diff --git a/com.google.eclipse.protobuf.test/src/com/google/eclipse/protobuf/bugs/Issue91AddSupportForUTF16Strings.java b/com.google.eclipse.protobuf.test/src/com/google/eclipse/protobuf/bugs/Issue91AddSupportForUTF16Strings.java
new file mode 100644
index 0000000..e505ffd
--- /dev/null
+++ b/com.google.eclipse.protobuf.test/src/com/google/eclipse/protobuf/bugs/Issue91AddSupportForUTF16Strings.java
@@ -0,0 +1,32 @@
+/*
+ * Copyright (c) 2011 Google Inc.
+ *
+ * All rights reserved. This program and the accompanying materials are made available under the terms of the Eclipse
+ * Public License v1.0 which accompanies this distribution, and is available at
+ *
+ * http://www.eclipse.org/legal/epl-v10.html
+ */
+package com.google.eclipse.protobuf.bugs;
+
+import com.google.eclipse.protobuf.junit.core.XtextRule;
+import com.google.eclipse.protobuf.junit.util.MultiLineTextBuilder;
+
+import org.junit.*;
+
+/**
+ * Tests fix for <a href="http://code.google.com/p/protobuf-dt/issues/detail?id=91">Issue 91</a>.
+ * 
+ * @author alruiz@google.com (Alex Ruiz)
+ */
+public class Issue91AddSupportForUTF16Strings {
+
+  @Rule public XtextRule xtext = new XtextRule();
+
+  @Test public void should_recognize_UTF16_strings() {
+    MultiLineTextBuilder proto = new MultiLineTextBuilder();
+    proto.append("message Foo {                                      ")
+         .append("  optional string bar = 1 [default=\"\\302\\265\"];")
+         .append("}                                                  ");
+    xtext.parse(proto);
+  }
+}
diff --git a/com.google.eclipse.protobuf/src/com/google/eclipse/protobuf/Protobuf.xtext b/com.google.eclipse.protobuf/src/com/google/eclipse/protobuf/Protobuf.xtext
index df250b8..d524c02 100644
--- a/com.google.eclipse.protobuf/src/com/google/eclipse/protobuf/Protobuf.xtext
+++ b/com.google.eclipse.protobuf/src/com/google/eclipse/protobuf/Protobuf.xtext
@@ -152,8 +152,11 @@
   SL_STRING (SL_STRING)*;
 
 terminal SL_STRING:
-  '"' ('\\' ('b' | 't' | 'n' | 'f' | 'r' | 'u' | '"' | "'" | '\\') | !('\\' | '"'))* '"' (WS)*;
+  '"' ('\\' ('b' | 't' | 'n' | 'f' | 'r' | 'u' | '"' | "'" | '\\' | UNICODE_OCTAL) | !('\\' | '"'))* '"' (WS)*;
 
+terminal UNICODE_OCTAL:
+  ('0'..'3')('0'..'7')('0'..'7');
+  
 Nan:
   number='nan';
 
diff --git a/com.google.eclipse.protobuf/src/com/google/eclipse/protobuf/conversion/STRINGValueConverter.java b/com.google.eclipse.protobuf/src/com/google/eclipse/protobuf/conversion/STRINGValueConverter.java
index f8030dc..63c5f96 100644
--- a/com.google.eclipse.protobuf/src/com/google/eclipse/protobuf/conversion/STRINGValueConverter.java
+++ b/com.google.eclipse.protobuf/src/com/google/eclipse/protobuf/conversion/STRINGValueConverter.java
@@ -14,6 +14,8 @@
 import org.eclipse.xtext.conversion.impl.AbstractLexerBasedConverter;
 import org.eclipse.xtext.nodemodel.INode;
 
+import java.util.regex.Pattern;
+
 /**
  * Converts multi-line strings to {@code String}s.
  *
@@ -21,6 +23,8 @@
  */
 public class STRINGValueConverter extends AbstractLexerBasedConverter<String> {
 
+  private static final Pattern LINE_BREAK = Pattern.compile("\"[\t\r\n]+\"|'[\t\r\n]+'");
+  
   @Override
   protected String toEscapedString(String value) {
     if (value == null) return null;
@@ -38,15 +42,15 @@
     if (string == null) return null;
     try {
       String clean = removeLineBreaksFrom(string);
-      return convertFromJavaString(clean.substring(1, clean.length() - 1), true);
+      return convertToJavaString(clean.substring(1, clean.length() - 1), true);
     } catch (IllegalArgumentException e) {
       throw parsingError(string, node, e);
     }
   }
 
   private static String removeLineBreaksFrom(String s) {
-    if (s == null) return s;
-    return s.replaceAll("\"[\t\r\n]+\"|'[\t\r\n]+'", "");
+    if (isEmpty(s)) return s;
+    return LINE_BREAK.matcher(s).replaceAll("");
   }
 
   private ValueConverterException parsingError(String string, INode node, Exception cause) {