diff --git a/harbour/ChangeLog b/harbour/ChangeLog
index ae5a1ad7af..2ca0ffdafc 100644
--- a/harbour/ChangeLog
+++ b/harbour/ChangeLog
@@ -1,4 +1,34 @@
+20000508-22:50 GMT-8 Ron Pinkas <Ron@Profit-Master.com>
+
+   * source/compiler/harbour.l
+     - Removed un used token DECLARE_
+
+   * source/compiler/harbour.y
+     ! Fixed warning about conflict
+     ! Verified all calls to hb_compVariableAdd() to use hb_comp_cVarType (and VT_OFFSET_* constants) as 2nd parameter
+     + Added rules to support syntax of declartion of variable by reference parameter.
+
+   * include/hbcomp.h
+     + Added :
+	#define VT_OFFSET_BYREF             60
+	#define VT_OFFSET_VARIANT           90
+	#define VT_OFFSET_OPTIONAL          90
+
+   * source/compiler/harbour.c
+     * Minor cleanup in hb_compVariableAdd()
+
+   * source/compiler/hbpcode.c
+     * Modified hb_compStrongType() to use VT_OFFSET_* constants.
+
+   * source/compiler/hbgenerr.c
+     * Changed "number" to "#" in HB_COMP_WARN_PARAM_TYPE message.
+
+   * tests/testwarn.prg
+     + Added code to demonstrate new "Declared Refernced Paramater" syntax:
+         DECLARE FRead( nHandle As Num, @cBufferVar As Char, nBytes As Num ) AS Num
+
 20000508-22:50 GMT-3 Luiz Rafael Culik <culik@sl.conex.net>
+
 *doc/genhtm.rsp
     +Added lang.txt to HBDOC response file
 *doc/en/compiler.txt
diff --git a/harbour/include/hbcomp.h b/harbour/include/hbcomp.h
index f8ddab5b56..1df5425a06 100644
--- a/harbour/include/hbcomp.h
+++ b/harbour/include/hbcomp.h
@@ -181,6 +181,10 @@ void hb_compPCodeEval( PFUNCTION, HB_PCODE_FUNC_PTR *, void * );
 #define VU_INITIALIZED 1
 #define VU_USED        2
 
+#define VT_OFFSET_BYREF             60
+#define VT_OFFSET_VARIANT           90
+#define VT_OFFSET_OPTIONAL          90
+
 /*
  * flags for bFlags member
 */
diff --git a/harbour/source/compiler/harbour.c b/harbour/source/compiler/harbour.c
index 43e282ddc1..66d375be92 100644
--- a/harbour/source/compiler/harbour.c
+++ b/harbour/source/compiler/harbour.c
@@ -474,11 +474,15 @@ void hb_compVariableAdd( char * szVarName, BYTE cValueType )
                pDeclared->cParamTypes = ( BYTE * ) hb_xgrab( 1 );
 
             /* Store declared type of this parameter into the parameters type list. */
+            /*
             if ( cValueType == '-' )
-               /* Optional parameter */
+               // Optional parameter
                pDeclared->cParamTypes[ pDeclared->iParamCount - 1 ] = hb_comp_cVarType + 100;
             else
                pDeclared->cParamTypes[ pDeclared->iParamCount - 1 ] = hb_comp_cVarType;
+            */
+
+            pDeclared->cParamTypes[ pDeclared->iParamCount - 1 ] = cValueType;
 
             return;
          }
diff --git a/harbour/source/compiler/harbour.l b/harbour/source/compiler/harbour.l
index 88a74b9fd6..ea1c239430 100644
--- a/harbour/source/compiler/harbour.l
+++ b/harbour/source/compiler/harbour.l
@@ -110,7 +110,7 @@ Separator     {SpaceTab}
 
 %x            STRING1 STRING2 STRING3
 %x            NEXT_ BREAK_ CASE_ DO_ WHILE_ WITH_ END_ EXIT_ EXTERNAL_ FIELD_
-%x            FOR_ FUNCTION_ IIF_ IF_ IN_ INIT_ LOCAL_ LOOP_ DECLARE_
+%x            FOR_ FUNCTION_ IIF_ IF_ IN_ INIT_ LOCAL_ LOOP_
 %x            MEMVAR_ PARAM_ PRIVATE_ PUBLIC_ STATIC_ RETURN_ RECOVER_
 %x            INVALIDNUM_ OTHERWISE_ PROCEDURE_
 %x            OPTIONAL_
diff --git a/harbour/source/compiler/harbour.y b/harbour/source/compiler/harbour.y
index 7968f98014..1afcf10ddf 100644
--- a/harbour/source/compiler/harbour.y
+++ b/harbour/source/compiler/harbour.y
@@ -195,7 +195,7 @@ char * hb_comp_szAnnounce = NULL;    /* ANNOUNCEd procedure */
 %type <valInteger> NUM_INTEGER
 %type <valLong>    NUM_LONG
 %type <iNumber> FunScope AsType AsArray
-%type <iNumber> Params ParamList DecParams DecParamList OptParams
+%type <iNumber> Params ParamList DecParams DecList FormalList OptList Optional
 %type <iNumber> IfBegin VarList ExtVarList
 %type <iNumber> FieldList
 %type <lNumber> WhileBegin
@@ -261,10 +261,10 @@ Line       : LINE NUM_INTEGER LITERAL Crlf
 
 Function   : FunScope FUNCTION  IdentName { hb_comp_cVarType = ' '; hb_compFunctionAdd( $3, ( HB_SYMBOLSCOPE ) $1, 0 ); } Params Crlf {}
            | FunScope PROCEDURE IdentName { hb_comp_cVarType = ' '; hb_compFunctionAdd( $3, ( HB_SYMBOLSCOPE ) $1, FUN_PROCEDURE ); } Params Crlf {}
-           | FunScope DECLARE_FUN IdentName { hb_compDeclaredAdd( $3 ); hb_comp_szDeclaredFun = $3 ; } DecParams AsType Crlf { if( hb_comp_pLastDeclared )
-                                                                                                                              hb_comp_pLastDeclared->cType = hb_comp_cVarType;
-                                                                                                                              hb_comp_szDeclaredFun = NULL;
-                                                                                                                              hb_comp_cVarType = ' '; }
+           | DECLARE_FUN IdentName { hb_compDeclaredAdd( $2 ); hb_comp_szDeclaredFun = $2; } DecParams AsType Crlf { if( hb_comp_pLastDeclared )
+                                                                                                                       hb_comp_pLastDeclared->cType = hb_comp_cVarType;
+                                                                                                                     hb_comp_szDeclaredFun = NULL;
+                                                                                                                     hb_comp_cVarType = ' '; }
            ;
 
 FunScope   :                  { $$ = HB_FS_PUBLIC; }
@@ -273,25 +273,33 @@ FunScope   :                  { $$ = HB_FS_PUBLIC; }
            | EXIT             { $$ = HB_FS_EXIT; }
            ;
 
-DecParams  :                                               { $$ = 0; }
-           | '(' ')'                                       { $$ = 0; }
-           | '(' { hb_comp_iVarScope = VS_PARAMETER; } DecParamList ')'   { $$ = $3; }
+Params     :                                                         { $$ = 0; }
+           | '(' ')'                                                 { $$ = 0; }
+           | '(' { hb_comp_iVarScope = VS_PARAMETER; } ParamList ')' { $$ = $3; }
            ;
 
-DecParamList  : IdentName AsType                { hb_compVariableAdd( $1, ' ' ); $$ = 1; }
-              | DecParamList ',' IdentName AsType  { hb_compVariableAdd( $3, $4 ); $$++; }
-              | DecParamList OptParams
-              ;
+DecParams  :                  { $$ = 0; }
+           | '(' DecList ')'  { $$ = $2; }
+           ;
 
-OptParams  : ',' OPTIONAL IdentName AsType { hb_compVariableAdd( $3, '-' ); $$ = 3; }
-	   | OptParams ',' OPTIONAL IdentName AsType { hb_compVariableAdd( $4, '-' ); $$++; }
+DecList    :                  { $$ = 0; }
+           | FormalList
+	   | FormalList OptList
 	   ;
 
-Params     :                                               { $$ = 0; }
-           | '(' ')'                                       { $$ = 0; }
-           | '(' { hb_comp_iVarScope = VS_PARAMETER; } ParamList ')'   { $$ = $3; }
+FormalList : IdentName AsType                { hb_compVariableAdd( $1, hb_comp_cVarType ); $$ = 1; }
+	   | '@' IdentName AsType            { hb_compVariableAdd( $2, hb_comp_cVarType + VT_OFFSET_BYREF ); $$ = 2; }
+           | FormalList ',' IdentName AsType { hb_compVariableAdd( $3, hb_comp_cVarType ); $$++; }
            ;
 
+OptList    : Optional
+	   | OptList Optional
+	   ;
+
+Optional   : ',' OPTIONAL IdentName AsType     { hb_compVariableAdd( $3, hb_comp_cVarType + VT_OFFSET_OPTIONAL ); $$ = 3; }
+	   | ',' OPTIONAL '@' IdentName AsType { hb_compVariableAdd( $4, hb_comp_cVarType + VT_OFFSET_OPTIONAL + VT_OFFSET_BYREF ); $$ = 4; }
+	   ;
+
 AsType     : /* not specified */           { hb_comp_cVarType = ' '; }
            | AS_NUMERIC                    { hb_comp_cVarType = 'N'; }
            | AS_CHARACTER                  { hb_comp_cVarType = 'C'; }
@@ -322,8 +330,8 @@ AsArray    : AS_ARRAY                      { hb_comp_cVarType = 'A'; }
            | AS_VARIANT_ARRAY              { hb_comp_cVarType = 'A'; }
            ;
 
-ParamList  : IdentName AsType                { hb_compVariableAdd( $1, ' ' ); $$ = 1; }
-           | ParamList ',' IdentName AsType  { hb_compVariableAdd( $3, $4 ); $$++; }
+ParamList  : IdentName AsType                { hb_compVariableAdd( $1, hb_comp_cVarType ); $$ = 1; }
+           | ParamList ',' IdentName AsType  { hb_compVariableAdd( $3, hb_comp_cVarType ); $$++; }
            ;
 
 /* NOTE: This alllows the use of Expression as a statement.
@@ -1085,7 +1093,7 @@ ExtVarDef  : VarDef
                }
            ;
 
-VarDef     : IdentName AsType { hb_compVariableAdd( $1, $2 ); }
+VarDef     : IdentName AsType { hb_compVariableAdd( $1, hb_comp_cVarType ); }
                {
                   if( hb_comp_iVarScope == VS_STATIC )
                   {
@@ -1099,7 +1107,7 @@ VarDef     : IdentName AsType { hb_compVariableAdd( $1, $2 ); }
                }
 
            | IdentName AsType { $<iNumber>$ = hb_comp_iVarScope;
-                                hb_compVariableAdd( $1, $2 );
+                                hb_compVariableAdd( $1, hb_comp_cVarType );
                               }
              INASSIGN Expression
                {
@@ -1141,16 +1149,16 @@ DimIndex   : '[' Expression               { $$ = hb_compExprNewArgList( $2 ); }
 FieldsDef  : FIELD { hb_comp_iVarScope = VS_FIELD; } FieldList Crlf
            ;
 
-FieldList  : IdentName AsType               { $$=hb_compFieldsCount(); hb_compVariableAdd( $1, $2 ); }
-           | FieldList ',' IdentName AsType { hb_compVariableAdd( $3, $4 ); }
+FieldList  : IdentName AsType               { $$=hb_compFieldsCount(); hb_compVariableAdd( $1, hb_comp_cVarType ); }
+           | FieldList ',' IdentName AsType { hb_compVariableAdd( $3, hb_comp_cVarType ); }
            | FieldList IN IdentName { hb_compFieldSetAlias( $3, $<iNumber>1 ); }
            ;
 
 MemvarDef  : MEMVAR { hb_comp_iVarScope = VS_MEMVAR; } MemvarList Crlf
            ;
 
-MemvarList : IdentName AsType                     { hb_compVariableAdd( $1, ' ' ); }
-           | MemvarList ',' IdentName             { hb_compVariableAdd( $3, ' ' ); }
+MemvarList : IdentName AsType                     { hb_compVariableAdd( $1, hb_comp_cVarType ); }
+           | MemvarList ',' IdentName AsType      { hb_compVariableAdd( $3, hb_comp_cVarType ); }
            ;
 
 ExecFlow   : IfEndif
diff --git a/harbour/source/compiler/hbgenerr.c b/harbour/source/compiler/hbgenerr.c
index e0b0df8144..c9b846334b 100644
--- a/harbour/source/compiler/hbgenerr.c
+++ b/harbour/source/compiler/hbgenerr.c
@@ -106,7 +106,7 @@ char * hb_comp_szWarnings[] =
    "3Can\'t use array index with non-array",
    "3Incompatible return type: \'%s\' expected: \'%s\'",
    "3Invalid number of parameters: %s expected: %s",
-   "3Incompatible parameter number %s expected: \'%s\'",
+   "3Incompatible parameter # %s expected: \'%s\'",
    "3Duplicate Declaration of Function %s",
    "3Function \'%s\' conflicting with its declaration",
    "3Variable \'%s\' used but never initialized",
diff --git a/harbour/source/compiler/hbpcode.c b/harbour/source/compiler/hbpcode.c
index e8a9c64d7e..3a3a7d1b65 100644
--- a/harbour/source/compiler/hbpcode.c
+++ b/harbour/source/compiler/hbpcode.c
@@ -236,7 +236,7 @@ void hb_compStrongType( int iSize )
    PCOMDECLARED pDeclared;
    ULONG ulPos = pFunc->lPCodePos - iSize;
    SHORT wVar = 0;
-   char szType1[32], szType2[32], cType, cSubType1 = 0, cSubType2 = 0;
+   BYTE szType1[32], szType2[32], cType, cSubType1 = 0, cSubType2 = 0;
    BYTE bLast1, bLast2;
 
    /* Make sure we have enough stack space. */
@@ -274,8 +274,8 @@ void hb_compStrongType( int iSize )
              sprintf( szType1, "%c", pDeclared->cType );
 
              /* Variant as SubType. */
-             if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
-                cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex ] -= 100 );
+             if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
+                cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex ] -= VT_OFFSET_VARIANT );
 
              if ( cSubType1 && cSubType1 == '-' )
                 strcpy( szType2, "Variant.SubType\[NIL]" );
@@ -305,9 +305,10 @@ void hb_compStrongType( int iSize )
        {
          int iParamCount = hb_comp_iParamCount, iOptionals = 0;
 
+         /* First, find how many optionals. */
          while ( --iParamCount >= 0 )
          {
-            if ( hb_comp_cParamTypes[ iParamCount ] > 122 )
+            if ( hb_comp_cParamTypes[ iParamCount ] == ( ' ' + VT_OFFSET_OPTIONAL ) || hb_comp_cParamTypes[ iParamCount ] >= ( 'A' + VT_OFFSET_OPTIONAL ) )
                iOptionals++;
             else
                break;
@@ -315,31 +316,37 @@ void hb_compStrongType( int iSize )
 
          //printf( "\nOptionals: %i\n", iOptionals );
 
+         /* Now, check the types. */
          if( wVar >= ( hb_comp_iParamCount - iOptionals ) && wVar <= hb_comp_iParamCount )
          {
-           BYTE iOffset = 0, iParamBase = pFunc->iStackIndex - wVar;
+           BYTE iOffset = 0, iParamBase = pFunc->iStackIndex - wVar, cFormalType;
 
            while ( iOffset < wVar )
            {
-             if ( pFunc->pStack[ iParamBase + iOffset ] > 122 )
-               /* cSubType1 = */( pFunc->pStack[ iParamBase + iOffset ] -= 100 );
+             cFormalType = hb_comp_cParamTypes[ iOffset ];
 
-             if ( hb_comp_cParamTypes[ iOffset ] > 122 )
-               hb_comp_cParamTypes[ iOffset ] -= 100;
+             if ( cFormalType == ( ' ' + VT_OFFSET_OPTIONAL ) || cFormalType >= ( 'A' + VT_OFFSET_OPTIONAL ) )
+                cFormalType -= VT_OFFSET_OPTIONAL;
 
-             if ( hb_comp_cParamTypes[ iOffset ] != ' ' && hb_comp_cParamTypes[ iOffset ] != pFunc->pStack[ iParamBase + iOffset ] )
+             if ( cFormalType != ' ' && cFormalType != pFunc->pStack[ iParamBase + iOffset ] )
              {
+                if ( cFormalType > ( 'A' + VT_OFFSET_BYREF ) )
+                   sprintf( szType2, "@%c", cFormalType - VT_OFFSET_BYREF );
+                else
+                   sprintf( szType2, "%c", cFormalType );
+
                sprintf( szType1, "%i", iOffset + 1 );
-               sprintf( szType2, "%c", hb_comp_cParamTypes[ iOffset ] );
+
                hb_compGenWarning( hb_comp_szWarnings, 'W', HB_COMP_WARN_PARAM_TYPE, szType1, szType2 );
              }
+
              iOffset++;
            }
          }
          else
          {
            sprintf( szType1, "%i", wVar );
-           sprintf( szType2, "%i", hb_comp_iParamCount );
+           sprintf( szType2, "%i", hb_comp_iParamCount - iOptionals );
            hb_compGenWarning( hb_comp_szWarnings, 'W', HB_COMP_WARN_PARAM_COUNT, szType1, szType2 );
          }
        }
@@ -387,8 +394,8 @@ void hb_compStrongType( int iSize )
 
      case HB_P_DEC :
      case HB_P_INC :
-       if ( pFunc->pStack[ pFunc->iStackIndex - 1 ] > 122 )
-          cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex - 1 ] -= 100 );
+       if ( pFunc->pStack[ pFunc->iStackIndex - 1 ] > 'z' )
+          cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex - 1 ] -= VT_OFFSET_VARIANT );
 
        if ( cSubType1 && cSubType1 == '-' )
           strcpy( szType1, "Variant.SubType\[NIL]" );
@@ -420,8 +427,8 @@ void hb_compStrongType( int iSize )
           /* TODO Error Message after finalizing all possible pcodes. */
           break;
 
-       if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
-          cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex ] -= 100 );
+       if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
+          cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex ] -= VT_OFFSET_VARIANT );
 
        if ( cSubType1 && cSubType1 == '-' )
           strcpy( szType1, "Variant.SubType\[NIL]" );
@@ -449,11 +456,11 @@ void hb_compStrongType( int iSize )
           /* TODO Error Message after finalizing all possible pcodes. */
           break;
 
-       if ( pFunc->pStack[ pFunc->iStackIndex - 1 ] > 122 )
-          cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex - 1 ] -= 100 );
+       if ( pFunc->pStack[ pFunc->iStackIndex - 1 ] > 'z' )
+          cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex - 1 ] -= VT_OFFSET_VARIANT );
 
-       if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
-          cSubType2 = ( pFunc->pStack[ pFunc->iStackIndex ] -= 100 );
+       if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
+          cSubType2 = ( pFunc->pStack[ pFunc->iStackIndex ] -= VT_OFFSET_VARIANT );
 
        if ( cSubType1 && cSubType1 == '-' )
           strcpy( szType1, "Variant.SubType\[NIL]" );
@@ -523,11 +530,11 @@ void hb_compStrongType( int iSize )
 
        //printf( "\nTop: %c Bottom: %c Typ-SubType: %c Bottom->SubType: %c\n", pFunc->pStack[ pFunc->iStackIndex], pFunc->pStack[ pFunc->iStackIndex - 1 ], pFunc->pStack[ pFunc->iStackIndex] - 100, pFunc->pStack[ pFunc->iStackIndex - 1 ] - 100 );
 
-       if ( pFunc->pStack[ pFunc->iStackIndex - 1 ] > 122 )
-          cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex - 1 ] -= 100 );
+       if ( pFunc->pStack[ pFunc->iStackIndex - 1 ] > 'z' )
+          cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex - 1 ] -= VT_OFFSET_VARIANT );
 
-       if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
-          cSubType2 = ( pFunc->pStack[ pFunc->iStackIndex ] -= 100 );
+       if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
+          cSubType2 = ( pFunc->pStack[ pFunc->iStackIndex ] -= VT_OFFSET_VARIANT );
 
        if ( cSubType1 && cSubType1 == '-' )
           strcpy( szType1, "Variant.SubType\[NIL]" );
@@ -611,11 +618,11 @@ void hb_compStrongType( int iSize )
           /* TODO Error Message after finalizing all possible pcodes. */
           break;
 
-       if ( pFunc->pStack[ pFunc->iStackIndex - 1 ] > 122 )
-          cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex - 1 ] -= 100 );
+       if ( pFunc->pStack[ pFunc->iStackIndex - 1 ] > 'z' )
+          cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex - 1 ] -= VT_OFFSET_VARIANT );
 
-       if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
-          cSubType2 = ( pFunc->pStack[ pFunc->iStackIndex ] -= 100 );
+       if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
+          cSubType2 = ( pFunc->pStack[ pFunc->iStackIndex ] -= VT_OFFSET_VARIANT );
 
        if ( cSubType1 && cSubType1 == '-' )
           sprintf( szType1, "Variant.SubType\[NIL]" );
@@ -685,11 +692,11 @@ void hb_compStrongType( int iSize )
           /* TODO Error Message after finalizing all possible pcodes. */
           break;
 
-       if ( pFunc->pStack[ pFunc->iStackIndex - 1 ] > 122 )
-          cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex - 1 ] -= 100 );
+       if ( pFunc->pStack[ pFunc->iStackIndex - 1 ] > 'z' )
+          cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex - 1 ] -= VT_OFFSET_VARIANT );
 
-       if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
-          cSubType2 = ( pFunc->pStack[ pFunc->iStackIndex ] -= 100 );
+       if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
+          cSubType2 = ( pFunc->pStack[ pFunc->iStackIndex ] -= VT_OFFSET_VARIANT );
 
        if ( cSubType1 && cSubType1 == '-' )
           sprintf( szType1, "Variant.SubType\[NIL]" );
@@ -756,11 +763,11 @@ void hb_compStrongType( int iSize )
           /* TODO Error Message after finalizing all possible pcodes. */
           break;
 
-       if ( pFunc->pStack[ pFunc->iStackIndex - 1 ] > 122 )
-          cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex - 1 ] -= 100 );
+       if ( pFunc->pStack[ pFunc->iStackIndex - 1 ] > 'z' )
+          cSubType1 = ( pFunc->pStack[ pFunc->iStackIndex - 1 ] -= VT_OFFSET_VARIANT );
 
-       if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
-          cSubType2 = ( pFunc->pStack[ pFunc->iStackIndex ] -= 100 );
+       if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
+          cSubType2 = ( pFunc->pStack[ pFunc->iStackIndex ] -= VT_OFFSET_VARIANT );
 
        if ( cSubType1 && cSubType1 == '-' )
           sprintf( szType1, "Variant.SubType\[NIL]" );
@@ -920,7 +927,7 @@ void hb_compStrongType( int iSize )
                 pVar = pFunc->pMemvars;
                 while ( pVar )
                 {
-                   if ( pVar->cType > 122 )
+                   if ( pVar->cType > 'z' )
                       pVar->cType = ' ';
 
                    pVar = pVar->pNext;
@@ -931,6 +938,7 @@ void hb_compStrongType( int iSize )
        break;
 
      case HB_P_PUSHLOCALNEAR :
+     case HB_P_PUSHLOCALREF :
      case HB_P_PUSHLOCAL :
        if ( pFunc->pCode[ ulPos ] == HB_P_PUSHLOCALNEAR )
           wVar = ( SHORT ) pFunc->pCode[ ulPos + 1 ];
@@ -960,18 +968,21 @@ void hb_compStrongType( int iSize )
           /* Mark as used */
           pVar->iUsed |= VU_USED;
 
-          pFunc->pStack[ pFunc->iStackIndex++ ] = pVar->cType;
+          if ( pFunc->pCode[ ulPos ] == HB_P_PUSHLOCALREF )
+             pFunc->pStack[ pFunc->iStackIndex++ ] = pVar->cType + VT_OFFSET_BYREF;
+          else
+             pFunc->pStack[ pFunc->iStackIndex++ ] = pVar->cType;
        }
        else
-          pFunc->pStack[ pFunc->iStackIndex++ ] = ' ';
+          if ( pFunc->pCode[ ulPos ] == HB_P_PUSHLOCALREF )
+             pFunc->pStack[ pFunc->iStackIndex++ ] = '@';
+          else
+             pFunc->pStack[ pFunc->iStackIndex++ ] = ' ';
 
        break;
 
-     case HB_P_PUSHLOCALREF :
-       /* QUESTION: Fall from above, or use a "REFERENCED" type. */
-       pFunc->pStack[ pFunc->iStackIndex++ ] = 'R';
-       break;
 
+     case HB_P_PUSHSTATICREF :
      case HB_P_PUSHSTATIC :
        pTmp = hb_comp_functions.pFirst;
        wVar = pFunc->pCode[ ulPos + 1 ] + pFunc->pCode[ ulPos + 2 ] * 256;
@@ -993,17 +1004,19 @@ void hb_compStrongType( int iSize )
           /* Mark as used */
           pVar->iUsed |= VU_USED;
 
-          pFunc->pStack[ pFunc->iStackIndex++ ] = pVar->cType;
+          if ( pFunc->pCode[ ulPos ] == HB_P_PUSHSTATICREF )
+             pFunc->pStack[ pFunc->iStackIndex++ ] = pVar->cType + VT_OFFSET_BYREF;
+          else
+             pFunc->pStack[ pFunc->iStackIndex++ ] = pVar->cType;
        }
        else
-          pFunc->pStack[ pFunc->iStackIndex++ ] = ' ';
+          if ( pFunc->pCode[ ulPos ] == HB_P_PUSHSTATICREF )
+             pFunc->pStack[ pFunc->iStackIndex++ ] = '@';
+          else
+             pFunc->pStack[ pFunc->iStackIndex++ ] = ' ';
 
        break;
 
-     case HB_P_PUSHSTATICREF :
-       /* Question use type "REFERENCE" or the base type of the var */
-       pFunc->pStack[ pFunc->iStackIndex++ ] = 'R';
-
      case HB_P_PUSHVARIABLE :
        /* Type can not be detrmined at compile time. */
        pFunc->pStack[ pFunc->iStackIndex++ ] = ' ';
@@ -1032,13 +1045,17 @@ void hb_compStrongType( int iSize )
 
        /* Fall through - don't add break */
 
+     case HB_P_PUSHMEMVARREF :
      case HB_P_PUSHMEMVAR :
        if ( ! pSym )
           pSym = hb_compSymbolGetPos( pFunc->pCode[ ulPos + 1 ] + pFunc->pCode[ ulPos + 2 ] * 256 );
 
        if ( pSym )
        {
-         pFunc->pStack[ pFunc->iStackIndex++ ] = pSym->cType;
+          if ( pFunc->pCode[ ulPos ] == HB_P_PUSHMEMVARREF )
+             pFunc->pStack[ pFunc->iStackIndex++ ] = pSym->cType + VT_OFFSET_BYREF;
+          else
+             pFunc->pStack[ pFunc->iStackIndex++ ] = pSym->cType;
 
          if ( pFunc->pCode[ ulPos ] == HB_P_PUSHMEMVAR && pSym->szName )
          {
@@ -1061,7 +1078,6 @@ void hb_compStrongType( int iSize )
 
          if ( pVar )
          {
-            pFunc->pStack[ pFunc->iStackIndex - 1 ] = pVar->cType;
             //printf( "\nPused: %s Type: %c SubType: %c\n", pVar->szName, pVar->cType, pVar->cType - 100 );
 
             if ( ! ( pVar->iUsed & VU_INITIALIZED ) )
@@ -1069,18 +1085,21 @@ void hb_compStrongType( int iSize )
 
             /* Mark as used */
             pVar->iUsed |= VU_USED;
+
+            if ( pFunc->pCode[ ulPos ] == HB_P_PUSHMEMVARREF )
+               pFunc->pStack[ pFunc->iStackIndex - 1 ] = pVar->cType + VT_OFFSET_BYREF;
+            else
+               pFunc->pStack[ pFunc->iStackIndex - 1 ] = pVar->cType;
          }
        }
        else
-         pFunc->pStack[ pFunc->iStackIndex++ ] = ' ';
+         if ( pFunc->pCode[ ulPos ] == HB_P_PUSHMEMVARREF )
+            pFunc->pStack[ pFunc->iStackIndex++ ] = '@';
+         else
+            pFunc->pStack[ pFunc->iStackIndex++ ] = ' ';
 
        break;
 
-     case HB_P_PUSHMEMVARREF :
-       /* Question use type "REFERENCE" or the base type of the var */
-       pFunc->pStack[ pFunc->iStackIndex++ ] = 'R';
-       break;
-
      /* Arrays. */
 
      case HB_P_ARRAYDIM :
@@ -1147,8 +1166,8 @@ void hb_compStrongType( int iSize )
        {
           BYTE cVarType = pFunc->pStack[ pFunc->iStackIndex - 1 ];
 
-          if ( cVarType > 122 )
-             cVarType -= 100;
+          if ( cVarType > 'z' )
+             cVarType -= VT_OFFSET_VARIANT;
 
           if ( cVarType == ' ' )
           {
@@ -1182,11 +1201,11 @@ void hb_compStrongType( int iSize )
        {
           BYTE cVarType = pFunc->pStack[ pFunc->iStackIndex - 1 ], cElementType = pFunc->pStack[ pFunc->iStackIndex - 2 ];
 
-          if ( cVarType > 122 )
-             cVarType -= 100;
+          if ( cVarType > 'z' )
+             cVarType -= VT_OFFSET_VARIANT;
 
-          if ( cElementType > 122 )
-             cElementType -= 100;
+          if ( cElementType > 'z' )
+             cElementType -= VT_OFFSET_VARIANT;
 
           if ( cVarType == ' ' )
              hb_compGenWarning( hb_comp_szWarnings, 'W', HB_COMP_WARN_OPERAND_SUSPECT, "A", NULL );
@@ -1348,14 +1367,14 @@ void hb_compStrongType( int iSize )
              //printf( "\nSymbol: %s Variable: %s Type: %c #%i Function: %s\n", pSym->szName, pVar->szName, pVar->cType, wVar, pFunc->szName );
 
              /* Allow any type into a Variant, and record the subtype */
-             if ( pVar->cType == ' ' || pVar->cType > 122 )
+             if ( pVar->cType == ' ' || pVar->cType > 'z' )
              {
                 if ( pFunc->pStack[ pFunc->iStackIndex ] == ' ' )
                    pVar->cType = ' ';
-                else if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
+                else if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
                    pVar->cType = pFunc->pStack[ pFunc->iStackIndex ];
                 else
-                   pVar->cType = pFunc->pStack[ pFunc->iStackIndex ] + 100;
+                   pVar->cType = pFunc->pStack[ pFunc->iStackIndex ] + VT_OFFSET_VARIANT;
 
                 //printf( "\nSymbol: %s Variable: %s Assigned Type: \'%c\' SubType: %c #%i Stack: %i\n", pSym->szName, pVar->szName, pVar->cType, pVar->cType - 100, wVar, pFunc->iStackIndex );
              }
@@ -1366,8 +1385,8 @@ void hb_compStrongType( int iSize )
 
                 //printf( "Variable: %s Type: \'%c\' SubType: %c Comparing: %c Recorded: %s\n", pSym->szName, pVar->cType, pVar->cType - 100, pFunc->pStack[ pFunc->iStackIndex ], szType );
 
-                if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
-                   pFunc->pStack[ pFunc->iStackIndex ] -= 100;
+                if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
+                   pFunc->pStack[ pFunc->iStackIndex ] -= VT_OFFSET_VARIANT;
 
                 if ( pFunc->pStack[ pFunc->iStackIndex ] == '-' )
                    ; /* NIL allowed into all types */
@@ -1386,22 +1405,22 @@ void hb_compStrongType( int iSize )
           else
           {
              /* Allow any type into a Variant, and record the subtype */
-             if ( pSym->cType == ' ' || pSym->cType > 122 )
+             if ( pSym->cType == ' ' || pSym->cType > 'z' )
              {
                 if ( pFunc->pStack[ pFunc->iStackIndex ] == ' ' )
                    pSym->cType = ' ';
-                else if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
+                else if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
                    pSym->cType = pFunc->pStack[ pFunc->iStackIndex ];
                 else
-                   pSym->cType = pFunc->pStack[ pFunc->iStackIndex ] + 100;
+                   pSym->cType = pFunc->pStack[ pFunc->iStackIndex ] + VT_OFFSET_VARIANT;
              }
              else
              {
                 char szType[2];
                 sprintf( szType, "%c", pSym->cType );
 
-                if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
-                   pFunc->pStack[ pFunc->iStackIndex ] -= 100;
+                if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
+                   pFunc->pStack[ pFunc->iStackIndex ] -= VT_OFFSET_VARIANT;
 
                 if ( pFunc->pStack[ pFunc->iStackIndex ] == '-' )
                    ; /* NIL allowed into all types */
@@ -1454,22 +1473,22 @@ void hb_compStrongType( int iSize )
          pVar->iUsed |= VU_INITIALIZED;
 
          /* Allow any type into a Variant, and record the subtype */
-         if ( pVar->cType == ' ' || pVar->cType > 122 )
+         if ( pVar->cType == ' ' || pVar->cType > 'z' )
          {
             if ( pFunc->pStack[ pFunc->iStackIndex ] == ' ' )
                pVar->cType = ' ';
-            else if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
+            else if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
                pVar->cType = pFunc->pStack[ pFunc->iStackIndex ];
             else
-               pVar->cType = pFunc->pStack[ pFunc->iStackIndex ] + 100;
+               pVar->cType = pFunc->pStack[ pFunc->iStackIndex ] + VT_OFFSET_VARIANT;
          }
          else
          {
             char szType[2];
             sprintf( szType, "%c", pVar->cType );
 
-            if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
-               pFunc->pStack[ pFunc->iStackIndex ] -= 100;
+            if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
+               pFunc->pStack[ pFunc->iStackIndex ] -= VT_OFFSET_VARIANT;
 
             if ( pFunc->pStack[ pFunc->iStackIndex ] == '-' )
                 ; /* NIL allowed into all types */
@@ -1504,22 +1523,22 @@ void hb_compStrongType( int iSize )
          pVar->iUsed |= VU_INITIALIZED;
 
          /* Allow any type into a Variant, and record the subtype */
-         if ( pVar->cType == ' ' || pVar->cType > 122 )
+         if ( pVar->cType == ' ' || pVar->cType > 'z' )
          {
             if ( pFunc->pStack[ pFunc->iStackIndex ] == ' ' )
                pVar->cType = ' ';
-            else if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
+            else if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
                pVar->cType = pFunc->pStack[ pFunc->iStackIndex ];
             else
-               pVar->cType = pFunc->pStack[ pFunc->iStackIndex ] + 100;
+               pVar->cType = pFunc->pStack[ pFunc->iStackIndex ] + VT_OFFSET_VARIANT;
          }
          else
          {
             char szType[2];
             sprintf( szType, "%c", pVar->cType );
 
-            if ( pFunc->pStack[ pFunc->iStackIndex ] > 122 )
-               pFunc->pStack[ pFunc->iStackIndex ] -= 100;
+            if ( pFunc->pStack[ pFunc->iStackIndex ] > 'z' )
+               pFunc->pStack[ pFunc->iStackIndex ] -= VT_OFFSET_VARIANT;
 
             if ( pFunc->pStack[ pFunc->iStackIndex ] == '-' )
                 ; /* NIL allowed into all types */
diff --git a/harbour/tests/testwarn.prg b/harbour/tests/testwarn.prg
index 19fe3f1e45..0db02f5ac8 100644
--- a/harbour/tests/testwarn.prg
+++ b/harbour/tests/testwarn.prg
@@ -51,7 +51,7 @@
 
 DECLARE FUNCTION nMyFunc( cVar AS STRING, nVar AS NUMERIC ) AS NUMERIC
 
-DECLARE FUNCTION cOtherFunc( cVar as char, optional nVar as num, optional other as variant ) AS CHAR
+DECLARE FUNCTION cOtherFunc( @cVar as char, optional nVar as num, optional other as variant ) AS CHAR
 
 DECLARE FUNCTION cOtherFunc( ) AS CHAR
 
@@ -68,10 +68,10 @@ MEMVAR Var1 AS CHAR
 
 STATIC lGlobal AS LOGICAL
 
-PROCEDURE THEMAIN()
+PROCEDURE THEMAIN( optional )
 
   STATIC lStatic := 0
-  LOCAL cVar AS CHAR := 'Hello'
+  LOCAL cVar AS CHAR := [declare function]
 
   FIELD b AS NUM
   USE TEMP
@@ -81,8 +81,12 @@ PROCEDURE THEMAIN()
 
   PRIVATE TEST AS CHAR
 
+  IF optional
+     ? 'Ok'
+  ENDIF
+
   x := cOtherFunc( 'A' )
-  x := cOtherFunc( 1 )
+  x := cOtherFunc( @Test )
   x := cOtherFunc( 'A', 'A', 'A' )
 
   M->TEST := "TEST"   //OK - no warnings here