diff --git a/src/tex2lyx/text.cpp b/src/tex2lyx/text.cpp
index af0be81231..d584d8c43b 100644
--- a/src/tex2lyx/text.cpp
+++ b/src/tex2lyx/text.cpp
@@ -4533,7 +4533,12 @@ void parse_text(Parser & p, ostream & os, unsigned flags, bool outer,
 			os << "reference \"";
 			os << known_refstyle_prefixes[where - known_refstyle_commands]
 			   << ":";
-			os << convert_literate_command_inset_arg(p.getArg('{', '}'))
+			string arg = p.getArg('{', '}');
+			// with refstyle, labels containing blanks are grouped
+			// remove the grouping
+			if (contains(arg, ' '))
+				arg = ltrim(rtrim(arg, "}"), "{");
+			os << convert_literate_command_inset_arg(arg)
 			   << "\"\n";
 			os << "plural \"" << plural << "\"\n";
 			os << "caps \"" << cap << "\"\n";
diff --git a/status.24x b/status.24x
index 6e4d14663f..6ac251091d 100644
--- a/status.24x
+++ b/status.24x
@@ -88,6 +88,8 @@ What's new
 
 - Handle linguistic structure trees in ePub and PDF (DocBook) output (bug 12372).
 
+- Improve the way spaces are handled in labels when refstyle is used.
+
 
 * USER INTERFACE