diff --git a/htmlelements-java/src/main/java/ru/yandex/qatools/htmlelements/loader/HtmlElementLoader.java b/htmlelements-java/src/main/java/ru/yandex/qatools/htmlelements/loader/HtmlElementLoader.java
index 6cacd0e5..9eb667a1 100644
--- a/htmlelements-java/src/main/java/ru/yandex/qatools/htmlelements/loader/HtmlElementLoader.java
+++ b/htmlelements-java/src/main/java/ru/yandex/qatools/htmlelements/loader/HtmlElementLoader.java
@@ -32,11 +32,11 @@ public class HtmlElementLoader {
      * @see #createPageObject(Class, org.openqa.selenium.WebDriver)
      */
     public static <T> T create(Class<T> clazz, WebDriver driver) {
-    	return create(clazz, new HtmlElementLocatorFactory(driver));
-    }   
+        return create(clazz, new HtmlElementLocatorFactory(driver));
+    }
 
-	@SuppressWarnings("unchecked")
-	public static <T> T create(Class<T> clazz, CustomElementLocatorFactory locatorFactory) {
+    @SuppressWarnings("unchecked")
+    public static <T> T create(Class<T> clazz, CustomElementLocatorFactory locatorFactory) {
         if (isHtmlElement(clazz)) {
             Class<HtmlElement> htmlElementClass = (Class<HtmlElement>) clazz;
             return (T) createHtmlElement(htmlElementClass, locatorFactory);
@@ -44,7 +44,7 @@ public static <T> T create(Class<T> clazz, CustomElementLocatorFactory locatorFa
             // Otherwise consider class as a page object class
             return createPageObject(clazz, locatorFactory);
         }
-	}
+    }
 
     /**
      * Initializes {@code instance} as a block of elements it is instance of {@link HtmlElement}
@@ -90,13 +90,13 @@ public static <T> void populate(T instance, WebDriver driver) {
      * @return Initialized instance of the specified class.
      */
     public static <T extends HtmlElement> T createHtmlElement(Class<T> clazz, WebDriver driver) {
-    	return createHtmlElement(clazz, new HtmlElementLocatorFactory(driver));
+        return createHtmlElement(clazz, new HtmlElementLocatorFactory(driver));
     }
 
     public static <T extends HtmlElement> T createHtmlElement(Class<T> clazz, CustomElementLocatorFactory locatorFactory) {
         T htmlElementInstance = HtmlElementFactory.createHtmlElementInstance(clazz);
         populateHtmlElement(htmlElementInstance, locatorFactory);
-        return htmlElementInstance;    	
+        return htmlElementInstance;
     }
 
     /**
@@ -123,12 +123,12 @@ public static <T extends HtmlElement> T createHtmlElement(Class<T> clazz, Custom
     public static <T> T createPageObject(Class<T> clazz, WebDriver driver) {
         return createPageObject(clazz, new HtmlElementLocatorFactory(driver));
     }
-    
+
     public static <T> T createPageObject(Class<T> clazz, CustomElementLocatorFactory locatorFactory) {
-        T page = HtmlElementFactory.createPageObjectInstance(clazz, locatorFactory);
+        T page = HtmlElementFactory.createPageObjectInstance(clazz);
         populatePageObject(page, locatorFactory);
         return page;
-    }    
+    }
 
     /**
      * Initializes fields of the given block of elements with lazy proxies.
@@ -153,9 +153,9 @@ public static <T> T createPageObject(Class<T> clazz, CustomElementLocatorFactory
      * @param driver      The {@code WebDriver} instance that will be used to look up the elements.
      */
     public static void populateHtmlElement(HtmlElement htmlElement, WebDriver driver) {
-    	populateHtmlElement(htmlElement, new HtmlElementLocatorFactory(driver));
+        populateHtmlElement(htmlElement, new HtmlElementLocatorFactory(driver));
     }
-    
+
     public static void populateHtmlElement(HtmlElement htmlElement, CustomElementLocatorFactory locatorFactory) {
         @SuppressWarnings("unchecked")
         Class<HtmlElement> htmlElementClass = (Class<HtmlElement>) htmlElement.getClass();
@@ -168,7 +168,7 @@ public static void populateHtmlElement(HtmlElement htmlElement, CustomElementLoc
         String elementName = getElementName(htmlElementClass);
         htmlElement.setName(elementName);
         // Initialize elements of the block
-        PageFactory.initElements(new HtmlElementDecorator(elementToWrap), htmlElement);   	
+        PageFactory.initElements(new HtmlElementDecorator(elementToWrap), htmlElement);
     }
 
     /**
@@ -194,8 +194,8 @@ public static void populateHtmlElement(HtmlElement htmlElement, CustomElementLoc
     public static void populatePageObject(Object page, WebDriver driver) {
         populatePageObject(page, new HtmlElementLocatorFactory(driver));
     }
-    
+
     public static void populatePageObject(Object page, CustomElementLocatorFactory locatorFactory) {
-    	PageFactory.initElements(new HtmlElementDecorator(locatorFactory), page);
+        PageFactory.initElements(new HtmlElementDecorator(locatorFactory), page);
     }
 }
diff --git a/htmlelements-java/src/main/java/ru/yandex/qatools/htmlelements/loader/decorator/HtmlElementFactory.java b/htmlelements-java/src/main/java/ru/yandex/qatools/htmlelements/loader/decorator/HtmlElementFactory.java
index 73e216f2..b7636bc9 100644
--- a/htmlelements-java/src/main/java/ru/yandex/qatools/htmlelements/loader/decorator/HtmlElementFactory.java
+++ b/htmlelements-java/src/main/java/ru/yandex/qatools/htmlelements/loader/decorator/HtmlElementFactory.java
@@ -1,16 +1,12 @@
 package ru.yandex.qatools.htmlelements.loader.decorator;
 
-import java.lang.reflect.Constructor;
-import java.lang.reflect.InvocationHandler;
-import java.lang.reflect.InvocationTargetException;
-import java.lang.reflect.Proxy;
+import java.lang.reflect.*;
 import java.util.List;
 
 import org.openqa.selenium.WebElement;
 import org.openqa.selenium.internal.Locatable;
 import org.openqa.selenium.internal.WrapsElement;
 import org.openqa.selenium.support.pagefactory.ElementLocator;
-import org.openqa.selenium.support.pagefactory.ElementLocatorFactory;
 import org.openqa.selenium.support.pagefactory.internal.LocatingElementHandler;
 
 import ru.yandex.qatools.htmlelements.element.HtmlElement;
@@ -21,6 +17,8 @@
 import ru.yandex.qatools.htmlelements.loader.decorator.proxyhandlers.WebElementListNamedProxyHandler;
 import ru.yandex.qatools.htmlelements.loader.decorator.proxyhandlers.WebElementNamedProxyHandler;
 
+import static ru.yandex.qatools.htmlelements.utils.ReflectionUtils.newInstance;
+
 /**
  * Contains factory methods for creating instances of blocks, typified elements, page objects
  * and for creating lazy proxies.
@@ -32,19 +30,22 @@ public class HtmlElementFactory {
 
     public static <T extends HtmlElement> T createHtmlElementInstance(Class<T> elementClass) {
         try {
-            return elementClass.newInstance();
+            return newInstance(elementClass);
+        } catch (NoSuchMethodException e) {
+            throw new HtmlElementsException(e);
         } catch (InstantiationException e) {
             throw new HtmlElementsException(e);
         } catch (IllegalAccessException e) {
             throw new HtmlElementsException(e);
+        } catch (InvocationTargetException e) {
+            throw new HtmlElementsException(e);
         }
     }
 
     public static <T extends TypifiedElement> T createTypifiedElementInstance(Class<T> elementClass,
                                                                               WebElement elementToWrap) {
         try {
-            Constructor<T> constructor = elementClass.getConstructor(WebElement.class);
-            return constructor.newInstance(elementToWrap);
+            return newInstance(elementClass, elementToWrap);
         } catch (NoSuchMethodException e) {
             throw new HtmlElementsException(e);
         } catch (InstantiationException e) {
@@ -56,14 +57,11 @@ public static <T extends TypifiedElement> T createTypifiedElementInstance(Class<
         }
     }
 
-    public static <T> T createPageObjectInstance(Class<T> pageObjectClass, ElementLocatorFactory locatorFactory) {
+    public static <T> T createPageObjectInstance(Class<T> pageObjectClass) {
         try {
-            try {
-                Constructor<T> constructor = pageObjectClass.getConstructor(ElementLocatorFactory.class);
-                return constructor.newInstance(locatorFactory);
-            } catch (NoSuchMethodException e) {
-                return pageObjectClass.newInstance();
-            }
+            return newInstance(pageObjectClass);
+        } catch (NoSuchMethodException e) {
+            throw new HtmlElementsException(e);
         } catch (InstantiationException e) {
             throw new HtmlElementsException(e);
         } catch (IllegalAccessException e) {
diff --git a/htmlelements-java/src/main/java/ru/yandex/qatools/htmlelements/utils/ReflectionUtils.java b/htmlelements-java/src/main/java/ru/yandex/qatools/htmlelements/utils/ReflectionUtils.java
new file mode 100644
index 00000000..d5da31a8
--- /dev/null
+++ b/htmlelements-java/src/main/java/ru/yandex/qatools/htmlelements/utils/ReflectionUtils.java
@@ -0,0 +1,26 @@
+package ru.yandex.qatools.htmlelements.utils;
+
+import com.google.common.collect.Lists;
+
+import java.lang.reflect.InvocationTargetException;
+import java.lang.reflect.Modifier;
+
+import static org.apache.commons.lang3.reflect.ConstructorUtils.invokeConstructor;
+
+/**
+ * User: eroshenkoam
+ * Date: 1/22/13, 5:53 PM
+ */
+public class ReflectionUtils {
+
+    public static <T> T newInstance(Class<T> clazz, Object... args) throws IllegalAccessException,
+            InstantiationException, NoSuchMethodException, InvocationTargetException {
+        if (clazz.isMemberClass() && !Modifier.isStatic(clazz.getModifiers())) {
+            Class outerClass = clazz.getDeclaringClass();
+            Object outerObject = outerClass.newInstance();
+            return invokeConstructor(clazz, Lists.asList(outerObject, args).toArray());
+        } else {
+            return invokeConstructor(clazz, args);
+        }
+    }
+}
diff --git a/htmlelements-java/src/test/java/ru/yandex/qatools/htmlelements/NestedClassTest.java b/htmlelements-java/src/test/java/ru/yandex/qatools/htmlelements/NestedClassTest.java
new file mode 100644
index 00000000..7e34220e
--- /dev/null
+++ b/htmlelements-java/src/test/java/ru/yandex/qatools/htmlelements/NestedClassTest.java
@@ -0,0 +1,65 @@
+package ru.yandex.qatools.htmlelements;
+
+import org.junit.Before;
+import org.junit.Ignore;
+import org.junit.Test;
+import org.openqa.selenium.By;
+import org.openqa.selenium.WebDriver;
+import org.openqa.selenium.WebElement;
+import org.openqa.selenium.support.FindBy;
+import ru.yandex.qatools.htmlelements.annotations.Block;
+import ru.yandex.qatools.htmlelements.element.HtmlElement;
+import ru.yandex.qatools.htmlelements.element.Link;
+import ru.yandex.qatools.htmlelements.element.TypifiedElement;
+import ru.yandex.qatools.htmlelements.loader.HtmlElementLoader;
+
+import static org.hamcrest.core.IsNull.notNullValue;
+import static org.junit.Assert.assertThat;
+import static org.mockito.Mockito.mock;
+import static org.mockito.Mockito.when;
+
+/**
+ * User: eroshenkoam
+ * Date: 1/22/13, 2:16 PM
+ */
+public class NestedClassTest {
+
+    public WebDriver driver = mock(WebDriver.class);
+    WebElement arrow = mock(WebElement.class);
+    WebElement link = mock(WebElement.class);
+
+    @Before
+    public void before() {
+        when(driver.findElement(By.className("arrow"))).thenReturn(arrow);
+        when(arrow.findElement(By.className("link"))).thenReturn(link);
+    }
+
+    @Test
+    @Ignore
+    public void test() {
+        NestedPageObject pageObject = HtmlElementLoader.create(NestedPageObject.class, driver);
+        assertThat(pageObject, notNullValue());
+        assertThat(pageObject.arrow.getName(), notNullValue());
+        assertThat(pageObject.arrow.link.getWrappedElement(), notNullValue());
+    }
+
+    public class NestedPageObject {
+        @FindBy(className = "arrow")
+        public NestedHtmlElement arrow;
+    }
+
+    public class NestedHtmlElement extends HtmlElement {
+        @FindBy(className = "link")
+        public NestedTypifiedElement link;
+
+    }
+
+
+    public class NestedTypifiedElement extends TypifiedElement {
+
+        public NestedTypifiedElement(WebElement wrappedElement) {
+            super(wrappedElement);
+        }
+
+    }
+}