diff --git a/compiler/src/prog8/compiler/astprocessing/AstChecker.kt b/compiler/src/prog8/compiler/astprocessing/AstChecker.kt
index 82d9020c2..b938e2b03 100644
--- a/compiler/src/prog8/compiler/astprocessing/AstChecker.kt
+++ b/compiler/src/prog8/compiler/astprocessing/AstChecker.kt
@@ -627,8 +627,12 @@ internal class AstChecker(private val program: Program,
         }
 
         if(decl.datatype==DataType.STR) {
-            if(decl.value==null)
-                err("string var must be initialized with a string literal")
+            if(decl.value==null) {
+                // complain about uninitialized str, but only if it's a regular variable
+                val parameter = (decl.parent as? Subroutine)?.parameters?.singleOrNull{ it.name==decl.name }
+                if(parameter==null)
+                    err("string var must be initialized with a string literal")
+            }
             else if (decl.type==VarDeclType.VAR && decl.value !is StringLiteralValue)
                 err("string var can only be initialized with a string literal")
         }
diff --git a/compiler/test/TestSubroutines.kt b/compiler/test/TestSubroutines.kt
index 84fb70136..51dbec8ec 100644
--- a/compiler/test/TestSubroutines.kt
+++ b/compiler/test/TestSubroutines.kt
@@ -36,7 +36,6 @@ class TestSubroutines {
         val errors = ErrorReporterForTests()
         compileText(C64Target, false, text, errors, false).assertFailure("currently str type in signature is invalid")     // TODO should not be invalid
         assertEquals(0, errors.warnings.size)
-        // TODO fix extra error "string var must be initialized with a string literal"
         assertTrue(errors.errors.single().startsWith("Pass-by-reference types (str, array) cannot occur as a parameter type directly."))
     }
 
diff --git a/examples/test.p8 b/examples/test.p8
index 731497414..13a7e3e7f 100644
--- a/examples/test.p8
+++ b/examples/test.p8
@@ -1,5 +1,6 @@
 main {
     sub start() {
+        str zzz
         asmfunc("text")
         func("text")
     }