diff --git a/lark/parse_tree_builder.py b/lark/parse_tree_builder.py
index 5a7c5d7..8b81d29 100644
--- a/lark/parse_tree_builder.py
+++ b/lark/parse_tree_builder.py
@@ -195,6 +195,86 @@ def maybe_create_ambiguous_expander(tree_class, expansion, keep_all_tokens):
     if to_expand:
         return partial(AmbiguousExpander, to_expand, tree_class)
 
+class AmbiguousIntermediateExpander:
+    """
+    Propagate ambiguous intermediate nodes and their derivations up to the
+    current rule.
+
+    In general, converts
+
+    rule
+      _iambig
+        _inter
+          someChildren1
+          ...
+        _inter
+          someChildren2
+          ...
+      someChildren3
+      ...
+
+    to
+
+    _ambig
+      rule
+        someChildren1
+        ...
+        someChildren3
+        ...
+      rule
+        someChildren2
+        ...
+        someChildren3
+        ...
+      rule
+        childrenFromNestedIambigs
+        ...
+        someChildren3
+        ...
+      ...
+
+    propagating up any nested '_iambig' nodes along the way.
+    """
+
+    def __init__(self, tree_class, node_builder):
+        self.node_builder = node_builder
+        self.tree_class = tree_class
+
+    def __call__(self, children):
+        def _is_iambig_tree(child):
+            return hasattr(child, 'data') and child.data == '_iambig'
+
+        def _collapse_iambig(children):
+            """
+            Recursively flatten the derivations of the parent of an '_iambig'
+            node. Returns a list of '_inter' nodes guaranteed not
+            to contain any nested '_iambig' nodes, or None if children does
+            not contain an '_iambig' node.
+            """
+
+            # Due to the structure of the SPPF,
+            # an '_iambig' node can only appear as the first child
+            if children and _is_iambig_tree(children[0]):
+                iambig_node = children[0]
+                result = []
+                for grandchild in iambig_node.children:
+                    collapsed = _collapse_iambig(grandchild.children)
+                    if collapsed:
+                        for child in collapsed:
+                            child.children += children[1:]
+                        result += collapsed
+                    else:
+                        new_tree = self.tree_class('_inter', grandchild.children + children[1:])
+                        result.append(new_tree)
+                return result
+
+        collapsed = _collapse_iambig(children)
+        if collapsed:
+            processed_nodes = [self.node_builder(c.children) for c in collapsed]
+            return self.tree_class('_ambig', processed_nodes)
+
+        return self.node_builder(children)
+
 def ptb_inline_args(func):
     @wraps(func)
     def f(children):
@@ -239,6 +319,7 @@ class ParseTreeBuilder:
                 maybe_create_child_filter(rule.expansion, keep_all_tokens, self.ambiguous, options.empty_indices if self.maybe_placeholders else None),
                 self.propagate_positions and PropagatePositions,
                 self.ambiguous and maybe_create_ambiguous_expander(self.tree_class, rule.expansion, keep_all_tokens),
+                self.ambiguous and partial(AmbiguousIntermediateExpander, self.tree_class)
             ]))
 
             yield rule, wrapper_chain