diff --git a/lib/redcloth3.rb b/lib/redcloth3.rb
index 848aa7042..f4c624437 100644
--- a/lib/redcloth3.rb
+++ b/lib/redcloth3.rb
@@ -296,11 +296,11 @@ class RedCloth3 < String
         rip_offtags text
         no_textile text
         escape_html_tags text
+        # need to do this before #hard_break and #blocks
+        block_textile_quotes text unless @lite_mode
         hard_break text 
         unless @lite_mode
             refs text
-            # need to do this before text is split by #blocks
-            block_textile_quotes text
             blocks text
         end
         inline text
diff --git a/lib/redmine/wiki_formatting/textile/formatter.rb b/lib/redmine/wiki_formatting/textile/formatter.rb
index 88d52a6c2..a32e648ec 100644
--- a/lib/redmine/wiki_formatting/textile/formatter.rb
+++ b/lib/redmine/wiki_formatting/textile/formatter.rb
@@ -43,7 +43,7 @@ module Redmine
         # Patch for RedCloth.  Fixed in RedCloth r128 but _why hasn't released it yet.
         # <a href="http://code.whytheluckystiff.net/redcloth/changeset/128">http://code.whytheluckystiff.net/redcloth/changeset/128</a>
         def hard_break( text ) 
-          text.gsub!( /(.)\n(?!\n|\Z|>| *([#*=]+(\s|$)|[{|]))/, "\\1<br />" ) if hard_breaks
+          text.gsub!( /(.)\n(?!\n|\Z| *([#*=]+(\s|$)|[{|]))/, "\\1<br />" ) if hard_breaks
         end
         
         # Patch to add code highlighting support to RedCloth
diff --git a/test/unit/lib/redmine/wiki_formatting/textile_formatter_test.rb b/test/unit/lib/redmine/wiki_formatting/textile_formatter_test.rb
index a221b6c8d..fa5f8adb4 100644
--- a/test/unit/lib/redmine/wiki_formatting/textile_formatter_test.rb
+++ b/test/unit/lib/redmine/wiki_formatting/textile_formatter_test.rb
@@ -113,7 +113,7 @@ RAW
     expected = <<-EXPECTED
 <p>John said:</p>
 <blockquote>
-Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas sed libero.
+Lorem ipsum dolor sit amet, consectetuer adipiscing elit. Maecenas sed libero.<br />
 Nullam commodo metus accumsan nulla. Curabitur lobortis dui id dolor.
 <ul>
   <li>Donec odio lorem,</li>