diff --git a/core/src/main/java/org/springframework/security/config/PasswordEncoderParser.java b/core/src/main/java/org/springframework/security/config/PasswordEncoderParser.java
index 2bedf5d510..85d546cbcd 100644
--- a/core/src/main/java/org/springframework/security/config/PasswordEncoderParser.java
+++ b/core/src/main/java/org/springframework/security/config/PasswordEncoderParser.java
@@ -55,14 +55,17 @@ public class PasswordEncoderParser {
     private BeanMetadataElement passwordEncoder;
     private BeanDefinition saltSource;
 
-
     public PasswordEncoderParser(Element element, ParserContext parserContext) {
         parse(element, parserContext);
     }
 
     private void parse(Element element, ParserContext parserContext) {
         String hash = element.getAttribute(ATT_HASH);
-        boolean useBase64 = StringUtils.hasText(element.getAttribute(ATT_BASE_64));
+        boolean useBase64 = false;
+        
+        if (StringUtils.hasText(element.getAttribute(ATT_BASE_64))) {
+            useBase64 = Boolean.parseBoolean(element.getAttribute(ATT_BASE_64));
+        }
 
         String ref = element.getAttribute(ATT_REF);
 
@@ -73,10 +76,10 @@ public class PasswordEncoderParser {
             RootBeanDefinition beanDefinition = new RootBeanDefinition(beanClass);
             beanDefinition.setSource(parserContext.extractSource(element));
             if (useBase64) {
-                if (beanClass.isAssignableFrom(BaseDigestPasswordEncoder.class)) {
+                if (BaseDigestPasswordEncoder.class.isAssignableFrom(beanClass)) {
                     beanDefinition.getPropertyValues().addPropertyValue("encodeHashAsBase64", "true");
                 } else {
-                    logger.warn(ATT_BASE_64 + " isn't compatible with " + OPT_HASH_LDAP_SHA + " and will be ignored");
+                    logger.warn(ATT_BASE_64 + " isn't compatible with " + hash + " and will be ignored");
                 }
             }
             passwordEncoder = beanDefinition;
diff --git a/core/src/test/java/org/springframework/security/config/AuthenticationProviderBeanDefinitionParserTests.java b/core/src/test/java/org/springframework/security/config/AuthenticationProviderBeanDefinitionParserTests.java
index e13cd7735f..bae13d3a33 100644
--- a/core/src/test/java/org/springframework/security/config/AuthenticationProviderBeanDefinitionParserTests.java
+++ b/core/src/test/java/org/springframework/security/config/AuthenticationProviderBeanDefinitionParserTests.java
@@ -72,19 +72,17 @@ public class AuthenticationProviderBeanDefinitionParserTests {
     }
 
     @Test
-    public void worksWithJdbcUserService() throws Exception {
+    public void passwordIsBase64EncodedWhenBase64IsEnabled() throws Exception {
         setContext(" <authentication-provider>" +
-                "        <password-encoder hash='{sha}'/>" +
+                "        <password-encoder hash='md5' base64='true'/>" +
                 "        <user-service>" +
-                "            <user name='bob' password='{SSHA}PpuEwfdj7M1rs0C2W4ssSM2XEN/Y6S5U' authorities='ROLE_A' />" +
+                "            <user name='bob' password='ErFB811YuLOkbupl5qwXng==' authorities='ROLE_A' />" +
                 "        </user-service>" +
                 "    </authentication-provider>");
 
         getProvider().authenticate(bob);
-    }
-
-
-
+    }    
+    
     @Test
     public void externalUserServiceAndPasswordEncoderWork() throws Exception {
         setContext(" <authentication-provider user-service-ref='customUserService'>" +