diff --git a/libsolidity/parsing/Parser.cpp b/libsolidity/parsing/Parser.cpp
index 421e358f6..e844861b1 100644
--- a/libsolidity/parsing/Parser.cpp
+++ b/libsolidity/parsing/Parser.cpp
@@ -217,7 +217,9 @@ ASTPointer<ContractDefinition> Parser::parseContractDefinition(bool _isLibrary)
 		if (currentTokenValue == Token::RBrace)
 			break;
 		else if (currentTokenValue == Token::Function)
-			subNodes.push_back(parseFunctionDefinition(name.get()));
+			// This can be a function or a state variable of function type (especially
+			// complicated to distinguish fallback function from function type state variable)
+			subNodes.push_back(parseFunctionDefinitionOrFunctionTypeStateVariable(name.get()));
 		else if (currentTokenValue == Token::Struct)
 			subNodes.push_back(parseStructDefinition());
 		else if (currentTokenValue == Token::Enum)
@@ -334,7 +336,7 @@ Parser::FunctionHeaderParserResult Parser::parseFunctionHeader(bool _forceEmptyN
 	return result;
 }
 
-ASTPointer<FunctionDefinition> Parser::parseFunctionDefinition(ASTString const* _contractName)
+ASTPointer<ASTNode> Parser::parseFunctionDefinitionOrFunctionTypeStateVariable(ASTString const* _contractName)
 {
 	ASTNodeFactory nodeFactory(*this);
 	ASTPointer<ASTString> docstring;
@@ -343,28 +345,55 @@ ASTPointer<FunctionDefinition> Parser::parseFunctionDefinition(ASTString const*
 
 	FunctionHeaderParserResult header = parseFunctionHeader(false, true);
 
-	ASTPointer<Block> block = ASTPointer<Block>();
-	nodeFactory.markEndPosition();
-	if (m_scanner->currentToken() != Token::Semicolon)
+	if (
+		!header.modifiers.empty() ||
+		!header.name->empty() ||
+		m_scanner->currentToken() == Token::Semicolon ||
+		m_scanner->currentToken() == Token::LBrace
+	)
 	{
-		block = parseBlock();
-		nodeFactory.setEndPositionFromNode(block);
+		// this has to be a function
+		ASTPointer<Block> block = ASTPointer<Block>();
+		nodeFactory.markEndPosition();
+		if (m_scanner->currentToken() != Token::Semicolon)
+		{
+			block = parseBlock();
+			nodeFactory.setEndPositionFromNode(block);
+		}
+		else
+			m_scanner->next(); // just consume the ';'
+		bool const c_isConstructor = (_contractName && *header.name == *_contractName);
+		return nodeFactory.createNode<FunctionDefinition>(
+			header.name,
+			header.visibility,
+			c_isConstructor,
+			docstring,
+			header.parameters,
+			header.isDeclaredConst,
+			header.modifiers,
+			header.returnParameters,
+			header.isPayable,
+			block
+		);
 	}
 	else
-		m_scanner->next(); // just consume the ';'
-	bool const c_isConstructor = (_contractName && *header.name == *_contractName);
-	return nodeFactory.createNode<FunctionDefinition>(
-		header.name,
-		header.visibility,
-		c_isConstructor,
-		docstring,
-		header.parameters,
-		header.isDeclaredConst,
-		header.modifiers,
-		header.returnParameters,
-		header.isPayable,
-		block
-	);
+	{
+		// this has to be a state variable
+		ASTPointer<TypeName> type = nodeFactory.createNode<FunctionTypeName>(
+			header.parameters,
+			header.returnParameters,
+			header.visibility,
+			header.isDeclaredConst,
+			header.isPayable
+		);
+		type = parseTypeNameSuffix(type, nodeFactory);
+		VarDeclParserOptions options;
+		options.isStateVariable = true;
+		options.allowInitialValue = true;
+		auto node = parseVariableDeclaration(options, type);
+		expectToken(Token::Semicolon);
+		return node;
+	}
 }
 
 ASTPointer<StructDefinition> Parser::parseStructDefinition()
@@ -613,6 +642,21 @@ ASTPointer<UserDefinedTypeName> Parser::parseUserDefinedTypeName()
 	return nodeFactory.createNode<UserDefinedTypeName>(identifierPath);
 }
 
+ASTPointer<TypeName> Parser::parseTypeNameSuffix(ASTPointer<TypeName> type, ASTNodeFactory& nodeFactory)
+{
+	while (m_scanner->currentToken() == Token::LBrack)
+	{
+		m_scanner->next();
+		ASTPointer<Expression> length;
+		if (m_scanner->currentToken() != Token::RBrack)
+			length = parseExpression();
+		nodeFactory.markEndPosition();
+		expectToken(Token::RBrack);
+		type = nodeFactory.createNode<ArrayTypeName>(type, length);
+	}
+	return type;
+}
+
 ASTPointer<TypeName> Parser::parseTypeName(bool _allowVar)
 {
 	ASTNodeFactory nodeFactory(*this);
@@ -644,16 +688,7 @@ ASTPointer<TypeName> Parser::parseTypeName(bool _allowVar)
 
 	if (type)
 		// Parse "[...]" postfixes for arrays.
-		while (m_scanner->currentToken() == Token::LBrack)
-		{
-			m_scanner->next();
-			ASTPointer<Expression> length;
-			if (m_scanner->currentToken() != Token::RBrack)
-				length = parseExpression();
-			nodeFactory.markEndPosition();
-			expectToken(Token::RBrack);
-			type = nodeFactory.createNode<ArrayTypeName>(type, length);
-		}
+		type = parseTypeNameSuffix(type, nodeFactory);
 	return type;
 }
 
diff --git a/libsolidity/parsing/Parser.h b/libsolidity/parsing/Parser.h
index a59d26883..9295a7fa4 100644
--- a/libsolidity/parsing/Parser.h
+++ b/libsolidity/parsing/Parser.h
@@ -73,6 +73,7 @@ private:
 	ASTPointer<InheritanceSpecifier> parseInheritanceSpecifier();
 	Declaration::Visibility parseVisibilitySpecifier(Token::Value _token);
 	FunctionHeaderParserResult parseFunctionHeader(bool _forceEmptyName, bool _allowModifiers);
+	ASTPointer<ASTNode> parseFunctionDefinitionOrFunctionTypeStateVariable(ASTString const* _contractName);
 	ASTPointer<FunctionDefinition> parseFunctionDefinition(ASTString const* _contractName);
 	ASTPointer<StructDefinition> parseStructDefinition();
 	ASTPointer<EnumDefinition> parseEnumDefinition();
@@ -87,6 +88,7 @@ private:
 	ASTPointer<ModifierInvocation> parseModifierInvocation();
 	ASTPointer<Identifier> parseIdentifier();
 	ASTPointer<UserDefinedTypeName> parseUserDefinedTypeName();
+	ASTPointer<TypeName> parseTypeNameSuffix(ASTPointer<TypeName> type, ASTNodeFactory& nodeFactory);
 	ASTPointer<TypeName> parseTypeName(bool _allowVar);
 	ASTPointer<FunctionTypeName> parseFunctionType();
 	ASTPointer<Mapping> parseMapping();
diff --git a/test/libsolidity/SolidityEndToEndTest.cpp b/test/libsolidity/SolidityEndToEndTest.cpp
index 76df19705..0f392cab7 100644
--- a/test/libsolidity/SolidityEndToEndTest.cpp
+++ b/test/libsolidity/SolidityEndToEndTest.cpp
@@ -7669,7 +7669,33 @@ BOOST_AUTO_TEST_CASE(pass_function_types_externally)
 	BOOST_CHECK(callContractFunction("f2(uint256)", 7) == encodeArgs(u256(8)));
 }
 
-// TODO: storage, arrays
+BOOST_AUTO_TEST_CASE(store_function)
+{
+	char const* sourceCode = R"(
+		contract Other {
+			function addTwo(uint x) returns (uint) { return x + 2; }
+		}
+		contract C {
+			function (unction (uint) external returns (uint)) returns (uint) ev = eval;
+			function (uint) external returns (uint) x;
+			function store(function(uint) external returns (uint) y) {
+				x = y;
+			}
+			function eval(function(uint) external returns (uint) y) returns (uint) {
+				return y(7);
+			}
+			function t() returns (uint) {
+				this.store((new Other()).addTwo);
+				return ev(x);
+			}
+		}
+	)";
+
+	compileAndRun(sourceCode, 0, "C");
+	BOOST_CHECK(callContractFunction("t()") == encodeArgs(u256(9)));
+}
+
+// TODO: public function state variables, arrays
 
 BOOST_AUTO_TEST_CASE(shift_constant_left)
 {
diff --git a/test/libsolidity/SolidityParser.cpp b/test/libsolidity/SolidityParser.cpp
index 69b8d0f0e..496f47031 100644
--- a/test/libsolidity/SolidityParser.cpp
+++ b/test/libsolidity/SolidityParser.cpp
@@ -1256,7 +1256,26 @@ BOOST_AUTO_TEST_CASE(function_type_in_expression)
 
 BOOST_AUTO_TEST_CASE(function_type_as_storage_variable)
 {
-	// TODO disambiguate from fallback function
+	char const* text = R"(
+		contract test {
+			function (uint, uint) internal returns (uint) f1;
+		}
+	)";
+	BOOST_CHECK(successParse(text));
+}
+
+BOOST_AUTO_TEST_CASE(function_type_as_storage_variable_with_modifiers)
+{
+	char const* text = R"(
+		contract test {
+			function (uint, uint) modifier1() returns (uint) f1;
+		}
+	)";
+	BOOST_CHECK(!successParse(text));
+}
+
+BOOST_AUTO_TEST_CASE(function_type_as_storage_variable_with_assignment)
+{
 	char const* text = R"(
 		contract test {
 			function f(uint x, uint y) returns (uint a) {}