diff --git a/IPython/iplib.py b/IPython/iplib.py
index 07269bc..8e872d5 100644
--- a/IPython/iplib.py
+++ b/IPython/iplib.py
@@ -6,7 +6,7 @@ Requires Python 2.3 or newer.
 
 This file contains all the classes and helper functions specific to IPython.
 
-$Id: iplib.py 2889 2007-12-12 19:32:33Z vivainio $
+$Id: iplib.py 2891 2007-12-12 22:33:50Z vivainio $
 """
 
 #*****************************************************************************
@@ -79,16 +79,6 @@ import IPython.prefilter as prefilter
 import IPython.shadowns
 # Globals
 
-# make converting between str and unicode easy, so str() will work most of the
-# time
-
-try:
-    sys.setappdefaultencoding(sys.stdin.encoding or 'ascii')
-except:
-    # Many python versions don't have sys.setappdefaultencoding
-    reload(sys)
-    sys.setdefaultencoding(sys.stdin.encoding or 'ascii')
-
 # store the builtin raw_input globally, and use this always, in case user code
 # overwrites it (like wx.py.PyShell does)
 raw_input_original = raw_input
@@ -1921,7 +1911,7 @@ want to merge them back into the new files.""" % locals()
         # this allows execution of indented pasted code. It is tempting
         # to add '\n' at the end of source to run commands like ' a=1'
         # directly, but this fails for more complicated scenarios
-        source = str(source)
+        source=source.encode(self.stdin_encoding)
         if source[:1] in [' ', '\t']:
             source = 'if 1:\n%s' % source