link_to image_tag with inner text or html in rails

You can use blocks as an alternative to the string interpolation with correct usage html_safe. For example:

<%= link_to '#' do %>
  Lorem Ipsum <%= image_tag('/images/menu-arrow-down.gif') %>
<% end %>

Or a shorter way is

<%= link_to image_tag('image/someimage.png') + "Some text", some_path %>