diff --git a/py/lexer.c b/py/lexer.c
index 12cb5ae5b..97c84cf11 100644
--- a/py/lexer.c
+++ b/py/lexer.c
@@ -112,12 +112,11 @@ STATIC bool is_following_odigit(mp_lexer_t *lex) {
     return lex->chr1 >= '0' && lex->chr1 <= '7';
 }
 
-// TODO UNICODE include unicode characters in definition of identifiers
+// to easily parse utf-8 identifiers we allow any raw byte with high bit set
 STATIC bool is_head_of_identifier(mp_lexer_t *lex) {
-    return is_letter(lex) || lex->chr0 == '_';
+    return is_letter(lex) || lex->chr0 == '_' || lex->chr0 >= 0x80;
 }
 
-// TODO UNICODE include unicode characters in definition of identifiers
 STATIC bool is_tail_of_identifier(mp_lexer_t *lex) {
     return is_head_of_identifier(lex) || is_digit(lex);
 }
@@ -523,13 +522,13 @@ STATIC void mp_lexer_next_token_into(mp_lexer_t *lex, bool first_token) {
     } else if (is_head_of_identifier(lex)) {
         lex->tok_kind = MP_TOKEN_NAME;
 
-        // get first char
-        vstr_add_char(&lex->vstr, CUR_CHAR(lex));
+        // get first char (add as byte to remain 8-bit clean and support utf-8)
+        vstr_add_byte(&lex->vstr, CUR_CHAR(lex));
         next_char(lex);
 
         // get tail chars
         while (!is_end(lex) && is_tail_of_identifier(lex)) {
-            vstr_add_char(&lex->vstr, CUR_CHAR(lex));
+            vstr_add_byte(&lex->vstr, CUR_CHAR(lex));
             next_char(lex);
         }
 
diff --git a/tests/unicode/unicode_id.py b/tests/unicode/unicode_id.py
new file mode 100644
index 000000000..10f540c50
--- /dev/null
+++ b/tests/unicode/unicode_id.py
@@ -0,0 +1,27 @@
+# test unicode in identifiers
+
+# comment
+# αβγδϵφζ
+
+# global identifiers
+α = 1
+αβγ = 2
+bβ = 3
+βb = 4
+print(α, αβγ, bβ, βb)
+
+# function, argument, local identifiers
+def α(β, γ):
+    δ = β + γ
+    print(β, γ, δ)
+α(1, 2)
+
+# class, method identifiers
+class φ:
+    def __init__(self):
+        pass
+    def δ(self, ϵ):
+        print(ϵ)
+zζzζz = φ()
+if hasattr(zζzζz, "δ"):
+    zζzζz.δ(ϵ=123)