diff -u includes/form.inc includes/form.inc
--- includes/form.inc	1 Dec 2009 07:22:15 -0000
+++ includes/form.inc	1 Dec 2009 17:12:02 -0000
@@ -2851,14 +2851,14 @@
  *     where a visual label is not needed, such as a table of checkboxes where
  *     the row and column provide the context. The tooltip will include the
  *     title and required marker.
- * - none: Suppress output of any label or required marker. For example, this
- *     is used by the password_confirm #type as set in system_element_info().
- *     The password_confirm field creates children elements that have their own
- *     labels and required markers, but the parent element should have neither.
- *     Use this value carefully because a field with no label and no surrounding
- *     context causes challenges for accessibility.
- * The label or attribute includes a required marker for required fields for
- * all cases except 'none'.
+ * The label or attribute includes a required marker for required fields.
+ * 
+ * If the #title property is not set the label and any required marker will 
+ * not be displayed. This is used by the password_confirm element #type.
+ * The password_confirm field creates children elements that have their own
+ * labels and required markers, but the parent element should have neither.
+ * Use this carefully because a field with no label and no surrounding context
+ * causes challenges for accessibility.
  *
  * @param $variables
  *   An associative array containing:
@@ -2884,6 +2884,11 @@
   if (!empty($element['#name'])) {
     $class[] = 'form-item-' . strtr($element['#name'], array(' ' => '-', '_' => '-', '[' => '-', ']' => ''));
   }
+  
+  // If #title is not present, we don't display any label or required marker
+  if (!isset($element['#title'])) {
+  	$element['#title_display'] = 'none';
+  }
 
   $output = '<div class="' . implode(' ', $class) . '">' . "\n";
 
@@ -3246,7 +3251,7 @@
   $batch =& batch_get();
 
   drupal_theme_initialize();
-
+  
   if (isset($batch)) {
     // Add process information
     $process_info = array(
@@ -3261,7 +3266,7 @@
     );
     $batch += $process_info;
 
-    // The batch is now completely built. Allow other modules to make changes to the
+    // The batch is now completely built. Allow other modules to make changes to the 
     // batch so that it is easier to reuse batch processes in other enviroments.
     drupal_alter('batch', $batch);
 
diff -u modules/simpletest/tests/form_test.module modules/simpletest/tests/form_test.module
--- modules/simpletest/tests/form_test.module	1 Dec 2009 07:22:16 -0000
+++ modules/simpletest/tests/form_test.module	1 Dec 2009 17:12:02 -0000
@@ -515,7 +515,9 @@
   );
   $form['form_textfield_test_no_title_required'] = array(
     '#type' => 'textfield',
-    // No title.
+    // We use an empty title, since not setting #title supresses the label
+    // and required marker.
+    '#title' => '',
     '#required' => TRUE,
   );
   $form['form_textfield_test_title'] = array(
@@ -528,10 +530,9 @@
     '#title' => t('Textfield test for title after element'),
     '#title_display' => 'after',
   );
+  // Textfield test for title set not to display
   $form['form_textfield_test_title_no_show'] = array(
     '#type' => 'textfield',
-    '#title' => t('Textfield test for title set not to display'),
-    '#title_display' => 'none',
   );
 
   return $form;
diff -u modules/system/system.module modules/system/system.module
--- modules/system/system.module	1 Dec 2009 07:22:17 -0000
+++ modules/system/system.module	1 Dec 2009 17:12:02 -0000
@@ -368,9 +368,6 @@
     '#input' => TRUE,
     '#process' => array('form_process_password_confirm', 'user_form_process_password_confirm'),
     '#theme_wrappers' => array('form_element'),
-    // Do not output a title or required marker for password_confirm.
-    // The children elements will output their own titles as usual.
-    '#title_display' => 'none',
   );
   $types['textarea'] = array(
     '#input' => TRUE,