diff --git a/packages/compiler/src/ml_parser/lexer.ts b/packages/compiler/src/ml_parser/lexer.ts
index a2d734bf02..cff42e4763 100644
--- a/packages/compiler/src/ml_parser/lexer.ts
+++ b/packages/compiler/src/ml_parser/lexer.ts
@@ -101,6 +101,10 @@ export interface TokenizeOptions {
    * included in source-map segments.  A common example is whitespace.
    */
   leadingTriviaChars?: string[];
+  /**
+   * If true, do not convert CRLF to LF.
+   */
+  preserveLineEndings?: boolean;
 }
 
 export function tokenize(
@@ -134,6 +138,7 @@ class _Tokenizer {
   private _currentTokenType: TokenType|null = null;
   private _expansionCaseStack: TokenType[] = [];
   private _inInterpolation: boolean = false;
+  private readonly _preserveLineEndings: boolean;
   tokens: Token[] = [];
   errors: TokenError[] = [];
 
@@ -153,6 +158,7 @@ class _Tokenizer {
         options.range || {endPos: _file.content.length, startPos: 0, startLine: 0, startCol: 0};
     this._cursor = options.escapedString ? new EscapedCharacterCursor(_file, range) :
                                            new PlainCharacterCursor(_file, range);
+    this._preserveLineEndings = options.preserveLineEndings || false;
     try {
       this._cursor.init();
     } catch (e) {
@@ -161,6 +167,9 @@ class _Tokenizer {
   }
 
   private _processCarriageReturns(content: string): string {
+    if (this._preserveLineEndings) {
+      return content;
+    }
     // http://www.w3.org/TR/html5/syntax.html#preprocessing-the-input-stream
     // In order to keep the original position in the source, we can not
     // pre-process it.
diff --git a/packages/language-service/src/typescript_host.ts b/packages/language-service/src/typescript_host.ts
index f0e5280744..25a3f2e318 100644
--- a/packages/language-service/src/typescript_host.ts
+++ b/packages/language-service/src/typescript_host.ts
@@ -510,6 +510,7 @@ export class TypeScriptServiceHost implements LanguageServiceHost {
           );
       const htmlResult = htmlParser.parse(template.source, fileName, {
         tokenizeExpansionForms: true,
+        preserveLineEndings: true,  // do not convert CRLF to LF
       });
       const {directives, pipes, schemas} = this.getModuleMetadataForDirective(classSymbol);
       const parseResult =
diff --git a/packages/language-service/test/diagnostics_spec.ts b/packages/language-service/test/diagnostics_spec.ts
index 4378c95468..1db4fa0b84 100644
--- a/packages/language-service/test/diagnostics_spec.ts
+++ b/packages/language-service/test/diagnostics_spec.ts
@@ -645,30 +645,27 @@ describe('diagnostics', () => {
     });
   });
 
-  // https://github.com/angular/vscode-ng-language-service/issues/235
-  // There is no easy fix for this issue currently due to the way template
-  // tokenization is done. In the example below, the whole string
-  // `\r\n{{line0}}\r\n{{line1}}\r\n{{line2}}` is tokenized as a whole, and then
-  // CR characters are stripped from it. Source span information is lost in the
-  // process. For more discussion, see the link above.
-  /*
   it('should work correctly with CRLF endings', () => {
+    // https://github.com/angular/vscode-ng-language-service/issues/235
+    // In the example below, the string
+    // `\r\n{{line0}}\r\n{{line1}}\r\n{{line2}}` is tokenized as a whole,
+    // and then CRLF characters are converted to LF.
+    // Source span information is lost in the process.
     const fileName = '/app/test.ng';
-    const content = mockHost.override(fileName,
-  '\r\n<div>\r\n{{line0}}\r\n{{line1}}\r\n{{line2}}\r\n</div>');
+    const content =
+        mockHost.override(fileName, '\r\n<div>\r\n{{line0}}\r\n{{line1}}\r\n{{line2}}\r\n</div>');
     const ngDiags = ngLS.getDiagnostics(fileName);
     expect(ngDiags.length).toBe(3);
     for (let i = 0; i < 3; ++i) {
       const {messageText, start, length} = ngDiags[i];
       expect(messageText)
           .toBe(
-              `Identifier 'line${i}' is not defined. The component declaration, template variable
-  declarations, and element references do not contain such a member`);
+              `Identifier 'line${i}' is not defined. ` +
+              `The component declaration, template variable declarations, and ` +
+              `element references do not contain such a member`);
       // Assert that the span is actually highlight the bounded text. The span
       // would be off if CRLF endings are not handled properly.
       expect(content.substring(start !, start ! + length !)).toBe(`line${i}`);
     }
   });
-  */
-
 });