diff --git a/src/psyclone/domain/lfric/transformations/lfric_loop_fuse_trans.py b/src/psyclone/domain/lfric/transformations/lfric_loop_fuse_trans.py
index 488e64f2ee..98db3a8d96 100644
--- a/src/psyclone/domain/lfric/transformations/lfric_loop_fuse_trans.py
+++ b/src/psyclone/domain/lfric/transformations/lfric_loop_fuse_trans.py
@@ -168,7 +168,6 @@ def validate(self, node1: LFRicLoop, node2: LFRicLoop,
         # 2.2) If 'same_space' is true check that both function spaces are
         # the same or that at least one of the nodes is on ANY_SPACE. The
         # former case is convenient when loop fusion is applied generically.
-
         if same_space:
             if node1_fs_name == node2_fs_name:
                 pass
@@ -182,12 +181,15 @@ def validate(self, node1: LFRicLoop, node2: LFRicLoop,
             # 2.3.1) Check whether one or more of the function spaces
             # is ANY_SPACE without the 'same_space' flag
             if node_on_any_space:
-                raise TransformationError(
-                    f"Error in {self.name} transformation: One or more of the "
-                    f"iteration spaces is unknown ('ANY_SPACE') so loop fusion"
-                    f" might be invalid. If you know the spaces are the same "
-                    f"then please set the 'same_space' optional argument to "
-                    f"'True'.")
+                # If the nodes are on ANY_SPACE, but those are the same
+                # space, we can fuse.
+                if node1_fs_name != node2_fs_name:
+                    raise TransformationError(
+                        f"Error in {self.name} transformation: One or more of "
+                        f"the iteration spaces is unknown ('ANY_SPACE') so "
+                        f"loop fusion might be invalid. If you know the "
+                        f"spaces are the same then please set the "
+                        f"'same_space' optional argument to 'True'.")
             # 2.3.2) Check whether specific function spaces are the
             # same. If they are not, the loop fusion is still possible
             # but only when both function spaces are discontinuous
diff --git a/src/psyclone/tests/domain/lfric/transformations/lfric_transformations_test.py b/src/psyclone/tests/domain/lfric/transformations/lfric_transformations_test.py
index 1619d1eac7..e13ec177e8 100644
--- a/src/psyclone/tests/domain/lfric/transformations/lfric_transformations_test.py
+++ b/src/psyclone/tests/domain/lfric/transformations/lfric_transformations_test.py
@@ -3204,18 +3204,53 @@ def test_multi_builtins_fuse_error():
             "reduction") in str(excinfo.value)
 
 
-def test_loop_fuse_error(dist_mem):
-    '''Test that we raise an exception in loop fusion if one or more of
-    the loops has an any_space iteration space.'''
-    _, invoke = get_invoke("15.14.2_multiple_set_kernels.f90",
-                           TEST_API, idx=0, dist_mem=dist_mem)
+def test_loop_fuse_any_space(tmpdir, dist_mem):
+    '''Test that we correctly fuse two or more of loops that are on
+    any_space iteration space.'''
+    psy, invoke = get_invoke("15.14.2_multiple_set_kernels.f90",
+                             TEST_API, idx=0, dist_mem=dist_mem)
     schedule = invoke.schedule
     ftrans = LFRicLoopFuseTrans()
-    with pytest.raises(TransformationError) as excinfo:
-        ftrans.apply(schedule.children[0], schedule.children[1])
-    assert ("One or more of the iteration spaces is unknown "
-            "('ANY_SPACE') so loop fusion might be "
-            "invalid") in str(excinfo.value)
+
+    # Fuses the first two loops
+    ftrans.apply(schedule.children[0], schedule.children[1])
+    code = str(psy.gen)
+    assert (
+        "do df = loop0_start, loop0_stop, 1\n"
+        "      ! Built-in: setval_c (set a real-valued field to a real scalar "
+        "value)\n"
+        "      f1_data(df) = fred\n"
+        "\n"
+        "      ! Built-in: setval_c (set a real-valued field to a real scalar "
+        "value)\n"
+        "      f2_data(df) = 3.0_r_def\n"
+        "    enddo\n") in code
+    assert (
+        "do df = loop1_start, loop1_stop, 1\n"
+        "      ! Built-in: setval_c (set a real-valued field to a real scalar "
+        "value)\n"
+        "      f3_data(df) = ginger\n"
+        "    enddo\n") in code
+
+    # Fuses the combined loop with the third loop
+    ftrans.apply(schedule.children[0], schedule.children[1])
+    code = str(psy.gen)
+    assert (
+        "do df = loop0_start, loop0_stop, 1\n"
+        "      ! Built-in: setval_c (set a real-valued field to a real scalar "
+        "value)\n"
+        "      f1_data(df) = fred\n"
+        "\n"
+        "      ! Built-in: setval_c (set a real-valued field to a real scalar "
+        "value)\n"
+        "      f2_data(df) = 3.0_r_def\n"
+        "\n"
+        "      ! Built-in: setval_c (set a real-valued field to a real scalar "
+        "value)\n"
+        "      f3_data(df) = ginger\n"
+        "    enddo\n") in code
+
+    assert LFRicBuild(tmpdir).code_compiles(psy)
 
 
 # Repeat the reduction tests for the reproducible version