diff --git a/system/libraries/Image_lib.php b/system/libraries/Image_lib.php
index 0750b64..4017afb 100644
--- a/system/libraries/Image_lib.php
+++ b/system/libraries/Image_lib.php
@@ -943,10 +943,23 @@
 		{
 			@imagealphablending($src_img, TRUE);
 		} 		
-
-		// Set RGB values for text and shadow		
-		imagecolortransparent($wm_img, imagecolorat($wm_img, $this->wm_x_transp, $this->wm_y_transp));
-		imagecopymerge($src_img, $wm_img, $x_axis, $y_axis, 0, 0, $wm_width, $wm_height, $this->wm_opacity);
+		
+		// Set RGB values for text and shadow
+		$rgba = imagecolorat($wm_img, $this->wm_x_transp, $this->wm_y_transp);
+		$alpha = ($rgba & 0x7F000000) >> 24;
+		
+		// make a best guess as to whether we're dealing with an image with alpha transparency or no/binary transparency
+		if ($alpha > 0)
+		{
+			// copy the image directly, the image's alpha transparency being the sole determinant of blending
+			imagecopy($src_img, $wm_img, $x_axis, $y_axis, 0, 0, $wm_width, $wm_height);
+		}
+		else
+		{
+			// set our RGB value from above to be transparent and merge the images with the specified opacity
+			imagecolortransparent($wm_img, imagecolorat($wm_img, $this->wm_x_transp, $this->wm_y_transp));
+			imagecopymerge($src_img, $wm_img, $x_axis, $y_axis, 0, 0, $wm_width, $wm_height, $this->wm_opacity);			
+		}
 				
 		//  Output the image
 		if ($this->dynamic_output == TRUE)
@@ -1533,6 +1546,6 @@
 
 }
 // END Image_lib Class
-
-/* End of file Image_lib.php */
+
+/* End of file Image_lib.php */
 /* Location: ./system/libraries/Image_lib.php */
\ No newline at end of file