diff --git a/patchlevel.h b/patchlevel.h
index 02f1d60..8002af7 100644
--- a/patchlevel.h
+++ b/patchlevel.h
@@ -25,6 +25,6 @@
    regexp `^#define[ 	]*PATCHLEVEL', since that's what support/mkversion.sh
    looks for to find the patch level (for the sccs version string). */
 
-#define PATCHLEVEL 9
+#define PATCHLEVEL 10
 
 #endif /* _PATCHLEVEL_H_ */
diff --git a/tests/varenv.right b/tests/varenv.right
index 159a877..ca7d4cf 100644
--- a/tests/varenv.right
+++ b/tests/varenv.right
@@ -146,9 +146,9 @@ declare -x foo="abc"
 inside: declare -x var="value"
 outside: declare -- var="one"
 inside: declare -x var="value"
-outside: declare -x var="value"
-inside: declare -- var="local"
-outside: declare -x var="global"
+outside: declare -- var="outside"
+inside: declare -x var="global"
+outside: declare -- var="outside"
 foo=<unset> environment foo=
 foo=foo environment foo=foo
 foo=foo environment foo=foo
diff --git a/variables.c b/variables.c
index 610629a..af3fd04 100644
--- a/variables.c
+++ b/variables.c
@@ -4460,9 +4460,9 @@ char **tempvar_list;
 int tvlist_ind;
 
 /* Take a variable from an assignment statement preceding a posix special
-   builtin (including `return') and create a global variable from it. This
-   is called from merge_temporary_env, which is only called when in posix
-   mode. */
+   builtin (including `return') and create a variable from it as if a
+   standalone assignment statement had been performed. This is called from
+   merge_temporary_env, which is only called when in posix mode. */
 static void
 push_posix_temp_var (data)
      PTR_T data;
@@ -4472,16 +4472,27 @@ push_posix_temp_var (data)
 
   var = (SHELL_VAR *)data;
 
-  binding_table = global_variables->table;
-  if (binding_table == 0)
-    binding_table = global_variables->table = hash_create (VARIABLES_HASH_BUCKETS);
+  /* Just like do_assignment_internal(). This makes assignments preceding
+     special builtins act like standalone assignment statements when in
+     posix mode, satisfying the posix requirement that this affect the
+     "current execution environment." */
+  v = bind_variable (var->name, value_cell (var), ASS_FORCE|ASS_NOLONGJMP);
 
-  v = bind_variable_internal (var->name, value_cell (var), binding_table, 0, ASS_FORCE|ASS_NOLONGJMP);
+  /* If this modifies an existing local variable, v->context will be non-zero.
+     If it comes back with v->context == 0, we bound at the global context.
+     Set binding_table appropriately. It doesn't matter whether it's correct
+     if the variable is local, only that it's not global_variables->table */
+  binding_table = v->context ? shell_variables->table : global_variables->table;
 
   /* global variables are no longer temporary and don't need propagating. */
-  var->attributes &= ~(att_tempvar|att_propagate);
+  if (binding_table == global_variables->table)
+    var->attributes &= ~(att_tempvar|att_propagate);
+
   if (v)
-    v->attributes |= var->attributes;
+    {
+      v->attributes |= var->attributes;
+      v->attributes &= ~att_tempvar;	/* not a temp var now */
+    }
 
   if (find_special_var (var->name) >= 0)
     tempvar_list[tvlist_ind++] = savestring (var->name);
@@ -4575,14 +4586,17 @@ dispose_temporary_env (pushf)
      sh_free_func_t *pushf;
 {
   int i;
+  HASH_TABLE *disposer;
 
   tempvar_list = strvec_create (HASH_ENTRIES (temporary_env) + 1);
   tempvar_list[tvlist_ind = 0] = 0;
-    
-  hash_flush (temporary_env, pushf);
-  hash_dispose (temporary_env);
+
+  disposer = temporary_env;
   temporary_env = (HASH_TABLE *)NULL;
 
+  hash_flush (disposer, pushf);
+  hash_dispose (disposer);
+
   tempvar_list[tvlist_ind] = 0;
 
   array_needs_making = 1;