GDB call and p func() on embedded target

Hello,

I am trying to call a function from withing a gdb debugging session on
an embedded target. However gdb never returns and when i stop it
manually the program counter is in a strange place. It appears that gdb
is not able to catch the return, and is continuing  execution from
before the core was halted... 

assume the function I want to call has prototype int32_t Init(void);

If I set the pc manually I can step throught the function until the
return without a problem.

I can even set a breakpoint on Init and then use p Init(). The
breakpoint will fire and I can step throught the code manually.

eg.

target remote localhost:3333
monitor reset halt
monitor reset init
file loader.elf
load loader.elf
set $sp=0x20010000
set $pc=&Init
b Init
p Init()
n
n
n
...

However without the breakpoint gdb never returns.
Is this a known problem? Is there a workaround?

Some background:
The purpose of this entire excercise is to arrive at a tool/set of
scripts that can be used to load and execute arbitrary code from RAM,
to fi. manipulate external memories or run tests.

Regards,
M