diff --git a/src/AddIns/BackendBindings/XamlBinding/XamlBinding.Tests/XmlTests.cs b/src/AddIns/BackendBindings/XamlBinding/XamlBinding.Tests/XmlTests.cs
index 6120aff2f5..6731151cb0 100644
--- a/src/AddIns/BackendBindings/XamlBinding/XamlBinding.Tests/XmlTests.cs
+++ b/src/AddIns/BackendBindings/XamlBinding/XamlBinding.Tests/XmlTests.cs
@@ -69,7 +69,6 @@ namespace ICSharpCode.XamlBinding.Tests
 		}
 		
 		[Test]
-		[Ignore("Failing Test broke the build for 3 days - ignoring it. Reenable this test when the XmlParser bug is fixed!")]
 		public void InMarkupExtensionNamedParameterTest()
 		{
 			string xaml = "<Test val1=\"{Binding Value, Path=Control}\" />";
diff --git a/src/AddIns/DisplayBindings/XmlEditor/Project/Src/XmlParser.cs b/src/AddIns/DisplayBindings/XmlEditor/Project/Src/XmlParser.cs
index 7e775da9f9..6ac77a889b 100644
--- a/src/AddIns/DisplayBindings/XmlEditor/Project/Src/XmlParser.cs
+++ b/src/AddIns/DisplayBindings/XmlEditor/Project/Src/XmlParser.cs
@@ -323,16 +323,12 @@ namespace ICSharpCode.XmlEditor
 			// Count the number of double quotes and single quotes that exist
 			// before the first equals sign encountered going backwards to
 			// the start of the active element.
-			bool foundEqualsSign = false;
 			int doubleQuotesCount = 0;
 			int singleQuotesCount = 0;
 			char lastQuoteChar = ' ';
 			for (int i = index - 1; i > elementStartIndex; --i) {
 				char ch = xml[i];
-				if (ch == '=') {
-					foundEqualsSign = true;
-					break;
-				} else if (ch == '\"') {
+				if (ch == '\"') {
 					lastQuoteChar = ch;
 					++doubleQuotesCount;
 				} else if (ch == '\'') {
@@ -341,18 +337,13 @@ namespace ICSharpCode.XmlEditor
 				}
 			}
 			
-			bool isInside = false;
-			
-			if (foundEqualsSign) {
-				// Odd number of quotes?
-				if ((lastQuoteChar == '\"') && ((doubleQuotesCount % 2) > 0)) {
-					isInside = true;
-				} else if ((lastQuoteChar == '\'') && ((singleQuotesCount %2) > 0)) {
-					isInside = true;
-				}
+			// Odd number of quotes?
+			if ((lastQuoteChar == '\"') && ((doubleQuotesCount % 2) > 0)) {
+				return true;
+			} else if ((lastQuoteChar == '\'') && ((singleQuotesCount %2) > 0)) {
+				return true;
 			}
-			
-			return isInside;
+			return false;
 		}
 		
 		/// <summary>
diff --git a/src/AddIns/DisplayBindings/XmlEditor/Test/Parser/AttributeValueUnderCursorTests.cs b/src/AddIns/DisplayBindings/XmlEditor/Test/Parser/AttributeValueUnderCursorTests.cs
index 22b00ee838..bbbddb9ac9 100644
--- a/src/AddIns/DisplayBindings/XmlEditor/Test/Parser/AttributeValueUnderCursorTests.cs
+++ b/src/AddIns/DisplayBindings/XmlEditor/Test/Parser/AttributeValueUnderCursorTests.cs
@@ -79,6 +79,14 @@ namespace XmlEditor.Tests.Parser
 			Assert.AreEqual("{Binding Value}", XmlParser.GetAttributeValueAtIndex(xaml, offset));
 		}
 		
+		[Test]
+		public void InMarkupExtensionNamedParameterTest()
+		{
+			string xaml = "<Test val1=\"{Binding Value, Path=Control}\" />";
+			int offset = "<Test val1=\"{Binding Value, Path=".Length;
+			Assert.IsTrue(XmlParser.IsInsideAttributeValue(xaml, offset));
+		}
+		
 		[Test]
 		public void LeftCurlyBracketIsValidAttributeValueChar()
 		{