diff --git a/README.md b/README.md
index 6ccfc082..da7a9a75 100644
--- a/README.md
+++ b/README.md
@@ -54,7 +54,6 @@ There may also be some bugs.
 - Find a better way of testing. Create a test suite from scratch because most 
   markdown compilers don't appear to be working properly in every aspect (but 
   it's hard to tell because the markdown "spec" is so vague).
-- Possibly alter rules to recognize arbitrary blocks of HTML better.
 - Recognize and parse paragraph list items better.
 - Add an explicit pretty printing and minification feature.
 
diff --git a/lib/marked.js b/lib/marked.js
index d3e6ff59..80c7d369 100644
--- a/lib/marked.js
+++ b/lib/marked.js
@@ -196,25 +196,25 @@ block.token = function(str, tokens, line) {
  */
 
 var inline = {
+  escape: /^\\([\\`*{}\[\]()#+\-.!])/,
   autolink: /^<([^ >]+(:|@)[^ >]+)>/,
   tag: /^<[^\n>]+>/,
-  img: /^!\[([^\]]+)\]\(([^\s\)]+)\s*([^\)]*)\)/,
-  link: /^\[([^\]]+)\]\(([^\)]+)\)/,
-  reflink: /^\[([^\]]+)\]\[([^\]]+)\]/,
+  link: /^!?\[([^\]]+)\]\(([^\)]+)\)/,
+  reflink: /^!?\[([^\]]+)\]\[([^\]]+)\]/,
   strong: /^__([\s\S]+?)__|^\*\*([\s\S]+?)\*\*/,
   em: /^_([^_]+)_|^\*([^*]+)\*/,
-  escape: /^`([^`]+)`|^``([\s\S]+?)``/
+  code: /^`([^`]+)`|^``([\s\S]+?)``/
 };
 
 inline.keys = [
+  'escape',
   'autolink', 
   'tag', 
-  'img', 
   'link', 
   'reflink', 
   'strong', 
   'em', 
-  'escape'
+  'code'
 ];
 
 // hacky, but performant
@@ -245,9 +245,10 @@ inline.text = (function(rules) {
 inline.lexer = function(str) {
   var out = ''
     , links = tokens.links
-    , link
+    , link = {}
     , text
-    , href;
+    , href
+    , val;
 
   var rules = inline
     , keys = inline.keys
@@ -268,35 +269,52 @@ inline.lexer = function(str) {
 
   while (scan()) {
     switch (key) {
+      case 'escape': 
+        out += cap[1];
+        break;
       case 'tag':
         out += cap[0];
         break;
-      case 'img':
-        out += '<img src="' 
-          + escape(cap[2])
-          + '" alt="' + escape(cap[1])
-          + '"' 
-          + (cap[3] 
-          ? ' title="' 
-          + escape(cap[3])
-          + '"' 
-          : '') 
-          + '>';
-        break;
       case 'link':
       case 'reflink':
-        link = links[cap[2]] || '';
-        out += '<a href="' 
-          + escape(link.href || cap[2]) 
-          + '"' 
-          + (link.title
-          ? ' title="' 
-          + escape(link.title)
-          + '"' 
-          : '') 
-          + '>'
-          + inline.lexer(cap[1])
-          + '</a>';
+        if (cap[0][0] !== '!') {
+          if (key === 'reflink') {
+            link = links[cap[2]];
+          } else {
+            link.href = cap[2];
+            link.title = cap[3];
+          }
+          out += '<a href="' 
+            + escape(link.href) 
+            + '"' 
+            + (link.title
+            ? ' title="' 
+            + escape(link.title)
+            + '"' 
+            : '') 
+            + '>'
+            + inline.lexer(cap[1])
+            + '</a>';
+        } else {
+          if (key === 'reflink') {
+            link = links[cap[2]];
+          } else {
+            val = cap[2].match(/^([^\s]+)\s*(.+)?/);
+            link.href = val[1];
+            link.title = val[2];
+          }
+          out += '<img src="' 
+            + escape(link.href)
+            + '" alt="' 
+            + escape(cap[1])
+            + '"' 
+            + (link.title
+            ? ' title="' 
+            + escape(link.title)
+            + '"' 
+            : '') 
+            + '>';
+        }
         break;
       case 'autolink':
         if (cap[2] === '@') {
@@ -320,7 +338,7 @@ inline.lexer = function(str) {
           + inline.lexer(cap[2] || cap[1]) 
           + '</em>';
         break;
-      case 'escape':
+      case 'code':
         out += '<code>' 
           + escape(cap[2] || cap[1]) 
           + '</code>';