diff --git a/actionpack/test/fixtures/replies.yml b/actionpack/test/fixtures/replies.yml
index a17d2fc42b3a8de141dccb7b12990e1b67838ca1..2022523eac48d2bfcb22015dc34b1bc38706305d 100644
--- a/actionpack/test/fixtures/replies.yml
+++ b/actionpack/test/fixtures/replies.yml
@@ -12,4 +12,12 @@ another:
   developer_id: 1
   content: Nuh uh!
   created_at: <%= 1.hour.ago.to_s(:db) %>
-  updated_at: nil
\ No newline at end of file
+  updated_at: nil
+
+best_reply:
+  id: 3
+  topic_id: 3
+  developer_id: 2
+  content: No one can know
+  created_at: <%= 5.hours.ago.to_s(:db) %>
+  updated_at: nil
diff --git a/activerecord/lib/active_record/base.rb b/activerecord/lib/active_record/base.rb
index ebc0b7783f990ad48bb0ccc3220de37a60756232..8db3909d9a838dea15c54773b1fd4ab838a8f083 100755
--- a/activerecord/lib/active_record/base.rb
+++ b/activerecord/lib/active_record/base.rb
@@ -2097,7 +2097,11 @@ def with_scope(method_scoping = {}, action = :merge, &block)
                     (hash[method].keys + params.keys).uniq.each do |key|
                       merge = hash[method][key] && params[key] # merge if both scopes have the same key
                       if key == :conditions && merge
-                        hash[method][key] = merge_conditions(params[key], hash[method][key])
+                        if params[key].is_a?(Hash) && hash[method][key].is_a?(Hash)
+                          hash[method][key] = merge_conditions(hash[method][key].deep_merge(params[key]))
+                        else
+                          hash[method][key] = merge_conditions(params[key], hash[method][key])
+                        end
                       elsif key == :include && merge
                         hash[method][key] = merge_includes(hash[method][key], params[key]).uniq
                       elsif key == :joins && merge
@@ -2107,7 +2111,7 @@ def with_scope(method_scoping = {}, action = :merge, &block)
                       end
                     end
                   else
-                    hash[method] = params.merge(hash[method])
+                    hash[method] = hash[method].merge(params)
                   end
                 else
                   hash[method] = params
diff --git a/activerecord/test/cases/named_scope_test.rb b/activerecord/test/cases/named_scope_test.rb
index bab842cf66c67e652c81b373c76a56ad64e8fb88..e1e27fa130dbdb3c911dffcaa63d7d3b7fc7a032 100644
--- a/activerecord/test/cases/named_scope_test.rb
+++ b/activerecord/test/cases/named_scope_test.rb
@@ -277,6 +277,26 @@ def test_chaining_with_duplicate_joins
     post = Post.find(1)
     assert_equal post.comments.size, Post.scoped(:joins => join).scoped(:joins => join, :conditions => "posts.id = #{post.id}").size
   end
+
+  def test_chanining_should_use_latest_conditions_when_creating
+    post1 = Topic.rejected.approved.new
+    assert post1.approved?
+
+    post2 = Topic.approved.rejected.new
+    assert ! post2.approved?
+  end
+
+  def test_chanining_should_use_latest_conditions_when_searching
+    # Normal hash conditions
+    assert_equal Topic.all(:conditions => {:approved => true}), Topic.rejected.approved.all
+    assert_equal Topic.all(:conditions => {:approved => false}), Topic.approved.rejected.all
+
+    # Nested hash conditions with same keys
+    assert_equal [posts(:sti_comments)], Post.with_special_comments.with_very_special_comments.all
+
+    # Nested hash conditions with different keys
+    assert_equal [posts(:sti_comments)], Post.with_special_comments.with_post(4).all.uniq
+  end
 end
 
 class DynamicScopeMatchTest < ActiveRecord::TestCase  
diff --git a/activerecord/test/models/post.rb b/activerecord/test/models/post.rb
index e0d8be676a8e0e88f5c7d5060d787635ace0b3c4..388fff8fba175d52ccd53349b0e7260ded270140 100644
--- a/activerecord/test/models/post.rb
+++ b/activerecord/test/models/post.rb
@@ -17,6 +17,12 @@ def greeting
 
   has_one :last_comment, :class_name => 'Comment', :order => 'id desc'
 
+  named_scope :with_special_comments, :joins => :comments, :conditions => {:comments => {:type => 'SpecialComment'} }
+  named_scope :with_very_special_comments, :joins => :comments, :conditions => {:comments => {:type => 'VerySpecialComment'} }
+  named_scope :with_post, lambda {|post_id|
+    { :joins => :comments, :conditions => {:comments => {:post_id => post_id} } }
+  }
+
   has_many   :comments, :order => "body" do
     def find_most_recent
       find(:first, :order => "id DESC")
diff --git a/activerecord/test/models/topic.rb b/activerecord/test/models/topic.rb
index 39ca1bf42ad185c3bd003e01fef92550b5c5e17b..08bb24ed03b8dd46d962577104efa2e208d228c1 100644
--- a/activerecord/test/models/topic.rb
+++ b/activerecord/test/models/topic.rb
@@ -4,6 +4,8 @@ class Topic < ActiveRecord::Base
     { :conditions => ['written_on < ?', time] }
   }
   named_scope :approved, :conditions => {:approved => true}
+  named_scope :rejected, :conditions => {:approved => false}
+
   named_scope :by_lifo, :conditions => {:author_name => 'lifo'}
   
   named_scope :approved_as_hash_condition, :conditions => {:topics => {:approved => true}}