diff --git a/CHANGES.current b/CHANGES.current
index 8469fa815..3d5c27950 100644
--- a/CHANGES.current
+++ b/CHANGES.current
@@ -1,6 +1,10 @@
 Version 1.3.41 (in progress)
 ============================
 
+2009-11-15: wsfulton
+            Fix #1960977 - Syntax error parsing derived nested class declaration and member
+            variable instance.
+
 2009-11-14: wsfulton
             Fix #2310483 - function pointer typedef within extern "C" block.
 
diff --git a/Examples/test-suite/derived_nested.i b/Examples/test-suite/derived_nested.i
index 9a7cfce07..29114d5a0 100644
--- a/Examples/test-suite/derived_nested.i
+++ b/Examples/test-suite/derived_nested.i
@@ -6,6 +6,7 @@ This was reported in bug #909389 */
 %warnfilter(SWIGWARN_PARSE_NAMED_NESTED_CLASS) BB::CC;
 %warnfilter(SWIGWARN_PARSE_NAMED_NESTED_CLASS) BB::DD;
 %warnfilter(SWIGWARN_PARSE_NAMED_NESTED_CLASS) BB::EE;
+%warnfilter(SWIGWARN_PARSE_NAMED_NESTED_CLASS) BB::FF;
 
 %inline %{
 
@@ -19,6 +20,7 @@ struct BB {
   class CC { int y; };
   class DD : public A { int z; };
   struct EE : public A { int z; };
+  struct FF : public A { int z; } ff_instance; // Bug 1960977
   void useEE(const EE& e) {}
 };
 %}
diff --git a/Source/CParse/parser.y b/Source/CParse/parser.y
index f78d5255b..b87ba9368 100644
--- a/Source/CParse/parser.y
+++ b/Source/CParse/parser.y
@@ -4483,7 +4483,7 @@ cpp_nested :   storage_class cpptype ID LBRACE { cparse_start_line = cparse_line
 /* This adds one shift/reduce. */
 
               | storage_class cpptype idcolon COLON base_list LBRACE { cparse_start_line = cparse_line; skip_balanced('{','}');
-              } SEMI {
+              } cpp_opt_declarators {
 	        $$ = 0;
 		if (cplus_mode == CPLUS_PUBLIC) {
 		  $$ = nested_forward_declaration($2, $3);