diff --git a/Changes.md b/Changes.md
index 446f7f532..20b3bb975 100644
--- a/Changes.md
+++ b/Changes.md
@@ -13,6 +13,8 @@ Unreleased
   ([#1164](https://github.com/melange-re/melange/pull/1164))
 - Fix code generation of custom `true` / `false` constructors
   ([#1175](https://github.com/melange-re/melange/pull/1175))
+- Fix code generation of OCaml objects that refers to an init variable in scope
+  ([#1183](https://github.com/melange-re/melange/pull/1183))
 
 4.0.1 2024-06-07
 ---------------
diff --git a/flake.lock b/flake.lock
index ce632f4e8..df8f1f610 100644
--- a/flake.lock
+++ b/flake.lock
@@ -28,11 +28,11 @@
         ]
       },
       "locked": {
-        "lastModified": 1727645950,
-        "narHash": "sha256-xJmVyAQ4FQyPojnUiuGpwfCTpVnTEO4jhxGIMDys4Ps=",
+        "lastModified": 1728189430,
+        "narHash": "sha256-uf5rHgvoWekml5HSquY2YtqQCC56oo7ML/HIuBrDHak=",
         "owner": "melange-re",
         "repo": "melange-compiler-libs",
-        "rev": "bd6a2fb5ec54936ba7aa789965f2af1d0f1e1bf4",
+        "rev": "5548a064ea3cfe7593676a22013fd81df7ee970f",
         "type": "github"
       },
       "original": {
@@ -64,11 +64,11 @@
         "nixpkgs": "nixpkgs_2"
       },
       "locked": {
-        "lastModified": 1727987141,
-        "narHash": "sha256-wJLCtS1HhFhTBqN0+F2Wrcq/ilsbDvjzFTqejVN7xfg=",
+        "lastModified": 1728141961,
+        "narHash": "sha256-jKk4zhu8b5AvZnolb0IMlAk6jUd9kYGhUbIvBr+9OZI=",
         "owner": "nix-ocaml",
         "repo": "nix-overlays",
-        "rev": "614db0fa6bc7ee19b844f39ac944cebd45b38f4f",
+        "rev": "8a5d125c9e3c01cd26b489cba8c3424cfaf26704",
         "type": "github"
       },
       "original": {
@@ -79,17 +79,17 @@
     },
     "nixpkgs_2": {
       "locked": {
-        "lastModified": 1727968508,
-        "narHash": "sha256-2rDTgqMf84us7lARphOGRxnr5Q4nJ0RAQsCKYWeRsmI=",
+        "lastModified": 1728055773,
+        "narHash": "sha256-Fih2RMPboL+nuY7IEp3ujaCjLXLgFfoDQf+CT/GJdok=",
         "owner": "NixOS",
         "repo": "nixpkgs",
-        "rev": "e873268a358f13746037e5ae3e88aa7aa626b9cf",
+        "rev": "d5f1752ca905354f763f2fab62e6139310b5ce91",
         "type": "github"
       },
       "original": {
         "owner": "NixOS",
         "repo": "nixpkgs",
-        "rev": "e873268a358f13746037e5ae3e88aa7aa626b9cf",
+        "rev": "d5f1752ca905354f763f2fab62e6139310b5ce91",
         "type": "github"
       }
     },
diff --git a/test/blackbox-tests/objects-close-over-variable.t b/test/blackbox-tests/objects-close-over-variable.t
new file mode 100644
index 000000000..86cec7dd2
--- /dev/null
+++ b/test/blackbox-tests/objects-close-over-variable.t
@@ -0,0 +1,104 @@
+Test classes that close over an init variable from the outside scope
+
+  $ . ./setup.sh
+  $ cat > dune-project <<EOF
+  > (lang dune 3.9)
+  > (using melange 0.1)
+  > EOF
+
+  $ cat > dune <<EOF
+  > (melange.emit
+  >  (target out)
+  >  (preprocess
+  >   (pps melange.ppx)))
+  > EOF
+
+  $ cat > x.ml <<EOF
+  > let fresh () =
+  >   let r = 2 in
+  >   let dummy = object
+  >     val mutable x = r
+  >     method get_x = x
+  >     method set_x y = x <- y
+  >   end in
+  >   dummy
+  > let () =
+  >   let f = (fresh()) in
+  >   let x = f#get_x in
+  >   Js.log2 "x expect 2" x;
+  >   f#set_x 42 ;
+  >   let y = f#get_x in
+  >   Js.log2 "x expect 42" y;
+  > EOF
+
+  $ dune build @melange
+
+  $ node _build/default/out/x.js
+  x expect 2 2
+  x expect 42 42
+
+  $ cat _build/default/out/x.js
+  // Generated by Melange
+  'use strict';
+  
+  const Caml_oo_curry = require("melange.js/caml_oo_curry.js");
+  const CamlinternalOO = require("melange/camlinternalOO.js");
+  const Curry = require("melange.js/curry.js");
+  
+  const shared = [
+    "set_x",
+    "get_x"
+  ];
+  
+  const object_tables = {
+    TAG: /* Cons */0,
+    key: undefined,
+    data: undefined,
+    next: undefined
+  };
+  
+  function fresh(param) {
+    if (!object_tables.key) {
+      const $$class = CamlinternalOO.create_table(shared);
+      const ids = CamlinternalOO.new_methods_variables($$class, shared, ["x"]);
+      const set_x = ids[0];
+      const get_x = ids[1];
+      const x = ids[2];
+      CamlinternalOO.set_methods($$class, [
+            get_x,
+            (function (self$1) {
+                return self$1[x];
+              }),
+            set_x,
+            (function (self$1, y) {
+                self$1[x] = y;
+              })
+          ]);
+      const env_init = function (env) {
+        const self = CamlinternalOO.create_object_opt(undefined, $$class);
+        self[x] = env[1];
+        return self;
+      };
+      CamlinternalOO.init_class($$class);
+      object_tables.key = env_init;
+    }
+    return Curry._1(object_tables.key, [
+                undefined,
+                2
+              ]);
+  }
+  
+  const f = fresh(undefined);
+  
+  const x = Caml_oo_curry.js1(291546447, 1, f);
+  
+  console.log("x expect 2", x);
+  
+  Caml_oo_curry.js2(-97543333, 2, f, 42);
+  
+  const y = Caml_oo_curry.js1(291546447, 3, f);
+  
+  console.log("x expect 42", y);
+  
+  exports.fresh = fresh;
+  /* f Not a pure module */
diff --git a/vendor/melange-compiler-libs b/vendor/melange-compiler-libs
index bd6a2fb5e..5548a064e 160000
--- a/vendor/melange-compiler-libs
+++ b/vendor/melange-compiler-libs
@@ -1 +1 @@
-Subproject commit bd6a2fb5ec54936ba7aa789965f2af1d0f1e1bf4
+Subproject commit 5548a064ea3cfe7593676a22013fd81df7ee970f