diff --git a/haskell-utils.el b/haskell-utils.el
index bd919cafd..6f4f9a53d 100644
--- a/haskell-utils.el
+++ b/haskell-utils.el
@@ -100,12 +100,13 @@ execusion."
     (remove-hook
      'post-command-hook #'haskell-utils-async-update-post-command-flag t)))
 
-(defun haskell-utils-reduce-string (s)
-  "Remove newlines and extra whitespace from S.
-Removes all extra whitespace at the beginning of each line leaving
-only a single space.  Then removes all newlines."
-  (let ((s_ (replace-regexp-in-string "^\s+" " " s)))
-    (replace-regexp-in-string "\n" "" s_)))
+(defun haskell-utils-reduce-string (str)
+  "Remove newlines and extra whitespace from string STR.
+If line starts with a sequence of whitespaces, substitutes this
+sequence with a single whitespace.  Removes all newline
+characters."
+  (let ((s (replace-regexp-in-string "^\s+" " " str)))
+    (replace-regexp-in-string "\r?\n" "" s)))
 
 (defun haskell-utils-repl-response-error-status (response)
   "Parse response REPL's RESPONSE for errors.
diff --git a/tests/haskell-utils-tests.el b/tests/haskell-utils-tests.el
index 8738d84f5..0bbb02355 100644
--- a/tests/haskell-utils-tests.el
+++ b/tests/haskell-utils-tests.el
@@ -201,4 +201,28 @@ strings will change in future."
     (should (equal r6 'no-error))
     (should (equal r7 'no-error))))
 
+(ert-deftest reduce-strign ()
+  "Test `haskell-utils-reduce-strign' command.
+Whitespace sequences at beginning of lines should be replaced
+with single whitespace, all newline characters should be
+removed."
+  (should (string-equal "" (haskell-utils-reduce-string "\n")))
+  (should (string-equal "" (haskell-utils-reduce-string "\r\n")))
+  (should (string-equal " " (haskell-utils-reduce-string "    \n")))
+  (should (string-equal
+           "TestTest"
+           (haskell-utils-reduce-string "Test\nTest")))
+  (should (string-equal
+           "Test Test"
+           (haskell-utils-reduce-string "Test\n     Test")))
+  (should (string-equal
+           " Test Test"
+           (haskell-utils-reduce-string "   Test\r\n     Test")))
+  (should (string-equal
+           " TestTest"
+           (haskell-utils-reduce-string "  Test\r\nTest")))
+  (should (string-equal
+           " TestTest Test test"
+           (haskell-utils-reduce-string " Test\r\nTest\n    Test test"))))
+
 ;;; haskell-utils-tests.el ends here