diff --git a/codefilter.module b/codefilter.module
index 65e1634..0959dce 100644
--- a/codefilter.module
+++ b/codefilter.module
@@ -112,41 +112,13 @@ function codefilter_fix_spaces($text) {
 function codefilter_escape($text, $type = 'code', $attributes = NULL) {
   // Note, pay attention to odd preg_replace-with-/e behaviour on slashes.
   $text = check_plain(str_replace('\"', '"', $text));
-
   // Protect newlines from line break converter.
   $text = str_replace(array("\r", "\n"), array('', '
'), $text);
 
-  // Prepare the class HTML attribute for the codefilter tag.
-  if (isset($attributes)) {
-    $attributes = ' ' . $attributes;
-  }
-
-  // Add codefilter escape tags.
-  $text = "[codefilter_{$type}{$attributes}]{$text}[/codefilter_$type]";
-
   return $text;
 }
 
 /**
- * Callback to escape content of <code> elements.
- */
-function _codefilter_escape_code_tag_callback($matches) {
-  // Extract a potentially existing class HTML attribute.
-  $attributes = NULL;
-  if (!empty($matches[1]) && preg_match('@class="[^"]+"@', $matches[1], $class_matches)) {
-    $attributes = $class_matches[0];
-  }
-  return codefilter_escape($matches[2], 'code', $attributes);
-}
-
-/**
- * Callback to escape content of <?php ?>, [?php ?], <% %>, and [% %] elements.
- */
-function _codefilter_escape_php_tag_callback($matches) {
-  return codefilter_escape($matches[2], 'php');
-}
-
-/**
  * Implements hook_filter_info().
  */
 function codefilter_filter_info() {
@@ -169,12 +141,12 @@ function codefilter_filter_info() {
  * Implements hook_filter_FILTER_prepare().
  *
  * Escape code tags to prevent other filters from acting on them.
- * <code> </code>, <?php ?>, [?php ?], <% %>, and [% %] tags are escaped.
+ * <code> </code>, <?php ?> are escaped.
  */
 function _codefilter_prepare($text, $format) {
-  $callback_prefix = $format->settings['codefilter_prism'] ? '_codefilter_prism' : '_codefilter';
-  $text = preg_replace_callback('@<code([^>]*)>(.+?)</code>@s', "{$callback_prefix}_escape_code_tag_callback", $text);
-  $text = preg_replace_callback('@[\[<](\?php)(.+?)(\?)[\]>]@s', "{$callback_prefix}_escape_php_tag_callback", $text);
+  $tag_prefix = $format->settings['codefilter_prism'] ? 'codefilter_prism' : 'codefilter';
+  $text = replace_tags_with_nesting($text, '<?php', '?>', "[{$tag_prefix}_php]", "[/{$tag_prefix}_php]");
+  $text = replace_tags_with_nesting($text, '<code>', '</code>', "[{$tag_prefix}_code]", "[/{$tag_prefix}_code]");
   return $text;
 }
 
@@ -238,3 +210,94 @@ function _codefilter_settings($form, &$form_state, $filter, $format, $defaults)
   }
   return $elements;
 }
+
+
+/**
+ * Replace tags with placeholders, without replacing nested tags.
+ *
+ * @param string $string
+ *   String to process.
+ * @param string $opening_tag
+ *   Opening tag to replace.
+ * @param string $closing_tag
+ *   Closing tag to replace.
+ * @param string $replace_opening
+ *   Replacement opening tag.
+ * @param string $replace_closing
+ *   Replacement closing tag.
+ * @param bool $preserve_attributes
+ *   If set to TRUE, attributes like "class='myclass'" will be preserved.
+ *
+ * @return string
+ *   The processed string.
+ */
+function replace_tags_with_nesting($string, $opening_tag = '<?php', $closing_tag = '?>', $replace_opening = '[codefilter_php]', $replace_closing = '[/codefilter_php]', $preserve_attributes = TRUE) {
+  $string_length = strlen($string);
+  $return = '';
+  $open_count = 0;
+
+  for ($i = 0; $i < $string_length; $i++) {
+
+    if ($string[$i] === substr($opening_tag, 0, 1)) {
+      // Hacky special case for code tags with attributes.
+      if ($preserve_attributes && $opening_tag == '<code>') {
+        if (substr($string, $i, 5) == '<code') {
+          $open_count += 1;
+          if ($open_count === 1) {
+            $attributes = _get_attributes($string, $i);
+            $replace_opening = str_replace('_code', "_code{$attributes}", $replace_opening);
+            $i = $i + strlen($opening_tag) + strlen($attributes);
+            $return .= $replace_opening;
+            continue;
+          }
+        }
+      }
+      // Simple matching on opening tags.
+      if (substr($string, $i, strlen($opening_tag)) === $opening_tag) {
+        $open_count += 1;
+        if ($open_count === 1) {
+          $i += strlen($opening_tag);
+          $return .= $replace_opening;
+          continue;
+        }
+      }
+    }
+
+    // Match on closing tags but only if we are at the outside of a nest.
+    if ($string[$i] === substr($closing_tag, 0, 1)) {
+      if (substr($string, $i, strlen($closing_tag)) === $closing_tag) {
+        $open_count--;
+        if ($open_count === 0) {
+          $return .= $replace_closing;
+          $i += strlen($closing_tag);
+          continue;
+        }
+      }
+    }
+
+    $return .= $string[$i];
+  }
+
+  return $return;
+}
+
+/**
+ * Finds HTML attributes in a <code attribute="value"> declaration.
+ *
+ * @param string $string
+ *   String to check.
+ * @param int $start_position
+ *   Offset in string to begin checking from.
+ *
+ * @return string
+ *   The attribute string, e.g. 'attribute="value"'.
+ */
+function _get_attributes($string, $start_position) {
+  $attributes = '';
+  $string = substr($string, $start_position);
+  // Find attributes if any.
+  if (preg_match('/<code([^>]*)>/', $string, $matches) !== FALSE) {
+    $attributes = $matches[1];
+  }
+  return $attributes;
+}
diff --git a/modules/codefilter_prism/codefilter_prism.module b/modules/codefilter_prism/codefilter_prism.module
index d9328e2..169015b 100644
--- a/modules/codefilter_prism/codefilter_prism.module
+++ b/modules/codefilter_prism/codefilter_prism.module
@@ -148,26 +148,6 @@ function _codefilter_prism_process_code_callback($matches) {
 }
 
 /**
- * Callback to escape content of <code> elements.
- */
-function _codefilter_prism_escape_code_tag_callback($matches) {
-  // Extract a potentially existing class HTML attribute.
-  $attributes = '';
-  if (!empty($matches[1]) && preg_match('@class="[^"]+"@', $matches[1], $class_matches)) {
-    $attributes = $class_matches[0];
-  }
-
-  return codefilter_prism_escape($matches[2], 'code', $attributes);
-}
-
-/**
- * Callback to escape content of <?php ?>, [?php ?], <% %>, and [% %] elements.
- */
-function _codefilter_prism_escape_php_tag_callback($matches) {
-  return codefilter_prism_escape($matches[2], 'php');
-}
-
-/**
  * Escape code blocks during input filter 'prepare'.
  *
  * @param string $text