diff --git a/apps/builder/app/canvas/features/text-editor/interop.test.tsx b/apps/builder/app/canvas/features/text-editor/interop.test.tsx
index 25bb29dcaa..03cd1cb6f5 100644
--- a/apps/builder/app/canvas/features/text-editor/interop.test.tsx
+++ b/apps/builder/app/canvas/features/text-editor/interop.test.tsx
@@ -340,3 +340,64 @@ test.each([
     );
   }
 );
+
+test.each(["em", "strong", "span"])(
+  "preserves text and a nested link inside %s across edits",
+  async (tag) => {
+    const { instances } = renderData(
+      <ws.element ws:tag="p" ws:id="paragraph">
+        <ws.element ws:tag={tag} ws:id="wrapper">
+          {"Before "}
+          <ws.element ws:tag="a" ws:id="link">
+            linked text
+          </ws.element>
+          {" after."}
+        </ws.element>
+      </ws.element>
+    );
+    const refs: Refs = new Map();
+    const editor = createHeadlessEditor({ nodes: [LinkNode] });
+    await new Promise<void>((resolve) => {
+      editor.update(() => $convertToLexical(instances, "paragraph", refs), {
+        onUpdate: resolve,
+      });
+    });
+    expect(
+      editor.getEditorState().read(() => $getRoot().getTextContent())
+    ).toBe("Before linked text after.");
+    await new Promise<void>((resolve) => {
+      editor.update(
+        () => {
+          $getRoot()
+            .getAllTextNodes()
+            .find((node) => node.getTextContent() === "linked text")!
+            .setTextContent("edited link");
+        },
+        { onUpdate: resolve }
+      );
+    });
+    let id = 0;
+    const updates = editor
+      .getEditorState()
+      .read(() =>
+        $convertToUpdates(
+          instances.get("paragraph")!,
+          refs,
+          new Map(),
+          () => `new-${++id}`
+        )
+      );
+    const expected = renderTemplate(
+      <ws.element ws:tag="p" ws:id="paragraph">
+        <ws.element ws:tag={tag} ws:id="wrapper">
+          {"Before "}
+          <ws.element ws:tag="a" ws:id="link">
+            edited link
+          </ws.element>
+          {" after."}
+        </ws.element>
+      </ws.element>
+    ).instances;
+    expect(updates).toEqual(expected);
+  }
+);
diff --git a/apps/builder/app/canvas/features/text-editor/interop.ts b/apps/builder/app/canvas/features/text-editor/interop.ts
index 847456577f..b0735f6ac1 100644
--- a/apps/builder/app/canvas/features/text-editor/interop.ts
+++ b/apps/builder/app/canvas/features/text-editor/interop.ts
@@ -1,12 +1,12 @@
 import {
   type TextNode,
   type ElementNode,
+  type TextFormatType,
   $getRoot,
   $createTextNode,
   $createParagraphNode,
   $createLineBreakNode,
   $isTextNode,
-  $isElementNode,
   $isParagraphNode,
   $isLineBreakNode,
 } from "lexical";
@@ -45,8 +45,60 @@ const $writeUpdates = (
   refs: Refs,
   newLinkKeyToInstanceId: Refs,
   createId: CreateId,
-  transientTextNodeKeys: ReadonlySet<string>
+  transientTextNodeKeys: ReadonlySet<string>,
+  inheritedFormats: ReadonlySet<string> = new Set()
 ) => {
+  const wrapFormats = (child: TextNode | ElementNode) => {
+    let parentUpdates = instanceChildren;
+    const formats = new Set(inheritedFormats);
+    const textNodes = $isTextNode(child) ? [child] : child.getAllTextNodes();
+    const candidates = [["span", "span"], ...elementLexicalFormats] as const;
+    for (const [format, defaultTag, ...aliases] of candidates) {
+      if (formats.has(format)) {
+        continue;
+      }
+      const alias = aliases.find((tag) => refs.has(`${child.getKey()}:${tag}`));
+      const key = `${child.getKey()}:${alias ?? format}`;
+      if (!$isTextNode(child) && !refs.has(key)) {
+        continue;
+      }
+      if (
+        textNodes.length === 0 ||
+        !textNodes.every((text) =>
+          format === "span" ? $isSpanNode(text) : text.hasFormat(format)
+        )
+      ) {
+        continue;
+      }
+      let id = refs.get(key) ?? createId();
+      const previous = parentUpdates.at(-1);
+      const existing = instancesList.find((instance) => instance.id === id);
+      if (
+        previous?.type === "id" &&
+        previous.value === id &&
+        existing !== undefined
+      ) {
+        parentUpdates = existing.children;
+      } else {
+        if (existing !== undefined) {
+          id = createId();
+        }
+        const instance: Instance = {
+          type: "instance",
+          id,
+          component: elementComponent,
+          tag: alias ?? defaultTag,
+          children: [],
+        };
+        refs.set(key, id);
+        instancesList.push(instance);
+        parentUpdates.push({ type: "id", value: id });
+        parentUpdates = instance.children;
+      }
+      formats.add(format);
+    }
+    return { parentUpdates, formats };
+  };
   const children = node.getChildren();
   for (const child of children) {
     if ($isParagraphNode(child)) {
@@ -64,10 +116,11 @@ const $writeUpdates = (
       instanceChildren.push({ type: "text", value: "\n" });
     }
     if ($isLinkNode(child)) {
+      const { parentUpdates, formats } = wrapFormats(child);
       const key = child.getKey();
       const id = refs.get(key) ?? newLinkKeyToInstanceId.get(key) ?? createId();
       refs.set(key, id);
-      instanceChildren.push({
+      parentUpdates.push({
         type: "id",
         value: id,
       });
@@ -79,7 +132,8 @@ const $writeUpdates = (
         refs,
         newLinkKeyToInstanceId,
         createId,
-        transientTextNodeKeys
+        transientTextNodeKeys,
+        formats
       );
       instancesList.push({
         type: "instance",
@@ -97,46 +151,7 @@ const $writeUpdates = (
       // considering lexical represents both as single node
       // and add ref suffix to distinct styling on one node key
       const text = child.getTextContent();
-      let parentUpdates = instanceChildren;
-      if ($isSpanNode(child)) {
-        // prematurely generate span id to select it right after applying
-        const key = `${child.getKey()}:span`;
-        const id = refs.get(key) ?? createId();
-        refs.set(key, id);
-        const childChildren: Instance["children"] = [];
-        instancesList.push({
-          type: "instance",
-          id,
-          component: elementComponent,
-          tag: "span",
-          children: childChildren,
-        });
-        parentUpdates.push({ type: "id", value: id });
-        parentUpdates = childChildren;
-      }
-      // convert all lexical formats
-      for (const [format, defaultTag, ...aliases] of elementLexicalFormats) {
-        if (child.hasFormat(format)) {
-          // Preserve semantic MDX tags and their template identity on edits.
-          const alias = aliases.find((tag) =>
-            refs.has(`${child.getKey()}:${tag}`)
-          );
-          const tag = alias ?? defaultTag;
-          const key = `${child.getKey()}:${alias ?? format}`;
-          const id = refs.get(key) ?? createId();
-          refs.set(key, id);
-          const childInstance: Instance = {
-            type: "instance",
-            id,
-            component: elementComponent,
-            tag,
-            children: [],
-          };
-          instancesList.push(childInstance);
-          parentUpdates.push({ type: "id", value: id });
-          parentUpdates = childInstance.children;
-        }
-      }
+      const { parentUpdates } = wrapFormats(child);
       parentUpdates.push({ type: "text", value: text });
     }
   }
@@ -176,26 +191,37 @@ export const $convertToPlainTextUpdate = (treeRootInstance: Instance) => [
   },
 ];
 
+type InlineFormat = {
+  format: TextFormatType | "span";
+  suffix: string;
+  id: string;
+};
+
 const $writeLexical = (
-  parent: ElementNode | TextNode,
+  parent: ElementNode,
   children: Instance["children"],
   instances: Instances,
-  refs: Refs
+  refs: Refs,
+  formats: InlineFormat[] = []
 ) => {
   for (const child of children) {
     if (child.type === "text") {
       // convert text
-      if (child.value === "\n" && $isElementNode(parent)) {
+      if (child.value === "\n") {
         const lineBreakNode = $createLineBreakNode();
         parent.append(lineBreakNode);
         continue;
       }
-      if ($isTextNode(parent)) {
-        parent.setTextContent(child.value);
-      } else {
-        const textNode = $createTextNode(child.value);
-        parent.append(textNode);
+      const textNode = $createTextNode(child.value);
+      for (const { format, suffix, id } of formats) {
+        if (format === "span") {
+          $setNodeSpan(textNode);
+        } else if (!textNode.hasFormat(format)) {
+          textNode.toggleFormat(format);
+        }
+        refs.set(`${textNode.getKey()}:${suffix}`, id);
       }
+      parent.append(textNode);
       continue;
     }
 
@@ -208,40 +234,33 @@ const $writeLexical = (
     const isLinkInstance =
       instance.component === "RichTextLink" ||
       (instance.component === elementComponent && instance.tag === "a");
-    if (isLinkInstance && $isElementNode(parent)) {
+    if (isLinkInstance) {
       const linkNode = $createLinkNode("");
       refs.set(linkNode.getKey(), instance.id);
+      for (const { suffix, id } of formats) {
+        refs.set(`${linkNode.getKey()}:${suffix}`, id);
+      }
       parent.append(linkNode);
-      $writeLexical(linkNode, instance.children, instances, refs);
+      $writeLexical(linkNode, instance.children, instances, refs, formats);
+      continue;
     }
     if (
       instance.component === "Span" ||
       (instance.component === elementComponent && instance.tag === "span")
     ) {
-      let textNode;
-      if ($isTextNode(parent)) {
-        textNode = parent;
-      } else {
-        textNode = $createTextNode("");
-        parent.append(textNode);
-      }
-      $setNodeSpan(textNode);
-      refs.set(`${textNode.getKey()}:span`, instance.id);
-      $writeLexical(textNode, instance.children, instances, refs);
+      $writeLexical(parent, instance.children, instances, refs, [
+        ...formats,
+        { format: "span", suffix: "span", id: instance.id },
+      ]);
+      continue;
     }
     // convert all lexical formats
     for (const [format, component] of legacyLexicalFormats) {
       if (instance.component === component) {
-        let textNode;
-        if ($isTextNode(parent)) {
-          textNode = parent;
-        } else {
-          textNode = $createTextNode("");
-          parent.append(textNode);
-        }
-        textNode.toggleFormat(format);
-        refs.set(`${textNode.getKey()}:${format}`, instance.id);
-        $writeLexical(textNode, instance.children, instances, refs);
+        $writeLexical(parent, instance.children, instances, refs, [
+          ...formats,
+          { format, suffix: format, id: instance.id },
+        ]);
       }
     }
     // convert all lexical formats
@@ -251,16 +270,10 @@ const $writeLexical = (
         instance.component === elementComponent &&
         (instance.tag === tag || alias !== undefined)
       ) {
-        let textNode;
-        if ($isTextNode(parent)) {
-          textNode = parent;
-        } else {
-          textNode = $createTextNode("");
-          parent.append(textNode);
-        }
-        textNode.toggleFormat(format);
-        refs.set(`${textNode.getKey()}:${alias ?? format}`, instance.id);
-        $writeLexical(textNode, instance.children, instances, refs);
+        $writeLexical(parent, instance.children, instances, refs, [
+          ...formats,
+          { format, suffix: alias ?? format, id: instance.id },
+        ]);
       }
     }
   }
diff --git a/apps/builder/app/canvas/features/text-editor/text-editor.test.tsx b/apps/builder/app/canvas/features/text-editor/text-editor.test.tsx
index 1292d416b4..3b5add8376 100644
--- a/apps/builder/app/canvas/features/text-editor/text-editor.test.tsx
+++ b/apps/builder/app/canvas/features/text-editor/text-editor.test.tsx
@@ -3,6 +3,7 @@ import { createRoot, type Root } from "react-dom/client";
 import { afterEach, describe, expect, test, vi } from "vitest";
 import { ContentEditable } from "@lexical/react/LexicalContentEditable";
 import { userEvent } from "@vitest/browser/context";
+import { renderData, renderTemplate, ws } from "@webstudio-is/template";
 import {
   blockComponent,
   blockTemplateComponent,
@@ -84,6 +85,68 @@ afterEach(() => {
 });
 
 describe("TextEditor", () => {
+  test("saves edits to text containing a formatted link on blur", async () => {
+    const { instances } = renderData(
+      <ws.element ws:id="paragraph" ws:tag="p">
+        <ws.element ws:id="emphasis" ws:tag="em">
+          {"Before "}
+          <ws.element ws:id="link" ws:tag="a" ws:label="Link">
+            linked text
+          </ws.element>
+          {" after."}
+        </ws.element>
+      </ws.element>
+    );
+    $instances.set(instances);
+    selectInstance(["paragraph"]);
+    $textEditingInstanceSelector.set({
+      selector: ["paragraph"],
+      reason: "left",
+    });
+    const onChange = vi.fn();
+    const container = document.createElement("div");
+    document.body.appendChild(container);
+    root = createRoot(container);
+    await act(async () => {
+      root?.render(
+        <TextEditor
+          rootInstanceSelector={["paragraph"]}
+          instances={instances}
+          props={new Map()}
+          contentEditable={<ContentEditable />}
+          onChange={onChange}
+          onSelectInstance={() => {}}
+        />
+      );
+    });
+    const editable = container.querySelector<HTMLElement>(
+      "[data-lexical-editor]"
+    )!;
+    expect(editable.textContent).toBe("Before linked text after.");
+    expect(editable.querySelector("a")?.getAttribute("data-ws-id")).toBe(
+      "link"
+    );
+    await act(async () => {
+      await userEvent.type(editable, " edited");
+      editable.blur();
+    });
+    expect(onChange).toHaveBeenCalledTimes(1);
+    expect(onChange.mock.calls[0]?.[0]).toEqual(
+      renderTemplate(
+        <ws.element ws:id="paragraph" ws:tag="p">
+          <ws.element ws:id="emphasis" ws:tag="em">
+            {"Before "}
+            <ws.element ws:id="link" ws:tag="a" ws:label="Link">
+              linked text
+            </ws.element>
+            {" after."}
+          </ws.element>
+          {" edited"}
+        </ws.element>
+      ).instances
+    );
+  });
+
   test("focuses the editable element when initializing a new empty instance", async () => {
     const instance: Instance = {
       type: "instance",
diff --git a/apps/builder/app/canvas/features/text-editor/text-editor.tsx b/apps/builder/app/canvas/features/text-editor/text-editor.tsx
index eaf89bf273..960e5a470c 100644
--- a/apps/builder/app/canvas/features/text-editor/text-editor.tsx
+++ b/apps/builder/app/canvas/features/text-editor/text-editor.tsx
@@ -135,6 +135,9 @@ const BindInstanceToNodePlugin = ({
     for (const [nodeKey, instanceId] of refs) {
       // extract key from stored key:style format
       const [key] = nodeKey.split(":");
+      if (nodeKey !== key && refs.has(key)) {
+        continue;
+      }
       const element = editor.getElementByKey(key);
       if (element) {
         element.setAttribute(idAttribute, instanceId);
@@ -1673,7 +1676,12 @@ export const TextEditor = ({
               builderRuntimeContext.createId,
               transientTextNodeKeys
             );
-        const idMap = onChange(updates);
+        const idMap = onChange(
+          updates.map((instance) => ({
+            ...currentInstances.get(instance.id),
+            ...instance,
+          }))
+        );
         if (idMap !== undefined) {
           for (const [key, instanceId] of refs) {
             refs.set(key, idMap[instanceId] ?? instanceId);