diff --git a/CHANGELOG.textile b/CHANGELOG.textile
index c998dd02..cc256bfe 100644
--- a/CHANGELOG.textile
+++ b/CHANGELOG.textile
@@ -1,5 +1,8 @@
 h1. Textile Changelog
 
+h2. Version 3.0.1
+* BUGFIX: Fix improper handling of extended code blocks. ("#61":https://github.com/textile/python-textile/pull/61)
+
 h2. Version 3.0.0
 * Drop support for Python 2.6 and 3.2.
 * Update to the current version of html5lib
diff --git a/tests/test_github_issues.py b/tests/test_github_issues.py
index 27befff7..6b5b3d75 100644
--- a/tests/test_github_issues.py
+++ b/tests/test_github_issues.py
@@ -262,3 +262,37 @@ def test_issue_56():
     result = textile.textile("- :=\n-")
     expect = '<dl>\n</dl>'
     assert result == expect
+
+def test_github_issue_57():
+    input = '''bc.. This is some TEXT inside a "Code BLOCK"
+
+{
+  if (JSON) {
+
+    return {"JSON":"value"}
+  }
+}
+
+Back to 10-4 CAPS 
+
+p.. Some multiline Paragragh
+
+Here is some output!!! "Some" CAPS'''
+
+    expect = '''<pre><code>This is some TEXT inside a &quot;Code BLOCK&quot;
+
+{
+  if (JSON) {
+
+    return {&quot;JSON&quot;:&quot;value&quot;}
+  }
+}
+
+Back to 10-4 CAPS </code></pre>
+
+<p>Some multiline Paragragh
+
+Here is some output!!! &#8220;Some&#8221; <span class="caps">CAPS</span></p>'''
+    t = textile.Textile()
+    result = t.parse(input)
+    assert result == expect
diff --git a/textile/core.py b/textile/core.py
index 7572a468..a5dae835 100644
--- a/textile/core.py
+++ b/textile/core.py
@@ -503,7 +503,7 @@ def block(self, text):
                                 block.outer_atts)
                         line = "\t{0}".format(line)
                 else:
-                    if block.tag == 'pre':
+                    if block.tag == 'pre' or block.inner_tag == 'code':
                         line = self.shelve(encode_html(line, quotes=True))
                     else:
                         line = self.graf(line)
diff --git a/textile/version.py b/textile/version.py
index aaa42644..a29b27e7 100644
--- a/textile/version.py
+++ b/textile/version.py
@@ -1 +1 @@
-VERSION = '3.0.0'
+VERSION = '3.0.1'