diff --git a/python/paddle/fluid/dygraph/dygraph_to_static/loop_transformer.py b/python/paddle/fluid/dygraph/dygraph_to_static/loop_transformer.py
index 09ac73057af20d31c012379be39f5755fba22603..ef5caa2dd87e9296cb49f86ce574e30d639aa7ec 100644
--- a/python/paddle/fluid/dygraph/dygraph_to_static/loop_transformer.py
+++ b/python/paddle/fluid/dygraph/dygraph_to_static/loop_transformer.py
@@ -125,6 +125,11 @@ class NameVisitor(gast.NodeVisitor):
         # List of gast.While/gast.For nodes
         self.current_loop = []
 
+        # List of nodes that have scope of variables.
+        self.nodes_with_scope = []
+
+        self.blacklist_names = {"False", "True", "None"}
+
         # Mapping from gast.While/gast.For to variable nodes
         self.before_loop_body_vars = defaultdict(set)
         self.in_loop_vars = defaultdict(set)
@@ -169,7 +174,7 @@ class NameVisitor(gast.NodeVisitor):
         if self._is_call_func_name_node(node):
             self.generic_visit(node)
             return
-        if node.id == "False" or node.id == "True" or node.id == "None":
+        if node.id in self.blacklist_names:
             self.generic_visit(node)
             return
 
@@ -178,6 +183,19 @@ class NameVisitor(gast.NodeVisitor):
             self.in_loop_vars[loop_node].add(node)
         self.generic_visit(node)
 
+    def visit_FunctionDef(self, node):
+        self.nodes_with_scope.append(node)
+        self.blacklist_names.add(node.name)
+        # The variables in the function are not visible to the outside scope.
+        before_func_seen_vars = copy.copy(self.current_seen_vars)
+
+        self.generic_visit(node)
+        self.nodes_with_scope.pop()
+        # After exiting the scope of the node, variables in this scope
+        # should be removed from self.current_seen_vars.
+        if self.nodes_with_scope:
+            self.current_seen_vars = before_func_seen_vars
+
     def visit(self, node):
         method = 'visit_' + node.__class__.__name__
         visitor = getattr(self, method, self.generic_visit)
@@ -188,6 +206,16 @@ class NameVisitor(gast.NodeVisitor):
         if self._is_call_func_name_node(node):
             return
         attr_full_name = get_attribute_full_name(node)
+        # Class variables are not allowed to appear in the arguments list
+        # of defined function under class methods in Python.
+        """
+        def class_func(self):
+            def while_loop_body(self.x, y) # `self.x` is illegal.
+        """
+        # TODO: If do change the variable with `self.var`, need a better
+        # way to deal with this case.
+        if attr_full_name.startswith("self."):
+            return
         self.current_seen_vars.add(node)
         for loop_node in self.current_loop:
             self.in_loop_vars[loop_node].add(node)
diff --git a/python/paddle/fluid/tests/unittests/dygraph_to_static/test_loop.py b/python/paddle/fluid/tests/unittests/dygraph_to_static/test_loop.py
index 7c500a05c2512f8cbeb38cbd9a87d0271e59222a..baf396a41b7373f40baa6e2aa745500d3f8d93fc 100644
--- a/python/paddle/fluid/tests/unittests/dygraph_to_static/test_loop.py
+++ b/python/paddle/fluid/tests/unittests/dygraph_to_static/test_loop.py
@@ -35,6 +35,23 @@ def while_loop_dyfunc(x):
     return i
 
 
+def while_loop_dyfun_with_conflict_var(x):
+    i = fluid.dygraph.to_variable(x)
+
+    def relu(y):
+        # 'y' is not visible outside the scope.
+        return fluid.layers.relu(y)
+
+    while x < 10:
+        # If a tmp variable is created which has same name
+        # with a argument in function, it should not be
+        # included in the loop_vars.
+        add_fn = lambda x, y: x + y
+        i = add_fn(i, x)
+        x = x + 1
+    return i
+
+
 def while_loop_dyfunc_with_none(x):
     i = fluid.dygraph.to_variable(x)\
         if x is not None \
@@ -131,6 +148,11 @@ class TestTransformWhileLoop(unittest.TestCase):
         # self.assertTrue(np.allclose(self._run_dygraph(), self._run_static()))
 
 
+class TestTransformWhileLoopWithConflicVar(TestTransformWhileLoop):
+    def _init_dyfunc(self):
+        self.dyfunc = while_loop_dyfun_with_conflict_var
+
+
 class TestTransformWhileLoopWithNone(TestTransformWhileLoop):
     def _init_dyfunc(self):
         self.dyfunc = while_loop_dyfunc_with_none