diff --git a/src/AddIns/BackendBindings/VBNetBinding/Project/Src/FormattingStrategy/VBNetFormattingStrategy.cs b/src/AddIns/BackendBindings/VBNetBinding/Project/Src/FormattingStrategy/VBNetFormattingStrategy.cs
index 8fb8a4c5b1..8ddd12dc16 100644
--- a/src/AddIns/BackendBindings/VBNetBinding/Project/Src/FormattingStrategy/VBNetFormattingStrategy.cs
+++ b/src/AddIns/BackendBindings/VBNetBinding/Project/Src/FormattingStrategy/VBNetFormattingStrategy.cs
@@ -686,12 +686,33 @@ namespace ICSharpCode.VBNetBinding
 					}
 				}
 				
-				// do not indent if current token is start of lambda
-				// only works with single-line lambdas
+				// check if it is a lambda
 				if (current.Kind == Tokens.Function || current.Kind == Tokens.Sub) {
 					lexer.StartPeek();
 					
-					if (lexer.Peek().Kind == Tokens.OpenParenthesis)
+					bool isSingleLineLambda = false;
+					
+					if (lexer.Peek().Kind == Tokens.OpenParenthesis) {
+						isSingleLineLambda = true;
+						
+						int brackets = 1;
+						
+						// look for end of parameter list
+						while (brackets > 0) {
+							var t = lexer.Peek();
+							if (t.Kind == Tokens.OpenParenthesis)
+								brackets++;
+							if (t.Kind == Tokens.CloseParenthesis)
+								brackets--;
+						}
+						
+						// expression is multiline lambda if next Token is EOL
+						if (brackets == 0)
+							return lexer.Peek().Kind == Tokens.EOL;
+					}
+					
+					// do not indent if current token is start ofsingleline lambda
+					if (isSingleLineLambda)
 						return false;
 				}
 				
diff --git a/src/AddIns/BackendBindings/VBNetBinding/Test/FormattingStrategy/IndentationTests.cs b/src/AddIns/BackendBindings/VBNetBinding/Test/FormattingStrategy/IndentationTests.cs
index 0690880af5..260067b1e1 100644
--- a/src/AddIns/BackendBindings/VBNetBinding/Test/FormattingStrategy/IndentationTests.cs
+++ b/src/AddIns/BackendBindings/VBNetBinding/Test/FormattingStrategy/IndentationTests.cs
@@ -404,6 +404,54 @@ End Class";
 			RunFormatTest(code, expected);
 		}
 		
+		[Test]
+		public void FunctionLambda()
+		{
+			string expected = @"Public Class Test
+	Private Sub Tester()
+		Dim increment1 = Function(x) x + 1
+		Dim increment2 = Function(x)
+			Return x + 2
+		End Function
+	End Sub
+End Class";
+			
+			string code = @"Public Class Test
+Private Sub Tester()
+Dim increment1 = Function(x) x + 1
+Dim increment2 = Function(x)
+Return x + 2
+End Function
+End Sub
+End Class";
+			
+			RunFormatTest(code, expected);
+		}
+		
+		[Test]
+		public void SubLambda()
+		{
+			string expected = @"Public Class Test
+	Private Sub Tester()
+		Dim writeline1 = Sub(x) Console.WriteLine(x)
+		Dim writeline2 = Sub(x)
+			Console.WriteLine(x)
+		End Sub
+	End Sub
+End Class";
+			
+			string code = @"Public Class Test
+Private Sub Tester()
+Dim writeline1 = Sub(x) Console.WriteLine(x)
+Dim writeline2 = Sub(x)
+Console.WriteLine(x)
+End Sub
+End Sub
+End Class";
+			
+			RunFormatTest(code, expected);
+		}
+		
 		void RunFormatTest(string code, string expectedCode)
 		{
 			AvalonEditTextEditorAdapter editor = new AvalonEditTextEditorAdapter(new TextEditor());