A way to accept the same XML input as model.to_xml generates as output (see http://stackoverflow.com/questions/4052677/rails-nested-resources-input-vs-output-format-inconsistency for details)

application_controller.rb

class ApplicationController < ActionController::Base
  private

  def fix_nested_attribute_structure(data = nil, model = nil)
    unless data
      # guess data based on current controller
      data = params[self.class.to_s.sub('Controller', '').singularize.underscore.to_sym]
    end
    unless model
      # guess model based on current controller
      model = self.class.to_s.sub('Controller', '').singularize.constantize
    end

    # iterate over the nested attribute keys for the given model
    model.nested_attributes_options.keys.each do |key|
      # skip if current data-set doesn't contain this key
      next unless data.has_key? key

      # When recieving the XML all nested attributes are "doubble-nested".
      # We need to remove this doubble-nesting and also ensure that the
      # content is wrapped inside an array (e.g. if the orignal XML only
      # contained a single sub-node, the XML->Hash conversion would not
      # have done this)
      raise "More than one sub-key found inside a nested attribute key" if data[key].keys.size > 1
      sub_key = data[key].keys[0]
      data[key] = [ data[key].delete(sub_key) ].flatten

      # Recursively fix nested attributes
      fix_nested_attribute_structure data[key], eval(key.to_s.classify)

      # Renamed the nested attribute name by appending '_attributes' to
      # the key-name
      data["#{key.to_s}_attributes".to_sym] = data.delete(key)
    end
  end
end

companies_controller.rb

class CompaniesController < ApplicationController
  before_filter :fix_nested_attribute_structure, :only => [:create, :update]

  ...
end