diff --git a/pkg/compiler/func_scope.go b/pkg/compiler/func_scope.go
index 5c202c8aa..b66c8e1dd 100644
--- a/pkg/compiler/func_scope.go
+++ b/pkg/compiler/func_scope.go
@@ -139,16 +139,18 @@ func (c *funcScope) stackSize() int64 {
 
 // newVariable creates a new local variable or argument in the scope of the function.
 func (c *funcScope) newVariable(t varType, name string) int {
-	c.i++
+	var n int
 	switch t {
 	case varLocal:
-		c.locals[name] = c.i
+		n = len(c.locals)
+		c.locals[name] = n
 	case varArgument:
-		c.arguments[name] = c.i
+		n = len(c.arguments)
+		c.arguments[name] = n
 	default:
 		panic("invalid type")
 	}
-	return c.i
+	return n
 }
 
 // newLocal creates a new local variable into the scope of the function.
diff --git a/pkg/compiler/function_call_test.go b/pkg/compiler/function_call_test.go
index c9d9ca04c..446ac0b9a 100644
--- a/pkg/compiler/function_call_test.go
+++ b/pkg/compiler/function_call_test.go
@@ -169,3 +169,18 @@ func TestFunctionWithMultipleArgumentNames(t *testing.T) {
 	}`
 	eval(t, src, big.NewInt(3))
 }
+
+func TestLocalsCount(t *testing.T) {
+	src := `package foo
+	func f(a, b, c int) int {
+		sum := a
+		for i := 0; i < c; i++ {
+			sum += b
+		}
+		return sum
+	}
+	func Main() int {
+		return f(1, 2, 3)
+	}`
+	eval(t, src, big.NewInt(7))
+}