diff --git a/lib/lyx2lyx/lyx_1_4.py b/lib/lyx2lyx/lyx_1_4.py
index 039851b84f..5d35f1d023 100644
--- a/lib/lyx2lyx/lyx_1_4.py
+++ b/lib/lyx2lyx/lyx_1_4.py
@@ -202,7 +202,7 @@ def revert_space_names(document):
 
 
 def lyx_support_escape(lab):
-    " Equivalent to lyx::support::escape()"
+    " Equivalent to pre-unicode lyx::support::escape()"
     hexdigit = ['0', '1', '2', '3', '4', '5', '6', '7',
                 '8', '9', 'A', 'B', 'C', 'D', 'E', 'F']
     enc = ""
diff --git a/src/support/lstrings.C b/src/support/lstrings.C
index 939d48531b..9761da6d34 100644
--- a/src/support/lstrings.C
+++ b/src/support/lstrings.C
@@ -702,21 +702,27 @@ string const rsplit(string const & a, string & piece, char delim)
 }
 
 
-// This function escapes 8-bit characters and other problematic
-// characters that cause problems in latex labels.
 docstring const escape(docstring const & lab)
 {
-	lyx::char_type hexdigit[16] = { '0', '1', '2', '3', '4', '5', '6', '7',
-			      '8', '9', 'A', 'B', 'C', 'D', 'E', 'F' };
+	char_type hexdigit[16] = { '0', '1', '2', '3', '4', '5', '6', '7',
+	                           '8', '9', 'A', 'B', 'C', 'D', 'E', 'F' };
 	docstring enc;
 	for (docstring::size_type i = 0; i < lab.length(); ++i) {
-		lyx::char_type c = lab[i];
-		// FIXME We must change the following algorithm for UCS4
-		// chars, but that will be a file format change.
+		char_type c = lab[i];
 		if (c >= 128 || c == '=' || c == '%') {
+			// Although char_type is a 32 bit type we know that
+			// UCS4 occupies only 21 bits, so we don't need to
+			// encode bigger values. Test for 2^24 because we
+			// can encode that with the 6 hex digits that are
+			// needed for 21 bits anyway.
+			BOOST_ASSERT(c < (1 << 24));
 			enc += '=';
-			enc += hexdigit[c>>4];
-			enc += hexdigit[c & 15];
+			enc += hexdigit[(c>>20) & 15];
+			enc += hexdigit[(c>>16) & 15];
+			enc += hexdigit[(c>>12) & 15];
+			enc += hexdigit[(c>> 8) & 15];
+			enc += hexdigit[(c>> 4) & 15];
+			enc += hexdigit[ c      & 15];
 		} else {
 			enc += c;
 		}
diff --git a/src/support/lstrings.h b/src/support/lstrings.h
index 16288e6f44..21d57eeb91 100644
--- a/src/support/lstrings.h
+++ b/src/support/lstrings.h
@@ -216,7 +216,8 @@ std::string const split(std::string const & a, char delim);
 /// Same as split but uses the last delim.
 std::string const rsplit(std::string const & a, std::string & piece, char delim);
 
-/// Escapes non ASCII chars
+/// Escapes non ASCII chars and other problematic characters that cause
+/// problems in latex labels.
 docstring const escape(docstring const & lab);
 
 /// gives a vector of stringparts which have the delimiter delim