diff --git a/src/librustc/middle/resolve_lifetime.rs b/src/librustc/middle/resolve_lifetime.rs
index 23eb5a56c8439..5c06231631010 100644
--- a/src/librustc/middle/resolve_lifetime.rs
+++ b/src/librustc/middle/resolve_lifetime.rs
@@ -193,7 +193,12 @@ impl<'a, 'v> Visitor<'v> for LifetimeContext<'a> {
                 })
             }
             FnKind::Closure(_) => {
-                self.add_scope_and_walk_fn(fk, fd, b, s, fn_id)
+                // Closures have their own set of labels, save labels just
+                // like for foreign items above.
+                let saved = replace(&mut self.labels_in_fn, vec![]);
+                let result = self.add_scope_and_walk_fn(fk, fd, b, s, fn_id);
+                replace(&mut self.labels_in_fn, saved);
+                result
             }
         }
     }
diff --git a/src/test/run-pass/issue-25343.rs b/src/test/run-pass/issue-25343.rs
index 9e01d577276b8..64e7350fb8244 100644
--- a/src/test/run-pass/issue-25343.rs
+++ b/src/test/run-pass/issue-25343.rs
@@ -8,9 +8,24 @@
 // option. This file may not be copied, modified, or distributed
 // except according to those terms.
 
+#[allow(unused)]
 fn main() {
     || {
         'label: loop {
         }
     };
+
+    // More cases added from issue 31754
+
+    'label2: loop {
+        break;
+    }
+
+    let closure = || {
+        'label2: loop {}
+    };
+
+    fn inner_fn() {
+        'label2: loop {}
+    }
 }