diff --git a/result/XInclude/fallback8.xml b/result/XInclude/fallback8.xml
new file mode 100644
index 00000000..1b2508f8
--- /dev/null
+++ b/result/XInclude/fallback8.xml
@@ -0,0 +1,4 @@
+<?xml version="1.0"?>
+<doc>
+    text not found
+</doc>
diff --git a/result/XInclude/fallback8.xml.err b/result/XInclude/fallback8.xml.err
new file mode 100644
index 00000000..4327677f
--- /dev/null
+++ b/result/XInclude/fallback8.xml.err
@@ -0,0 +1 @@
+I/O warning : failed to load "test/XInclude/docs/404.txt": No such file or directory
diff --git a/result/XInclude/fallback8.xml.rdr b/result/XInclude/fallback8.xml.rdr
new file mode 100644
index 00000000..f99d17e8
--- /dev/null
+++ b/result/XInclude/fallback8.xml.rdr
@@ -0,0 +1,7 @@
+0 1 doc 0 0
+1 14 #text 0 1 
+    
+1 3 #text 0 1 text not found
+1 14 #text 0 1 
+
+0 15 doc 0 0
diff --git a/test/XInclude/docs/fallback8.xml b/test/XInclude/docs/fallback8.xml
new file mode 100644
index 00000000..102ccfc0
--- /dev/null
+++ b/test/XInclude/docs/fallback8.xml
@@ -0,0 +1,7 @@
+<?xml version="1.0"?>
+<doc>
+    <xi:include xmlns:xi="http://www.w3.org/2001/XInclude" href="404.txt" parse="text">
+        <xi:fallback>text not found</xi:fallback>
+    </xi:include>
+</doc>
+
diff --git a/xinclude.c b/xinclude.c
index 103fb54d..faf22883 100644
--- a/xinclude.c
+++ b/xinclude.c
@@ -1655,9 +1655,14 @@ xmlXIncludeLoadTxt(xmlXIncludeCtxtPtr ctxt, xmlXIncludeRefPtr ref) {
     }
     inputStream = xmlLoadExternalEntity((const char*)url, NULL, pctxt);
     if (inputStream == NULL) {
+        /*
+         * ENOENT only produces a warning which isn't reflected in errNo.
+         */
         if (pctxt->errNo == XML_ERR_NO_MEMORY)
             xmlXIncludeErrMemory(ctxt);
-        else
+        else if ((pctxt->errNo != XML_ERR_OK) &&
+                 (pctxt->errNo != XML_IO_ENOENT) &&
+                 (pctxt->errNo != XML_IO_UNKNOWN))
             xmlXIncludeErr(ctxt, NULL, pctxt->errNo, "load error", NULL);
 	goto error;
     }