diff --git a/phpBB/docs/CHANGELOG.html b/phpBB/docs/CHANGELOG.html
index 2e81cb13ce..a0cc54f308 100644
--- a/phpBB/docs/CHANGELOG.html
+++ b/phpBB/docs/CHANGELOG.html
@@ -168,6 +168,7 @@
 		<li>[Fix] Allow changing forum from select box under certain circumstances. (Bug #37525)</li>
 		<li>[Fix] Display required fields notice on registration above the custom profile fields. (Bug #39665)</li>
 		<li>[Fix] Copy poll options properly when copying topic. (Bug #39065)</li>
+		<li>[Fix] Preserve newlines in template files (one newline had been always dropped after a template variable due to PHP's handling of closing tags)</li>
 		<li>[Change] Change the data format of the default file ACM to be more secure from tampering and have better performance.</li>
 		<li>[Change] Add index on log_time to the log table to prevent slowdown on boards with many log entries. (Bug #44665 - Patch by bantu)</li>
 		<li>[Change] Template engine now permits to a limited extent variable includes.</li>
diff --git a/phpBB/includes/functions_template.php b/phpBB/includes/functions_template.php
index a951579db5..1d3a4d74f8 100644
--- a/phpBB/includes/functions_template.php
+++ b/phpBB/includes/functions_template.php
@@ -251,15 +251,22 @@ class template_compile
 			$template_php .= (!$no_echo) ? (($trim_check_text != '') ? $text_blocks[$i] : '') . ((isset($compile_blocks[$i])) ? $compile_blocks[$i] : '') : (($trim_check_text != '') ? $text_blocks[$i] : '') . ((isset($compile_blocks[$i])) ? $compile_blocks[$i] : '');
 		}
 
+		// Remove unused opening/closing tags
+		$template_php = str_replace(' ?><?php ', ' ', $template_php);
+
+		// Now add a newline after each php closing tag which already has a newline
+		// PHP itself strips a newline if a closing tag is used (this is documented behaviour) and it is mostly not intended by style authors to remove newlines
+		$template_php = preg_replace('#\?\>([\r\n])#', '?>\1\1', $template_php);
+
 		// There will be a number of occasions where we switch into and out of
 		// PHP mode instantaneously. Rather than "burden" the parser with this
 		// we'll strip out such occurences, minimising such switching
 		if ($no_echo)
 		{
-			return "\$$echo_var .= '" . str_replace(' ?><?php ', ' ', $template_php) . "'";
+			return "\$$echo_var .= '" . $template_php . "'";
 		}
 
-		return str_replace(' ?><?php ', ' ', $template_php);
+		return $template_php;
 	}
 
 	/**
diff --git a/phpBB/includes/template.php b/phpBB/includes/template.php
index 0263783849..7cf865072f 100644
--- a/phpBB/includes/template.php
+++ b/phpBB/includes/template.php
@@ -82,6 +82,8 @@ class template
 		$this->root = $template_path;
 		$this->cachepath = $phpbb_root_path . 'cache/ctpl_' . str_replace('_', '-', $template_name) . '_';
 
+		$this->_rootref = &$this->_tpldata['.'][0];
+
 		return true;
 	}