diff -u -r automake_patch1/ChangeLog automake_patch2/ChangeLog
--- automake_patch1/ChangeLog	Thu Aug  2 01:16:58 2001
+++ automake_patch2/ChangeLog	Thu Aug  2 01:39:14 2001
@@ -1,3 +1,13 @@
+2001-08-02  Richard Boulton <address@hidden>
+
+	* automake.in (variable_conditions_sub): Handle variable
+	substitution refs when computing conditions based on subvariable
+	conditions.  Fixes substitution refs of system variables when sub
+	variable is conditional.
+
+	* tests/cond16.test: New file: regression test for variable
+	substitution refs.
+
 2001-08-01  Richard Boulton <address@hidden>
 
 	* automake.in (file_contents_internal): if a rule is conditionally
diff -u -r automake_patch1/automake.in automake_patch2/automake.in
--- automake_patch1/automake.in	Thu Aug  2 01:16:58 2001
+++ automake_patch2/automake.in	Thu Aug  2 01:08:28 2001
@@ -5909,11 +5909,16 @@
 	    # Handle variable substitutions.
 	    if (/^\$\{(.*)\}$/ || /^\$\((.*)\)$/)
 	    {
+	        my $varname = $1;
+		if ($varname =~ /^([^:]*):([^=]*)=(.*)$/)
+		{
+		    $varname = $1;
+		}
 
 		# Here we compute all the conditions under which the
 		# subvariable is defined.  Then we go through and add
 		# $VCOND to each.
-		my @svc = &variable_conditions_sub ($1, $var);
+		my @svc = &variable_conditions_sub ($varname, $var);
 		foreach my $item (@svc)
 		{
 		    my $val = conditional_string ($vcond, split (' ', $item));
diff -u -r automake_patch1/tests/Makefile.am automake_patch2/tests/Makefile.am
--- automake_patch1/tests/Makefile.am	Thu Aug  2 01:16:58 2001
+++ automake_patch2/tests/Makefile.am	Thu Aug  2 01:42:44 2001
@@ -69,6 +69,7 @@
 cond13.test \
 cond14.test \
 cond15.test \
+cond16.test \
 condincl.test \
 condincl2.test \
 condlib.test \
diff -u -r automake_patch1/tests/Makefile.in automake_patch2/tests/Makefile.in
--- automake_patch1/tests/Makefile.in	Thu Aug  2 01:16:58 2001
+++ automake_patch2/tests/Makefile.in	Thu Aug  2 01:42:51 2001
@@ -137,6 +137,7 @@
 cond13.test \
 cond14.test \
 cond15.test \
+cond16.test \
 condincl.test \
 condincl2.test \
 condlib.test \
diff -u -r automake_patch1/tests/cond16.test automake_patch2/tests/cond16.test
--- automake_patch1/tests/cond16.test	Thu Jan  1 01:00:00 1970
+++ automake_patch2/tests/cond16.test	Thu Aug  2 01:06:20 2001
@@ -0,0 +1,48 @@
+#! /bin/sh
+
+# Test for bug in conditionals in SOURCES with variable substitution references.
+# Report from Richard Boulton
+
+. $srcdir/defs || exit 1
+
+cat > configure.in << 'END'
+AC_INIT(hello.c)
+AM_INIT_AUTOMAKE(hello,0.23)
+AC_PROG_CC
+AM_CONDITIONAL(COND1, true)
+AC_OUTPUT(Makefile)
+END
+
+cat > hello.c << 'END'
+END
+
+cat > Makefile.am << 'END'
+
+if COND1
+var = foo.c
+else
+var = foo.c
+endif
+
+bin_PROGRAMS = hell
+hell_SOURCES = $(var:=)
+
+echorule:
+	@echo $(hell_SOURCES) $(hell_OBJECTS)
+
+END
+
+$needs_autoconf
+(gcc -v) > /dev/null 2>&1 || exit 77
+
+set -e
+
+$ACLOCAL
+$AUTOCONF
+$AUTOMAKE -a
+
+CC='gcc' ./configure
+
+val=`$MAKE echorule`;
+echo $val
+test "x$val" = "xfoo.c foo.o"