diff --git a/jvm/src/test/scala/scala/xml/XMLTest.scala b/jvm/src/test/scala/scala/xml/XMLTest.scala
index aea258486..53c9d6bf7 100644
--- a/jvm/src/test/scala/scala/xml/XMLTest.scala
+++ b/jvm/src/test/scala/scala/xml/XMLTest.scala
@@ -415,6 +415,71 @@ class XMLTestJVM {
     assertHonorsIterableContract(<a a="" y={ null: String }/>.attributes)
   }
 
+  @UnitTest
+  def preserveSpaceTextOptionDisabledIssue107: Unit = {
+    // This test is rhetorical, but is the argument for being
+    // consistent with entities.
+    val x = "<div>tt</div>"
+    val preserveWS = false
+    val d = ConstructingParser.fromSource(scala.io.Source.fromString(x), preserveWS).document
+    assertEquals(x, d.toString)
+  }
+
+  @UnitTest
+  def preserveNoSpaceBetweenEntitiesOptionDisabledIssue107: Unit = {
+    // This is the example given in the original post.
+    val x = "<div>&lt;&lt;</div>"
+    val preserveWS = false
+    val d = ConstructingParser.fromSource(scala.io.Source.fromString(x), preserveWS).document
+    // Should:
+    assertEquals(x, d.toString)
+    // But was adding a space:
+    // assertEquals("<div>&lt; &lt;</div>", d.toString)
+  }
+
+  @UnitTest
+  def preserveNoSpaceBetweenEntitiesOptionEnabledIssue107: Unit = {
+    val x = "<div>&lt;&lt;</div>"
+    // Shouldn't add space when this option is enabled, either.
+    val preserveWS = true
+    val d = ConstructingParser.fromSource(scala.io.Source.fromString(x), preserveWS).document
+    // Should:
+    assertEquals(x, d.toString)
+    // But was adding a space:
+    // assertEquals("<div>&lt; &lt;</div>", d.toString)
+  }
+
+  @UnitTest
+  def preserveSpaceBetweenEntitiesOptionEnabledIssue107: Unit = {
+    val x = "<div>&lt; &lt;</div>"
+    val preserveWS = true
+    val d = ConstructingParser.fromSource(scala.io.Source.fromString(x), preserveWS).document
+    // This was already correct in 1.0.5
+    assertEquals(x, d.toString)
+  }
+
+  @UnitTest
+  def preserveSpaceBetweenEntitiesOptionDisabledIssue107: Unit = {
+    val x = "<div>&lt; &lt;</div>"
+    val preserveWS = false
+    val d = ConstructingParser.fromSource(scala.io.Source.fromString(x), preserveWS).document
+    // This was already correct in 1.0.5
+    assertEquals(x, d.toString)
+  }
+
+  @UnitTest
+  def issue77: Unit = {
+    val preserveWS = false
+    
+    val x = "<x>a &amp; b</x>"
+    val d = ConstructingParser.fromSource(scala.io.Source.fromString(x), preserveWS).document
+    assertEquals(x, d.toString)
+
+    val y = "<y>&amp; a &amp;</y>"
+    val e = ConstructingParser.fromSource(scala.io.Source.fromString(y), preserveWS).document
+    assertEquals(y, e.toString)
+  }
+
   @UnitTest
   def t5843 {
     val foo = scala.xml.Attribute(null, "foo", "1", scala.xml.Null)
diff --git a/shared/src/main/scala/scala/xml/Utility.scala b/shared/src/main/scala/scala/xml/Utility.scala
index 5b96ccefb..a66a80ea7 100755
--- a/shared/src/main/scala/scala/xml/Utility.scala
+++ b/shared/src/main/scala/scala/xml/Utility.scala
@@ -243,6 +243,12 @@ object Utility extends AnyRef with parsing.TokenTests {
       }
     }
 
+  // Checks if node when converted to string is an entity ref
+  def checkNodeForEntityRef(n: Node): Boolean = {
+    val st = n.toString 
+    st.startsWith("&") && st.endsWith(";")
+  }
+
   def sequenceToXML(
     children: Seq[Node],
     pscope: NamespaceBinding = TopScope,
@@ -256,10 +262,13 @@ object Utility extends AnyRef with parsing.TokenTests {
       else if (children forall isAtomAndNotText) { // add space
         val it = children.iterator
         val f = it.next()
+        var prev: Node = f
         serialize(f, pscope, sb, stripComments, decodeEntities, preserveWhitespace, minimizeTags)
         while (it.hasNext) {
           val x = it.next()
-          sb.append(' ')
+          // No need to append if space is between two EntityRefs. This is taken care in appendText in MarkupParser
+          if (!checkNodeForEntityRef(prev) && !checkNodeForEntityRef(x)) sb.append(' ')
+          prev = x
           serialize(x, pscope, sb, stripComments, decodeEntities, preserveWhitespace, minimizeTags)
         }
       } else children foreach { serialize(_, pscope, sb, stripComments, decodeEntities, preserveWhitespace, minimizeTags) }
diff --git a/shared/src/main/scala/scala/xml/parsing/MarkupParser.scala b/shared/src/main/scala/scala/xml/parsing/MarkupParser.scala
index a0831249b..64ee425fd 100755
--- a/shared/src/main/scala/scala/xml/parsing/MarkupParser.scala
+++ b/shared/src/main/scala/scala/xml/parsing/MarkupParser.scala
@@ -405,10 +405,25 @@ trait MarkupParser extends MarkupParserCommon with TokenTests {
   def appendText(pos: Int, ts: NodeBuffer, txt: String): Unit = {
     if (preserveWS)
       ts &+ handle.text(pos, txt)
-    else
-      for (t <- TextBuffer.fromString(txt).toText) {
-        ts &+ handle.text(pos, t.text)
+    else {
+      // If 'txt' is just made up of one or more spaces and 'ts' is not empty
+      if (!ts.isEmpty && TextBuffer.fromString(txt).toText == Nil) {
+        // Check if the last node in 'ts' was an 'Atom' and the next node to be parsed is an entity or character ref
+        if(ts.last.isAtom && ch == '&')
+          ts &+ handle.text(pos, " ") // Append a text node consisting of a single space
       }
+      else {
+        // If 'txt 'starts with a space and follows an 'Atom'
+        if(txt.startsWith(" ") && !ts.isEmpty && ts.last.isAtom)
+          ts &+ handle.text(pos, " ")
+        for (t <- TextBuffer.fromString(txt).toText) {
+          ts &+ handle.text(pos, t.text)
+        }
+        // If txt ends with a space and is followed by an entity or character ref
+        if(txt.endsWith(" ") && ch == '&')
+          ts &+ handle.text(pos, " ")
+      }
+    }
   }
 
   /**