diff --git a/CHANGELOG.md b/CHANGELOG.md
index 8a6ca359..5a4b4e9b 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -1,5 +1,7 @@
 # <angular/> 0.9.11 snow-maker  (in-progress) #
 
+### Bug Fixes
+- <option> value attribute gets clobbered when the element contains new line character(s).
 
 
 # <angular/> 0.9.10 flea-whisperer  (2011-01-26) #
diff --git a/src/markups.js b/src/markups.js
index 21dab128..0aa7170e 100644
--- a/src/markups.js
+++ b/src/markups.js
@@ -60,11 +60,18 @@ angularTextMarkup('{{}}', function(text, textNode, parentElement) {
 // TODO: this should be widget not a markup
 angularTextMarkup('OPTION', function(text, textNode, parentElement){
   if (nodeName_(parentElement) == "OPTION") {
-    var select = document.createElement('select');
-    select.insertBefore(parentElement[0].cloneNode(true), _null);
-    if (!select.innerHTML.match(/<option(\s.*\s|\s)value\s*=\s*.*>.*<\/\s*option\s*>/gi)) {
-      parentElement.attr('value', text);
-    }
+    var select = jqLite('<select>');
+    select.append(parentElement.clone());
+    htmlParser(select.html(), {
+      start: function(tag, attrs) {
+        if (isUndefined(attrs.value)) {
+          parentElement.attr('value', text);
+        }
+      },
+      chars: noop,
+      end: noop,
+      comment: noop
+    });
   }
 });
 
diff --git a/src/sanitizer.js b/src/sanitizer.js
index c8a7b9f1..8f4b87a6 100644
--- a/src/sanitizer.js
+++ b/src/sanitizer.js
@@ -15,9 +15,9 @@
  */
 
 // Regular Expressions for parsing tags and attributes
-var START_TAG_REGEXP = /^<\s*([\w:]+)((?:\s+\w+(?:\s*=\s*(?:(?:"[^"]*")|(?:'[^']*')|[^>\s]+))?)*)\s*(\/?)\s*>/,
-  END_TAG_REGEXP = /^<\s*\/\s*([\w:]+)[^>]*>/,
-  ATTR_REGEXP = /(\w+)(?:\s*=\s*(?:(?:"((?:[^"])*)")|(?:'((?:[^'])*)')|([^>\s]+)))?/g,
+var START_TAG_REGEXP = /^<\s*([\w:-]+)((?:\s+[\w:-]+(?:\s*=\s*(?:(?:"[^"]*")|(?:'[^']*')|[^>\s]+))?)*)\s*(\/?)\s*>/,
+  END_TAG_REGEXP = /^<\s*\/\s*([\w:-]+)[^>]*>/,
+  ATTR_REGEXP = /([\w:-]+)(?:\s*=\s*(?:(?:"((?:[^"])*)")|(?:'((?:[^'])*)')|([^>\s]+)))?/g,
   BEGIN_TAG_REGEXP = /^</,
   BEGING_END_TAGE_REGEXP = /^<\s*\//,
   COMMENT_REGEXP = /<!--(.*?)-->/g,
diff --git a/test/markupSpec.js b/test/markupSpec.js
index f78112d7..f629378d 100644
--- a/test/markupSpec.js
+++ b/test/markupSpec.js
@@ -41,9 +41,39 @@ describe("markups", function(){
     expect(element.attr('src')).toEqual("http://server/a/b.png");
   });
 
-  it('should populate value attribute on OPTION', function(){
-    compile('<select name="x"><option>a</option></select>');
-    expect(sortedHtml(element).replace(' selected="true"', '')).toEqual('<select name="x"><option value="a">a</option></select>');
+  describe('OPTION value', function(){
+    beforeEach(function(){
+      this.addMatchers({
+        toHaveValue: function(expected){
+          this.message = function(){
+            return 'Expected "' + sortedHtml(this.actual) + '" to have value="' + expected + '".';
+          };
+
+          return this.actual.html().indexOf('value="' + expected + '"') != -1;
+        }
+      });
+    });
+
+    it('should populate value attribute on OPTION', function(){
+      compile('<select name="x"><option>abc</option></select>');
+      expect(element).toHaveValue('abc');
+    });
+
+    it('should ignore value if already exists', function(){
+      compile('<select name="x"><option value="abc">xyz</option></select>');
+      expect(element).toHaveValue('abc');
+    });
+
+    it('should set value even if newlines present', function(){
+      compile('<select name="x"><option attr="\ntext\n" \n>\nabc\n</option></select>');
+      expect(element).toHaveValue('\nabc\n');
+    });
+
+    it('should set value even if self closing HTML', function(){
+      compile('<select name="x"><option>\n</option></select>');
+      expect(element).toHaveValue('\n');
+    });
+
   });
 
   it('should bind href', function() {
diff --git a/test/sanitizerSpec.js b/test/sanitizerSpec.js
index 57eedec9..7158fbee 100644
--- a/test/sanitizerSpec.js
+++ b/test/sanitizerSpec.js
@@ -4,6 +4,52 @@ describe('HTML', function(){
     return expect(new HTML(html).get());
   }
 
+  describe('htmlParser', function(){
+    var handler, start, text;
+    beforeEach(function(){
+      handler = {
+          start: function(tag, attrs, unary){
+            start = {
+                tag: tag,
+                attrs: attrs,
+                unary: unary
+            };
+          },
+          chars: function(text_){
+            text = text_;
+          },
+          end:function(tag) {
+            expect(tag).toEqual(start.tag);
+          }
+      };
+    });
+
+    it('should parse basic format', function(){
+      htmlParser('<tag attr="value">text</tag>', handler);
+      expect(start).toEqual({tag:'tag', attrs:{attr:'value'}, unary:false});
+      expect(text).toEqual('text');
+    });
+
+    it('should parse newlines in tags', function(){
+      htmlParser('<\ntag\n attr="value"\n>text<\n/\ntag\n>', handler);
+      expect(start).toEqual({tag:'tag', attrs:{attr:'value'}, unary:false});
+      expect(text).toEqual('text');
+    });
+
+    it('should parse newlines in attributes', function(){
+      htmlParser('<tag attr="\nvalue\n">text</tag>', handler);
+      expect(start).toEqual({tag:'tag', attrs:{attr:'\nvalue\n'}, unary:false});
+      expect(text).toEqual('text');
+    });
+
+    it('should parse namespace', function(){
+      htmlParser('<ns:t-a-g ns:a-t-t-r="\nvalue\n">text</ns:t-a-g>', handler);
+      expect(start).toEqual({tag:'ns:t-a-g', attrs:{'ns:a-t-t-r':'\nvalue\n'}, unary:false});
+      expect(text).toEqual('text');
+    });
+
+  });
+
   it('should echo html', function(){
     expectHTML('hello<b class="1\'23" align=\'""\'>world</b>.').
        toEqual('hello<b class="1\'23" align="&#34;&#34;">world</b>.');