diff --git a/CHANGELOG b/CHANGELOG
index aba6fd8f8..ce74c0740 100644
--- a/CHANGELOG
+++ b/CHANGELOG
@@ -42,6 +42,8 @@ Changes between 2.2.4 and 2.3.0.dev
   especially with respect to the "magic" history, also mention
   pytest-django, trial and unittest integration.
 
+- fix issue 178: xml binary escapes are now wrapped in py.xml.raw
+
 - reporting refinements:
 
   - pytest_report_header now receives a "startdir" so that
diff --git a/_pytest/junitxml.py b/_pytest/junitxml.py
index acf347bd9..117e0bd12 100644
--- a/_pytest/junitxml.py
+++ b/_pytest/junitxml.py
@@ -57,7 +57,7 @@ def bin_xml_escape(arg):
             return unicode('#x%02X') % i
         else:
             return unicode('#x%04X') % i
-    return illegal_xml_re.sub(repl, py.xml.escape(arg))
+    return py.xml.raw(illegal_xml_re.sub(repl, py.xml.escape(arg)))
 
 def pytest_addoption(parser):
     group = parser.getgroup("terminal reporting")
diff --git a/testing/test_junitxml.py b/testing/test_junitxml.py
index 1f99b85d8..5c30487d0 100644
--- a/testing/test_junitxml.py
+++ b/testing/test_junitxml.py
@@ -159,24 +159,27 @@ class TestPython:
 
     def test_failure_escape(self, testdir):
         testdir.makepyfile("""
-            def pytest_generate_tests(metafunc):
-                metafunc.addcall(id="<", funcargs=dict(arg1=42))
-                metafunc.addcall(id="&", funcargs=dict(arg1=44))
+            import pytest
+            @pytest.mark.parametrize('arg1', "<&'", ids="<&'")
             def test_func(arg1):
+                print arg1
                 assert 0
         """)
         result, dom = runandparse(testdir)
         assert result.ret
         node = dom.getElementsByTagName("testsuite")[0]
-        assert_attr(node, failures=2, tests=2)
-        tnode = node.getElementsByTagName("testcase")[0]
-        assert_attr(tnode,
-            classname="test_failure_escape",
-            name="test_func[<]")
-        tnode = node.getElementsByTagName("testcase")[1]
-        assert_attr(tnode,
-            classname="test_failure_escape",
-            name="test_func[&]")
+        assert_attr(node, failures=3, tests=3)
+
+        for index, char in enumerate("<&'"):
+        
+            tnode = node.getElementsByTagName("testcase")[index]
+            assert_attr(tnode,
+                classname="test_failure_escape",
+                name="test_func[%s]" % char)
+            sysout = tnode.getElementsByTagName('system-out')[0]
+            text = sysout.childNodes[0].wholeText
+            assert text == '%s\n' % char
+
 
     def test_junit_prefixing(self, testdir):
         testdir.makepyfile("""