diff --git a/src/org/ballerinalang/plugins/idea/formatter/BallerinaEnterBetweenBracesHandler.java b/src/org/ballerinalang/plugins/idea/formatter/BallerinaEnterBetweenBracesHandler.java
new file mode 100644
index 00000000..bc4e4141
--- /dev/null
+++ b/src/org/ballerinalang/plugins/idea/formatter/BallerinaEnterBetweenBracesHandler.java
@@ -0,0 +1,83 @@
+/*
+ *  Copyright (c) 2017, WSO2 Inc. (http://www.wso2.org) All Rights Reserved.
+ *
+ *  Licensed under the Apache License, Version 2.0 (the "License");
+ *  you may not use this file except in compliance with the License.
+ *  You may obtain a copy of the License at
+ *
+ *  http://www.apache.org/licenses/LICENSE-2.0
+ *
+ *  Unless required by applicable law or agreed to in writing, software
+ *  distributed under the License is distributed on an "AS IS" BASIS,
+ *  WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ *  See the License for the specific language governing permissions and
+ *  limitations under the License.
+ */
+
+package org.ballerinalang.plugins.idea.formatter;
+
+import com.intellij.codeInsight.editorActions.enter.EnterBetweenBracesHandler;
+import com.intellij.openapi.actionSystem.DataContext;
+import com.intellij.openapi.editor.Editor;
+import com.intellij.openapi.editor.EditorModificationUtil;
+import com.intellij.openapi.project.Project;
+import com.intellij.psi.PsiDocumentManager;
+import com.intellij.psi.PsiElement;
+import com.intellij.psi.PsiFile;
+import com.intellij.psi.PsiWhiteSpace;
+import org.ballerinalang.plugins.idea.BallerinaLanguage;
+import org.jetbrains.annotations.NotNull;
+
+public class BallerinaEnterBetweenBracesHandler extends EnterBetweenBracesHandler {
+
+    @Override
+    public Result postProcessEnter(@NotNull PsiFile file, @NotNull Editor editor, @NotNull DataContext dataContext) {
+        if (!file.getLanguage().is(BallerinaLanguage.INSTANCE)) {
+            return Result.Continue;
+        }
+        if (isInsideABlock(file, editor)) {
+            Project project = file.getProject();
+            // Todo - get the spacing from settings
+            EditorModificationUtil.insertStringAtCaret(editor, "    ", false, 4);
+            PsiDocumentManager.getInstance(project).commitDocument(editor.getDocument());
+        }
+        return Result.Continue;
+    }
+
+    private boolean isInsideABlock(PsiFile file, Editor editor) {
+        // Get the offset of the caret
+        int offset = editor.getCaretModel().getOffset();
+        // Get the element at the offset
+        PsiElement element = file.findElementAt(offset);
+        if (element == null) {
+            return false;
+        }
+
+        // Check whether the previous non whitespace element is '{'. If so, that means the caret is within a block.
+        int tempOffset = offset;
+        PsiElement tempElement = element;
+        while (tempElement instanceof PsiWhiteSpace && tempOffset > 0) {
+            tempElement = file.findElementAt(--tempOffset);
+        }
+        if (tempElement != null && "{".equals(tempElement.getText())) {
+            return true;
+        }
+
+        // Check whether the next non whitespace element is '}'. If so, that means the caret is within a block.
+        tempOffset = offset;
+        tempElement = element;
+        while (tempElement instanceof PsiWhiteSpace && tempOffset < file.getTextLength()) {
+            tempElement = file.findElementAt(++tempOffset);
+        }
+        if (tempElement != null && "}".equals(tempElement.getText())) {
+            return true;
+        }
+        // Return false if the above conditions are not satisfied.
+        return false;
+    }
+
+    @Override
+    protected boolean isBracePair(char c1, char c2) {
+        return c1 == '{' && c2 == '}';
+    }
+}