diff --git a/app/canvas/features/wrapper-component/wrapper-component.tsx b/app/canvas/features/wrapper-component/wrapper-component.tsx
index 22d053fa1e..a316969df0 100644
--- a/app/canvas/features/wrapper-component/wrapper-component.tsx
+++ b/app/canvas/features/wrapper-component/wrapper-component.tsx
@@ -70,10 +70,6 @@ export const WrapperComponentDev = ({
     "data-id": instance.id,
     ref: refCallback,
     onClick: (event: MouseEvent) => {
-      // Prevent click handler for element selection
-      if (isEditing) {
-        event.stopPropagation();
-      }
       if (instance.component === "Link") {
         event.preventDefault();
       }
diff --git a/app/canvas/shared/use-shortcuts.ts b/app/canvas/shared/use-shortcuts.ts
index df9f480c74..35cc52d80d 100644
--- a/app/canvas/shared/use-shortcuts.ts
+++ b/app/canvas/shared/use-shortcuts.ts
@@ -9,6 +9,8 @@ import {
   useTextEditingInstanceId,
 } from "~/shared/nano-states";
 
+const inputTags = ["INPUT", "SELECT", "TEXTAREA"] as const;
+
 type HandlerEvent = {
   key: string;
   preventDefault?: () => void;
@@ -73,7 +75,7 @@ export const useShortcuts = () => {
   useHotkeys(
     "backspace, delete",
     shortcutHandlerMap.delete,
-    { ...options, enableOnTags: ["INPUT", "SELECT", "TEXTAREA"] },
+    { ...options, enableOnTags: [...inputTags] },
     [shortcutHandlerMap.delete]
   );
 
@@ -89,7 +91,7 @@ export const useShortcuts = () => {
       setSelectedInstance(undefined);
       publish<"selectInstance">({ type: "selectInstance" });
     },
-    options,
+    { ...options, enableOnContentEditable: true, enableOnTags: [...inputTags] },
     [selectedInstance, editingInstanceId]
   );
 
diff --git a/app/canvas/shared/use-track-selected-element.ts b/app/canvas/shared/use-track-selected-element.ts
index afc0e5bd35..15529e9b5f 100644
--- a/app/canvas/shared/use-track-selected-element.ts
+++ b/app/canvas/shared/use-track-selected-element.ts
@@ -1,4 +1,4 @@
-import { useCallback, useEffect } from "react";
+import { useCallback, useEffect, useRef } from "react";
 import { type Instance, publish, useSubscribe } from "@webstudio-is/sdk";
 import { useSelectedElement, useSelectedInstance } from "./nano-states";
 import {
@@ -15,7 +15,9 @@ const eventOptions = {
 export const useTrackSelectedElement = () => {
   const [selectedElement, setSelectedElement] = useSelectedElement();
   const [selectedInstance, setSelectedInstance] = useSelectedInstance();
-  const [, setEditingInstanceId] = useTextEditingInstanceId();
+  const [editingInstanceId, setEditingInstanceId] = useTextEditingInstanceId();
+  const editingInstanceIdRef = useRef(editingInstanceId);
+  editingInstanceIdRef.current = editingInstanceId;
   const [rootInstance] = useRootInstance();
   const selectInstance = useCallback(
     (id) => {
@@ -45,17 +47,40 @@ export const useTrackSelectedElement = () => {
     }
   }, [selectedInstance, selectedElement, setSelectedElement]);
 
+  useEffect(() => {
+    if (
+      editingInstanceIdRef.current !== undefined &&
+      selectedInstance?.id !== editingInstanceIdRef.current
+    ) {
+      setEditingInstanceId(undefined);
+    }
+  }, [selectedInstance, setEditingInstanceId]);
+
   useEffect(() => {
     const handleClick = (event: MouseEvent) => {
       // Notify in general that document was clicked
       // e.g. to hide the side panel
       publish<"clickCanvas">({ type: "clickCanvas" });
+      let element = event.target as HTMLElement;
 
-      if (!(event.target instanceof HTMLElement)) return;
+      // If we click on an element that is not a component, we search for a parent component.
+      if (element.dataset.component === undefined) {
+        const instanceElement =
+          element.closest<HTMLElement>("[data-component]");
+        if (instanceElement === null) {
+          return;
+        }
+        element = instanceElement;
+      }
 
-      const { id, dataset } = event.target;
+      const { id, dataset } = element;
 
-      // It's a second click in a double click.
+      // Enable clicking inside of content editable without trying to select the element as an instance.
+      if (editingInstanceIdRef.current === id) {
+        return;
+      }
+
+      // It's the second click in a double click.
       if (event.detail === 2) {
         const component = dataset.component as Instance["component"];
         if (component === undefined || component in primitives === false) {
@@ -65,7 +90,7 @@ export const useTrackSelectedElement = () => {
         // When user double clicks on an inline instance, we need to select the parent instance and put it indo text editing mode.
         // Inline instances are not directly, only through parent instance.
         if (isInlineOnly) {
-          const parentId = event.target.parentElement?.id;
+          const parentId = element.parentElement?.id;
           if (parentId) {
             selectInstance(parentId);
             setEditingInstanceId(parentId);