Index: src/expr.c
==================================================================
--- src/expr.c
+++ src/expr.c
@@ -900,10 +900,11 @@
     pNewItem->zName = sqlite3DbStrDup(db, pOldItem->zName);
     pNewItem->zAlias = sqlite3DbStrDup(db, pOldItem->zAlias);
     pNewItem->jointype = pOldItem->jointype;
     pNewItem->iCursor = pOldItem->iCursor;
     pNewItem->isPopulated = pOldItem->isPopulated;
+    pNewItem->isCorrelated = pOldItem->isCorrelated;
     pNewItem->zIndex = sqlite3DbStrDup(db, pOldItem->zIndex);
     pNewItem->notIndexed = pOldItem->notIndexed;
     pNewItem->pIndex = pOldItem->pIndex;
     pTab = pNewItem->pTab = pOldItem->pTab;
     if( pTab ){

Index: src/resolve.c
==================================================================
--- src/resolve.c
+++ src/resolve.c
@@ -994,15 +994,29 @@
     /* Recursively resolve names in all subqueries
     */
     for(i=0; i<p->pSrc->nSrc; i++){
       struct SrcList_item *pItem = &p->pSrc->a[i];
       if( pItem->pSelect ){
+        NameContext *pNC;         /* Used to iterate name contexts */
+        int nRef = 0;             /* Refcount for pOuterNC and outer contexts */
         const char *zSavedContext = pParse->zAuthContext;
+
+        /* Count the total number of references to pOuterNC and all of its
+        ** parent contexts. After resolving references to expressions in
+        ** pItem->pSelect, check if this value has changed. If so, then
+        ** SELECT statement pItem->pSelect must be correlated. Set the
+        ** pItem->isCorrelated flag if this is the case. */
+        for(pNC=pOuterNC; pNC; pNC=pNC->pNext) nRef += pNC->nRef;
+
         if( pItem->zName ) pParse->zAuthContext = pItem->zName;
         sqlite3ResolveSelectNames(pParse, pItem->pSelect, pOuterNC);
         pParse->zAuthContext = zSavedContext;
         if( pParse->nErr || db->mallocFailed ) return WRC_Abort;
+
+        for(pNC=pOuterNC; pNC; pNC=pNC->pNext) nRef -= pNC->nRef;
+        assert( pItem->isCorrelated==0 && nRef<=0 );
+        pItem->isCorrelated = (nRef!=0);
       }
     }
   
     /* If there are no aggregate functions in the result-set, and no GROUP BY 
     ** expression, do not allow aggregates in any of the other expressions.

Index: src/sqliteInt.h
==================================================================
--- src/sqliteInt.h
+++ src/sqliteInt.h
@@ -1846,10 +1846,11 @@
     Table *pTab;      /* An SQL table corresponding to zName */
     Select *pSelect;  /* A SELECT statement used in place of a table name */
     u8 isPopulated;   /* Temporary table associated with SELECT is populated */
     u8 jointype;      /* Type of join between this able and the previous */
     u8 notIndexed;    /* True if there is a NOT INDEXED clause */
+    u8 isCorrelated;  /* True if sub-query is correlated */
 #ifndef SQLITE_OMIT_EXPLAIN
     u8 iSelectId;     /* If pSelect!=0, the id of the sub-select in EQP */
 #endif
     int iCursor;      /* The VDBE cursor number used to access this table */
     Expr *pOn;        /* The ON clause of a join */

Index: src/where.c
==================================================================
--- src/where.c
+++ src/where.c
@@ -1916,10 +1916,14 @@
     return;
   }
   if( pSrc->notIndexed ){
     /* The NOT INDEXED clause appears in the SQL. */
     return;
+  }
+  if( pSrc->isCorrelated ){
+    /* The source is a correlated sub-query. No point in indexing it. */
+    return;
   }
 
   assert( pParse->nQueryLoop >= (double)1 );
   pTable = pSrc->pTab;
   nTableRow = pTable->nRowEst;

ADDED   test/tkt-54844eea3f.test
Index: test/tkt-54844eea3f.test
==================================================================
--- test/tkt-54844eea3f.test
+++ test/tkt-54844eea3f.test
@@ -0,0 +1,67 @@
+# 2011 July 8
+#
+# The author disclaims copyright to this source code.  In place of
+# a legal notice, here is a blessing:
+#
+#    May you do good and not evil.
+#    May you find forgiveness for yourself and forgive others.
+#    May you share freely, never taking more than you give.
+#
+#***********************************************************************
+# This file implements regression tests for SQLite library.  The
+# focus of this file is testing that bug [54844eea3f] has been fixed.
+#
+
+set testdir [file dirname $argv0]
+source $testdir/tester.tcl
+
+set ::testprefix tkt-54844eea3f
+
+do_test 1.0 {
+  execsql {
+    CREATE TABLE t1(a INTEGER PRIMARY KEY);
+    INSERT INTO t1 VALUES(1);
+    INSERT INTO t1 VALUES(4);
+
+    CREATE TABLE t2(b INTEGER PRIMARY KEY);
+    INSERT INTO t2 VALUES(1);
+    INSERT INTO t2 VALUES(2);
+    INSERT INTO t2 SELECT b+2 FROM t2;
+    INSERT INTO t2 SELECT b+4 FROM t2;
+    INSERT INTO t2 SELECT b+8 FROM t2;
+    INSERT INTO t2 SELECT b+16 FROM t2;
+
+    CREATE TABLE t3(c INTEGER PRIMARY KEY);
+    INSERT INTO t3 VALUES(1);
+    INSERT INTO t3 VALUES(2);
+    INSERT INTO t3 VALUES(3);
+  }
+} {}
+
+do_test 1.1 {
+  execsql {
+    SELECT 'test-2', t3.c, (
+          SELECT count(*) 
+          FROM t1 JOIN (SELECT DISTINCT t3.c AS p FROM t2) AS x ON t1.a=x.p
+    )
+    FROM t3;
+  }
+} {test-2 1 1 test-2 2 0 test-2 3 0}
+
+do_test 1.2 {
+  execsql {
+    CREATE TABLE t4(a, b, c);
+    INSERT INTO t4 VALUES('a', 1, 'one');
+    INSERT INTO t4 VALUES('a', 2, 'two');
+    INSERT INTO t4 VALUES('b', 1, 'three');
+    INSERT INTO t4 VALUES('b', 2, 'four');
+    SELECT ( 
+      SELECT c FROM (
+        SELECT * FROM t4 WHERE a=out.a ORDER BY b LIMIT 10 OFFSET 1
+      ) WHERE b=out.b
+    ) FROM t4 AS out;
+  }
+} {{} two {} four}
+
+
+finish_test