diff --git a/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java b/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
index e8531f644de0..13d596ca7df8 100644
--- a/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
+++ b/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
@@ -450,7 +450,7 @@ public class HighlightUtil extends HighlightUtilBase {
             .range(variable).create();
         }
 
-        if (lType instanceof PsiArrayType) {
+        if (lType instanceof PsiArrayType && !lType.equals(typeElement.getType())) {
           return HighlightInfo.newHighlightInfo(HighlightInfoType.ERROR)
             .descriptionAndTooltip("'var' is not allowed as an element type of an array")
             .range(variable)
diff --git a/java/java-psi-api/src/com/intellij/psi/PsiTypeElement.java b/java/java-psi-api/src/com/intellij/psi/PsiTypeElement.java
index d91da5e91f8b..1be650b01200 100644
--- a/java/java-psi-api/src/com/intellij/psi/PsiTypeElement.java
+++ b/java/java-psi-api/src/com/intellij/psi/PsiTypeElement.java
@@ -58,7 +58,7 @@ public interface PsiTypeElement extends PsiElement, PsiAnnotationOwner {
 
 
   /**
-   * Returns true when variable is declared as <code>var name;</code>
+   * Returns {@code true} when a variable is declared as {@code var name;}
    * 
    * The actual type should be inferred according to the JEP 286: Local-Variable Type Inference
    * (http://openjdk.java.net/jeps/286). 
diff --git a/java/java-psi-impl/src/com/intellij/psi/impl/source/PsiTypeElementImpl.java b/java/java-psi-impl/src/com/intellij/psi/impl/source/PsiTypeElementImpl.java
index 5432fc09ea04..d0ca28db4fb5 100644
--- a/java/java-psi-impl/src/com/intellij/psi/impl/source/PsiTypeElementImpl.java
+++ b/java/java-psi-impl/src/com/intellij/psi/impl/source/PsiTypeElementImpl.java
@@ -98,26 +98,7 @@ public class PsiTypeElementImpl extends CompositePsiElement implements PsiTypeEl
       }
       else if (PsiUtil.isJavaToken(child, JavaTokenType.VAR_KEYWORD)) {
         assert type == null : this;
-        if (parent instanceof PsiParameter) {
-          PsiElement declarationScope = ((PsiParameter)parent).getDeclarationScope();
-          if (declarationScope instanceof PsiForeachStatement) {
-            PsiExpression iteratedValue = ((PsiForeachStatement)declarationScope).getIteratedValue();
-            if (iteratedValue != null) {
-              type = JavaGenericsUtil.getCollectionItemType(iteratedValue);
-            }
-          }
-        }
-        else {
-          for (PsiElement e = this; e != null; e = e.getNextSibling()) {
-            if (e instanceof PsiExpression) {
-              if (!(e instanceof PsiArrayInitializerExpression) &&
-                  !isSelfReferenced((PsiExpression)e, parent)) {
-                type = ((PsiExpression)e).getType();
-              }
-              break;
-            }
-          }
-        }
+        type = inferVarType(parent);
       }
       else if (child instanceof PsiJavaCodeReferenceElement) {
         assert type == null : this;
@@ -174,6 +155,30 @@ public class PsiTypeElementImpl extends CompositePsiElement implements PsiTypeEl
     return type;
   }
 
+  private PsiType inferVarType(PsiElement parent) {
+    if (parent instanceof PsiParameter) {
+      PsiElement declarationScope = ((PsiParameter)parent).getDeclarationScope();
+      if (declarationScope instanceof PsiForeachStatement) {
+        PsiExpression iteratedValue = ((PsiForeachStatement)declarationScope).getIteratedValue();
+        if (iteratedValue != null) {
+          return JavaGenericsUtil.getCollectionItemType(iteratedValue);
+        }
+      }
+    }
+    else {
+      for (PsiElement e = this; e != null; e = e.getNextSibling()) {
+        if (e instanceof PsiExpression) {
+          if (!(e instanceof PsiArrayInitializerExpression) &&
+              !isSelfReferenced((PsiExpression)e, parent)) {
+            return ((PsiExpression)e).getType();
+          }
+          return null;
+        }
+      }
+    }
+    return null;
+  }
+
   private static boolean isSelfReferenced(PsiExpression initializer, PsiElement parent) {
     class SelfReferenceVisitor extends JavaRecursiveElementVisitor {
       private boolean referenced = false;
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advLVTI/SimpleAvailability.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advLVTI/SimpleAvailability.java
index 2bf4984053c7..623df4cc8f88 100644
--- a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advLVTI/SimpleAvailability.java
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advLVTI/SimpleAvailability.java
@@ -4,6 +4,8 @@ class Main {
         var a = 1;
         <error descr="'var' is not allowed in a compound declaration">var b = 2</error>, <error descr="'var' is not allowed in a compound declaration">c = 3.0;</error>
         <error descr="'var' is not allowed as an element type of an array">var d[] = new int[4];</error>
+        var d1 = new int[] {4};                                                                                          
+        var d2 = new int[4];                                                                                          
         <error descr="Cannot infer type: 'var' on variable without initializer">var e;</error>
         var f = <error descr="Array initializer is not allowed here">{ 6 }</error>;
         var g = (<error descr="Incompatible types. Found: 'int', required: 'null'">g = 7</error>);