diff --git a/lib/moodlelib.php b/lib/moodlelib.php
index 59fcd1c132f..5a6ef0577e3 100644
--- a/lib/moodlelib.php
+++ b/lib/moodlelib.php
@@ -8375,11 +8375,12 @@ function count_words($string) {
  * Letters are defined as chars not in tags and different from whitespace.
  *
  * @category string
- * @param string $string The text to be searched for letters.
+ * @param string $string The text to be searched for letters. May be HTML.
  * @return int The count of letters in the specified text.
  */
 function count_letters($string) {
     $string = strip_tags($string); // Tags are out now.
+    $string = html_entity_decode($string);
     $string = preg_replace('/[[:space:]]*/', '', $string); // Whitespace are out now.
 
     return core_text::strlen($string);
diff --git a/lib/tests/moodlelib_test.php b/lib/tests/moodlelib_test.php
index 00ff10e1827..8c02d58b1b8 100644
--- a/lib/tests/moodlelib_test.php
+++ b/lib/tests/moodlelib_test.php
@@ -3822,6 +3822,31 @@ class core_moodlelib_testcase extends advanced_testcase {
         ];
     }
 
+    /**
+     * Test function {@see count_letters()}.
+     *
+     * @dataProvider count_letters_testcases
+     * @param int $expectedcount number of characters in $string.
+     * @param string $string the test string to count the letters of.
+     */
+    public function test_count_letters(int $expectedcount, string $string): void {
+        $this->assertEquals($expectedcount, count_letters($string));
+    }
+
+    /**
+     * Data provider for {@see count_letters_testcases}.
+     *
+     * @return array of test cases.
+     */
+    public function count_letters_testcases(): array {
+        return [
+            [0, ''],
+            [1, 'x'],
+            [1, '&'],
+            [4, '<p>frog</p>'],
+        ];
+    }
+
     /**
      * Tests the getremoteaddr() function.
      */