diff --git a/classes/template/TemplateHandler.class.php b/classes/template/TemplateHandler.class.php
index 06a2182a9..e9aebb1b9 100644
--- a/classes/template/TemplateHandler.class.php
+++ b/classes/template/TemplateHandler.class.php
@@ -301,7 +301,7 @@ class TemplateHandler {
 		$src = str_replace('/./', '/', $src);
 
 		// for backward compatibility
-		$src = preg_replace('@((?:[\w-]+/)+)\1@', '\1', $src);
+		$src = preg_replace('@/((?:[\w-]+/)+)\1@', '/\1', $src);
 
 		while(($tmp=preg_replace('@[^/]+/\.\./@', '', $src))!==$src) $src = $tmp;
 
diff --git a/tests/classes/template/TemplateHandlerTest.php b/tests/classes/template/TemplateHandlerTest.php
index b039d7229..f3a70fa87 100644
--- a/tests/classes/template/TemplateHandlerTest.php
+++ b/tests/classes/template/TemplateHandlerTest.php
@@ -222,6 +222,11 @@ class TemplateHandlerTest extends PHPUnit_Framework_TestCase
 				"<li <!--@if(in_array(\$act, array(\n'dispNmsAdminGroupList',\n'dispNmsAdminInsertGroup',\n'dispNmsAdminGroupInfo',\n'dispNmsAdminDeleteGroup')))-->class=\"on\"<!--@endif-->>",
 				"<li <?php if(in_array(\$__Context->act, array(\n'dispNmsAdminGroupList',\n'dispNmsAdminInsertGroup',\n'dispNmsAdminGroupInfo',\n'dispNmsAdminDeleteGroup'))){ ?>class=\"on\"<?php } ?>>"
 			),
+			// issue 746
+			array(
+				'<img src="../myxe/xe/img.png" />',
+				'<img src="/xe/tests/classes/myxe/xe/img.png" />'
+			),
 		);
 	}