--- gcc/cprop.c.mp	2012-11-29 15:49:53.120524295 +0100
+++ gcc/cprop.c	2012-11-30 10:30:23.509501957 +0100
@@ -1539,8 +1539,7 @@ bypass_block (basic_block bb, rtx setcc,
       /* The irreducible loops created by redirecting of edges entering the
 	 loop from outside would decrease effectiveness of some of the
 	 following optimizations, so prevent this.  */
-      if (may_be_loop_header
-	  && !(e->flags & EDGE_DFS_BACK))
+      if (may_be_loop_header)
 	{
 	  ei_next (&ei);
 	  continue;
--- gcc/testsuite/gcc.dg/pr54838.c.mp	2012-11-26 14:48:43.783980854 +0100
+++ gcc/testsuite/gcc.dg/pr54838.c	2012-11-29 17:43:19.397737779 +0100
@@ -0,0 +1,24 @@
+/* PR middle-end/54838 */
+/* { dg-do compile } */
+/* { dg-options "-O2 -fno-forward-propagate -ftracer" } */
+
+void bar (void);
+
+void
+foo (void *b, int *c)
+{
+again:
+  switch (*c)
+    {
+    case 1:
+      if (!b)
+	{
+	  bar ();
+	  return;
+	}
+      goto again;
+    case 3:
+      if (!b)
+	goto again;
+    }
+}