diff --git a/util/opt/flow.c b/util/opt/flow.c
index c5633567d..4821dff8d 100644
--- a/util/opt/flow.c
+++ b/util/opt/flow.c
@@ -37,7 +37,15 @@ findreach() {
 				np->n_repl->n_jumps++;
 				if (!(np->n_flags&NUMSCAN)) {
 					np->n_flags |= NUMSCAN;
-					reach(np->n_line->l_next);
+					if (np->n_line) {
+						reach(np->n_line->l_next);
+						continue;
+					}
+					if (!(np->n_repl->n_flags&NUMSCAN)) {
+						np->n_repl->n_flags |= NUMSCAN;
+						if (np->n_repl->n_line)
+						    reach(np->n_repl->n_line->l_next);
+					}
 				}
 			}
 }
@@ -52,11 +60,21 @@ reach(lnp) register line_p lnp; {
 			 */
 			np = lnp->l_a.la_np;
 			if ((lnp->l_instr&BMASK) != op_lab)
-				np = np->n_repl;
+				lnp->l_a.la_np = np = np->n_repl;
 			np->n_flags |= NUMREACH;
 			if (!(np->n_flags&NUMSCAN)) {
 				np->n_flags |= NUMSCAN;
-				reach(np->n_line->l_next);
+				if (np->n_line)
+					reach(np->n_line->l_next);
+				else {
+					np = np->n_repl;
+					np->n_flags |= NUMREACH;
+					if (!(np->n_flags & NUMSCAN)) {
+						np->n_flags |= NUMSCAN;
+						if (np->n_line)
+							reach(np->n_line->l_next);
+					}
+				}
 			}
 			if ((lnp->l_instr&BMASK) == op_lab)
 				return;
@@ -99,6 +117,9 @@ cleaninstrs() {
 		} else
 			superfluous = FALSE;
 		if ( (!reachable) || superfluous) {
+			if (instr == op_lab) {
+				lp->l_a.la_np->n_line = 0;
+			}
 			lp = lp->l_next;
 			oldline(*lpp);
 			OPTIM(O_UNREACH);
diff --git a/util/opt/peephole.c b/util/opt/peephole.c
index d14ce6bc2..7c206f776 100644
--- a/util/opt/peephole.c
+++ b/util/opt/peephole.c
@@ -127,24 +127,28 @@ peephole() {
 		hashpatterns();
 		phashed=TRUE;
 	}
-	optimize();
+	return optimize();
 }
 
 optimize() {
 	register num_p *npp,np;
 	register instr;
+	bool madeopt;
 
-	basicblock(&instrs);
+	madeopt = basicblock(&instrs);
 	for (npp=curpro.numhash;npp< &curpro.numhash[NNUMHASH]; npp++)
 		for (np = *npp; np != (num_p) 0; np=np->n_next) {
+			if (! np->n_line) continue;
 			if(np->n_line->l_next == (line_p) 0)
 				continue;
 			instr = np->n_line->l_next->l_instr&BMASK;
 			if (instr == op_lab || instr == op_bra)
 				np->n_repl = np->n_line->l_next->l_a.la_np;
 			else
-				basicblock(&np->n_line->l_next);
+				if (basicblock(&np->n_line->l_next))
+					madeopt = TRUE;
 		}
+	return madeopt;
 }
 
 offset oabs(off) offset off; {
@@ -590,20 +594,18 @@ int len;
 	return(tryrepl(lpp,bp,patlen));
 }
 
+int
 basicblock(alpp) line_p *alpp; {
 	register line_p *lpp,lp;
-	bool madeopt;
 	unsigned short hash[3];
 	line_p *next;
 	register byte *bp;
 	int i;
 	short index;
-	int npasses;
+	bool madeopt;
 
-	npasses = 0;
-	do {	/* make pass over basicblock */
-	    lpp = alpp; madeopt = FALSE;
-	    while ((*lpp) != (line_p) 0 && ((*lpp)->l_instr&BMASK) != op_lab) {
+	lpp = alpp; madeopt = FALSE;
+	while ((*lpp) != (line_p) 0 && ((*lpp)->l_instr&BMASK) != op_lab) {
 		lp = *lpp; next = &lp->l_next;
 		hash[0] = lp->l_instr&BMASK;
 		lp=lp->l_next;
@@ -638,7 +640,6 @@ basicblock(alpp) line_p *alpp; {
 		    }
 		}
 		lpp = next;
-	    }
-	} while(madeopt && ++npasses<5000);	/* as long as there is progress */
-	assert(!madeopt);
+	}
+	return madeopt;
 }
diff --git a/util/opt/process.c b/util/opt/process.c
index 4545b9925..60827d795 100644
--- a/util/opt/process.c
+++ b/util/opt/process.c
@@ -30,10 +30,16 @@ process() {
 		symvalue();		/* give symbols value */
 	if (prodepth != 0) {
 		if (!nflag) {
-			checklocs();	/* check definition of locals */
-			peephole();	/* local optimization */
+		    int npasses = 0;
+		    bool madeopt;
+
+		    checklocs();	/* check definition of locals */
+		    do {
+			madeopt = peephole();	/* local optimization */
 			relabel();	/* relabel local labels */
 			flow();		/* throw away unreachable code */
+		    } while (madeopt && ++npasses < 5000);
+		    assert(!madeopt);
 		}
 		outpro();		/* generate PRO pseudo */
 		outregs();		/* generate MES ms_reg pseudos */
@@ -62,6 +68,7 @@ relabel() {
 
 	for (npp = curpro.numhash; npp < &curpro.numhash[NNUMHASH]; npp++)
 		for (np = *npp; np != (num_p) 0; np = np->n_next) {
+			if (! np->n_line) continue;
 			assert((np->n_line->l_instr&BMASK) == op_lab
 			    && np->n_line->l_a.la_np == np);
 			for(tp=np; (tp->n_flags&(NUMKNOWN|NUMMARK))==0;
@@ -75,6 +82,11 @@ relabel() {
 				tp->n_flags |=   NUMKNOWN;
 			}
 		}
+	for (npp = curpro.numhash; npp < &curpro.numhash[NNUMHASH]; npp++)
+		for (np = *npp; np != (num_p) 0; np = np->n_next) {
+			np->n_flags &= ~(NUMKNOWN|NUMSCAN|NUMREACH);
+			np->n_jumps = 0;
+		}
 }
 
 symknown() {
diff --git a/util/opt/util.c b/util/opt/util.c
index a6835cbd4..da9e3b8ac 100644
--- a/util/opt/util.c
+++ b/util/opt/util.c
@@ -44,7 +44,7 @@ badassertion(file,line) char *file; unsigned line; {
 optim(n) {
 
 	fprintf(stderr,"Made optimization %d",n);
-	if (inpro)
+	if (prodepth)
 		fprintf(stderr," (%.*s)",IDL,curpro.symbol->s_name);
 	fprintf(stderr,"\n");
 }