diff --git a/src/tex2lyx/Parser.cpp b/src/tex2lyx/Parser.cpp
index 3d09e01b00..0067f88721 100644
--- a/src/tex2lyx/Parser.cpp
+++ b/src/tex2lyx/Parser.cpp
@@ -492,6 +492,49 @@ string const Parser::verbatimEnvironment(string const & name)
 }
 
 
+string const Parser::plainEnvironment(string const & name)
+{ 
+	if (!good())
+		return string();
+	
+	ostringstream os;
+	for (Token t = get_token(); good(); t = get_token()) {
+		if (t.asInput() == "\\end") {
+			string const end = getArg('{', '}');
+			if (end == name)
+				return os.str();
+			else
+				os << "\\end{" << end << '}';
+		} else
+			os << t.asInput();
+	}
+	cerr << "unexpected end of input" << endl;
+	return os.str();
+}
+
+
+string const Parser::plainCommand(char left, char right, string const & name)
+{
+	if (!good())
+		return string();
+	// ceck if first token is really the start character
+	Token tok = get_token();
+	if (tok.character() != left) {
+		cerr << "first character does not match start character of command \\" << name << endl;
+		return string();
+	}
+	ostringstream os;
+	for (Token t = get_token(); good(); t = get_token()) {
+		if (t.character() == right) {
+			return os.str();
+		} else
+			os << t.asInput();
+	}
+	cerr << "unexpected end of input" << endl;
+	return os.str();
+} 
+
+
 void Parser::tokenize_one()
 {
 	catInit();
diff --git a/src/tex2lyx/Parser.h b/src/tex2lyx/Parser.h
index 3ddb9df3e4..c82988bf71 100644
--- a/src/tex2lyx/Parser.h
+++ b/src/tex2lyx/Parser.h
@@ -202,6 +202,19 @@ public:
 	 * is parsed but not returned.
 	 */
 	std::string const verbatimEnvironment(std::string const & name);
+	/*
+	* The same as verbatimEnvironment(std::string const & name) but
+	* \begin and \end commands inside the name environment are not parsed.
+	* This function is designed to parse verbatim environments.
+	*/
+	std::string const plainEnvironment(std::string const & name);
+	/*
+	* Basically the same as plainEnvironment(std::string const & name) but
+	* instead of \begin and \end commands the parsing is started/stopped
+	* at given characters.
+	* This function is designed to parse verbatim commands.
+	*/
+	std::string const plainCommand(char left, char right, std::string const & name);
 	/*!
 	 * Returns the character of the current token and increments
 	 * the token position.
diff --git a/src/tex2lyx/text.cpp b/src/tex2lyx/text.cpp
index 3e38367c21..55b746befb 100644
--- a/src/tex2lyx/text.cpp
+++ b/src/tex2lyx/text.cpp
@@ -1110,7 +1110,7 @@ void parse_outer_box(Parser & p, ostream & os, unsigned flags, bool outer,
 }
 
 
-void parse_listings(Parser & p, ostream & os, Context & parent_context)
+void parse_listings(Parser & p, ostream & os, Context & parent_context, bool in_line)
 {
 	parent_context.check_layout(os);
 	begin_inset(os, "listings\n");
@@ -1118,14 +1118,26 @@ void parse_listings(Parser & p, ostream & os, Context & parent_context)
 		string arg = p.verbatimOption();
 		os << "lstparams " << '"' << arg << '"' << '\n';
 		if (arg.find("\\color") != string::npos)
-	                preamble.registerAutomaticallyLoadedPackage("color");
+			preamble.registerAutomaticallyLoadedPackage("color");
 	}
-	os << "inline false\n"
-	   << "status collapsed\n";
+	if (p.hasOpt()) {
+		string arg = p.verbatimOption();
+		os << "lstparams " << '"' << arg << '"' << '\n';
+	}
+	if (in_line)
+		os << "inline true\n";
+	else
+		os << "inline false\n";
+	os << "status collapsed\n";
 	Context context(true, parent_context.textclass);
 	context.layout = &parent_context.textclass.plainLayout();
-	context.check_layout(os);
-	string const s = p.verbatimEnvironment("lstlisting");
+	string s;
+	if (in_line) {
+		s = p.plainCommand('!', '!', "lstinline");
+		context.new_paragraph(os);
+		context.check_layout(os);
+	} else
+		s = p.plainEnvironment("lstlisting");
 	for (string::const_iterator it = s.begin(), et = s.end(); it != et; ++it) {
 		if (*it == '\\')
 			os << "\n\\backslash\n";
@@ -1374,13 +1386,7 @@ void parse_environment(Parser & p, ostream & os, bool outer,
 
 	else if (name == "lstlisting") {
 		eat_whitespace(p, os, parent_context, false);
-		// FIXME handle listings with parameters
-		if (p.hasOpt())
-			parse_unknown_environment(p, name, os, FLAG_END,
-			                          outer, parent_context);
-		else
-			parse_listings(p, os, parent_context);
-		p.skip_spaces();
+		parse_listings(p, os, parent_context, false);
 	}
 
 	else if (!parent_context.new_layout_allowed)
@@ -2758,6 +2764,11 @@ void parse_text(Parser & p, ostream & os, unsigned flags, bool outer,
 			end_inset(os);
 		}
 
+		else if (t.cs() == "lstinline") {
+			p.skip_spaces();
+			parse_listings(p, os, context, true);
+		}
+
 		else if (t.cs() == "ensuremath") {
 			p.skip_spaces();
 			context.check_layout(os);
diff --git a/status.20x b/status.20x
index d3bb1f4dd5..a76676f915 100644
--- a/status.20x
+++ b/status.20x
@@ -34,6 +34,7 @@ What's new
 
 * TEX2LYX IMPROVEMENTS
 
+- support for listings with options (bug #8066).
 - add new option -m to select needed modules (bug #8393).