 100644
index 000000000..23188ecf2
--- /dev/null
+++ b/apps/mwcompiler/context.hpp
@@ -0,0 +1,18 @@
+#ifndef MWCOMPILER_CONTEXT_H_INCLUDED
+#define MWCOMPILER_CONTEXT_H_INCLUDED
+
+#include <components/compiler/context.hpp>
+
+namespace SACompiler
+{
+    class Context : public Compiler::Context
+    {
+        public:
+        
+            virtual bool canDeclareLocals() const;
+            ///< Is the compiler allowed to declare local variables?    
+    };
+}
+
+#endif
+
diff --git a/apps/mwcompiler/main.cpp b/apps/mwcompiler/main.cpp
index 231496846..a4ec9a573 100644
--- a/apps/mwcompiler/main.cpp
+++ b/apps/mwcompiler/main.cpp
@@ -7,14 +7,15 @@
 #include <components/compiler/streamerrorhandler.hpp>
 #include <components/compiler/scanner.hpp>
 #include <components/compiler/fileparser.hpp>
-#include <components/compiler/context.hpp>
 #include <components/compiler/exception.hpp>
 
+#include "context.hpp"
+
 int main (int argc, char **argv)
 {
     try
     {
-        Compiler::Context context;
+        SACompiler::Context context;
         Compiler::StreamErrorHandler errorHandler (std::cout);
         Compiler::FileParser parser (errorHandler, context);
         
diff --git a/components/compiler/context.hpp b/components/compiler/context.hpp
index 795514cfd..d5284ffc9 100644
--- a/components/compiler/context.hpp
+++ b/components/compiler/context.hpp
@@ -5,7 +5,12 @@ namespace Compiler
 {
     class Context
     {
-    
+        public:
+        
+            virtual ~Context() {}
+            
+            virtual bool canDeclareLocals() const = 0;
+            ///< Is the compiler allowed to declare local variables?
     };
 }
 
diff --git a/components/compiler/lineparser.cpp b/components/compiler/lineparser.cpp
index 8d1fa70aa..f90352559 100644
--- a/components/compiler/lineparser.cpp
+++ b/components/compiler/lineparser.cpp
@@ -1,12 +1,16 @@
 
 #include "lineparser.hpp"
 
+#include <iostream>
+
 #include "scanner.hpp"
+#include "context.hpp"
+#include "errorhandler.hpp"
 
 namespace Compiler
 {
     LineParser::LineParser (ErrorHandler& errorHandler, Context& context)
-    : Parser (errorHandler, context)
+    : Parser (errorHandler, context), mState (BeginState)
     {}
 
     bool LineParser::parseInt (int value, const TokenLoc& loc, Scanner& scanner)
@@ -22,22 +26,45 @@ namespace Compiler
     bool LineParser::parseName (const std::string& name, const TokenLoc& loc,
         Scanner& scanner)
     {
+        if (mState==ShortState || mState==LongState || mState==FloatState)
+        {
+            if (!getContext().canDeclareLocals())
+                getErrorHandler().error ("local variables can't be declared in this context", loc);
+            
+            std::cout << "declaring local variable: " << name << std::endl;
+            mState = EndState;
+            return true;
+        }
+        
         return Parser::parseName (name, loc, scanner);
     }
 
     bool LineParser::parseKeyword (int keyword, const TokenLoc& loc, Scanner& scanner)
     {
+        if (mState==BeginState)
+        {
+            switch (keyword)
+            {
+                case Scanner::K_short: mState = ShortState; return true;
+                case Scanner::K_long: mState = LongState; return true;
+                case Scanner::K_float: mState = FloatState; return true;
+            }
+        }
+        
         return Parser::parseKeyword (keyword, loc, scanner);
     }
 
     bool LineParser::parseSpecial (int code, const TokenLoc& loc, Scanner& scanner)
     {
+        if (code==Scanner::S_newline && mState==EndState)
+            return false;
+            
         return Parser::parseSpecial (code, loc, scanner);
     }
     
     void LineParser::reset()
     {
-    
+        mState = BeginState;
     }
 }
 
diff --git a/components/compiler/lineparser.hpp b/components/compiler/lineparser.hpp
index 8b11dcf4a..420315551 100644
--- a/components/compiler/lineparser.hpp
+++ b/components/compiler/lineparser.hpp
@@ -9,6 +9,15 @@ namespace Compiler
     
     class LineParser : public Parser
     {
+            enum State
+            {
+                BeginState,
+                ShortState, LongState, FloatState,
+                EndState
+            };
+            
+            State mState;
+    
         public:
         
             LineParser (ErrorHandler& errorHandler, Context& context);