diff --git a/wp-admin/admin-functions.php b/wp-admin/admin-functions.php
index 37f28e2b7a..9a565a6197 100644
--- a/wp-admin/admin-functions.php
+++ b/wp-admin/admin-functions.php
@@ -1,5 +1,50 @@
 <?php
 
+function get_nested_categories($default = 0) {
+ global $post, $tablecategories, $tablepost2cat, $mode, $wpdb;
+
+ if ($post->ID) {
+   $checked_categories = $wpdb->get_col("
+     SELECT category_id
+     FROM  $tablecategories, $tablepost2cat
+     WHERE $tablepost2cat.category_id = cat_ID AND $tablepost2cat.post_id = '$post->ID'
+     ");
+ } else {
+   $checked_categories[] = $default;
+ }
+
+ $categories = $wpdb->get_results("SELECT * FROM $tablecategories ORDER BY category_parent DESC");
+ $result = array();
+ foreach($categories as $category) {
+   $array_category = get_object_vars($category);
+   $me = 0 + $category->cat_ID;
+   $parent = 0 + $category->category_parent;
+   $array_category['children'] = $result[$me];
+   $array_category['checked'] = in_array($category->cat_ID, $checked_categories);
+   $array_category['cat_name'] = stripslashes($category->cat_name);
+   $result[$parent][] = $array_category;
+ }
+
+ return $result[0];
+}
+
+function write_nested_categories($categories) {
+ foreach($categories as $category) {
+   echo '<label for="category-', $category['cat_ID'], '" class="selectit"><input value="', $category['cat_ID'],
+     '" type="checkbox" name="post_category[]" id="category-', $category['cat_ID'], '"',
+     ($category['checked'] ? ' checked="checked"' : ""), '/>', $category['cat_name'], "</label>\n";
+
+   if(isset($category['children'])) {
+     echo "\n<span class='cat-nest'>\n";
+     write_nested_categories($category['children'], $count);
+     echo "</span>\n";
+   }
+ }
+}
+
+function dropdown_categories($default = 0) {
+ write_nested_categories(get_nested_categories($default));
+} 
 
 // Dandy new recursive multiple category stuff.
 function cat_rows($parent = 0, $level = 0, $categories = 0) {
diff --git a/wp-admin/wp-admin.css b/wp-admin/wp-admin.css
index 11e5bd89c6..0bd05081e5 100644
--- a/wp-admin/wp-admin.css
+++ b/wp-admin/wp-admin.css
@@ -65,6 +65,11 @@ fieldset legend {
 	padding: .1em;
 }
 
+fieldset span.cat-nest {
+	display: block;
+	margin-left: 10px;
+}
+
 form, label input {
 	margin: 0;
 	padding: 0;
@@ -91,8 +96,8 @@ p, dl, dd, dt {
 
 textarea, input, select {
 	background: #f4f4f4;
-	color: black;
 	border: 1px solid #cacaca;
+	color: #000;
 	font-family: Georgia, "Times New Roman", Times, serif;
 	margin: 1px;
 	padding: 2px;
diff --git a/wp-includes/functions.php b/wp-includes/functions.php
index 7e84a104f8..ff855022b9 100644
--- a/wp-includes/functions.php
+++ b/wp-includes/functions.php
@@ -396,31 +396,6 @@ function profile($user_login) {
 	echo "<a href='profile.php?user=".$user_data->user_login."' onclick=\"javascript:window.open('profile.php?user=".$user_data->user_login."','Profile','toolbar=0,status=1,location=0,directories=0,menuBar=1,scrollbars=1,resizable=0,width=480,height=320,left=100,top=100'); return false;\">$user_login</a>";
 }
 
-function dropdown_categories($default = 0) {
-	global $post, $tablecategories, $tablepost2cat, $mode, $wpdb;
-	$categories = $wpdb->get_results("SELECT * FROM $tablecategories ORDER BY cat_name");
-
-	if ($post->ID) {
-		$postcategories = $wpdb->get_col("
-			SELECT category_id 
-			FROM  $tablecategories, $tablepost2cat 
-			WHERE $tablepost2cat.category_id = cat_ID AND $tablepost2cat.post_id = '$post->ID'
-			");
-	} else {
-		$postcategories[] = $default;
-	}
-	
-	foreach($categories as $category) {
-		++$i;
-		$category->cat_name = stripslashes($category->cat_name);
-		echo "\n<label for='category-$i' class='selectit'><input value='$category->cat_ID' type='checkbox' name='post_category[]' id='category-$i'";
-		if ($postcategories && in_array($category->cat_ID, $postcategories))
-			echo ' checked="checked"';
-		echo " /> $category->cat_name</label> ";
-	}
-
-}
-
 function touch_time($edit = 1) {
 	global $month, $postdata, $time_difference;
 	// echo $postdata['Date'];