diff --git a/docs/reference/repl.rst b/docs/reference/repl.rst
index c03cbfd388..0e481996f4 100644
--- a/docs/reference/repl.rst
+++ b/docs/reference/repl.rst
@@ -49,6 +49,10 @@ Finally type ``print(i)``, press RETURN, press BACKSPACE and press RETURN again:
     3
     >>>
 
+Auto-indent won't be applied if the previous two lines were all spaces.  This
+means that you can finish entering a compound statment by pressing RETURN
+twice, and then a third press will finish and execute.
+
 Auto-completion
 ---------------
 
diff --git a/lib/mp-readline/readline.c b/lib/mp-readline/readline.c
index b7c64aec3c..cbb99cc94c 100644
--- a/lib/mp-readline/readline.c
+++ b/lib/mp-readline/readline.c
@@ -370,6 +370,18 @@ STATIC void readline_auto_indent(void) {
             }
         }
         // i=start of line; j=first non-space
+        if (i > 0 && j + 1 == line->len) {
+            // previous line is not first line and is all spaces
+            for (size_t k = i - 1; k > 0; --k) {
+                if (line->buf[k - 1] == '\n') {
+                    // don't auto-indent if last 2 lines are all spaces
+                    return;
+                } else if (line->buf[k - 1] != ' ') {
+                    // 2nd previous line is not all spaces
+                    break;
+                }
+            }
+        }
         int n = (j - i) / 4;
         if (line->buf[line->len - 2] == ':') {
             n += 1;