diff --git a/apps/builder/app/builder/features/workspace/canvas-tools/block-editor-context-menu.tsx b/apps/builder/app/builder/features/workspace/canvas-tools/block-editor-context-menu.tsx
index 2f6c2f44f8..e35ba809bc 100644
--- a/apps/builder/app/builder/features/workspace/canvas-tools/block-editor-context-menu.tsx
+++ b/apps/builder/app/builder/features/workspace/canvas-tools/block-editor-context-menu.tsx
@@ -18,7 +18,6 @@ import { useEffectEvent } from "~/shared/hook-utils/effect-event";
 import type { InstanceSelector } from "~/shared/tree-utils";
 import type { Instance } from "@webstudio-is/sdk";
 import { shallowEqual } from "shallow-equal";
-import { emitCommand } from "~/builder/shared/commands";
 
 const TriggerButton = styled("button", {
   position: "absolute",
@@ -84,7 +83,6 @@ const Menu = ({
     (templateSelector: InstanceSelector) => {
       const insertBefore = modifierKeys.altKey;
       insertTemplateAt(templateSelector, anchor, insertBefore);
-      emitCommand("newInstanceText");
     },
     [anchor, modifierKeys.altKey]
   );
diff --git a/apps/builder/app/builder/features/workspace/canvas-tools/outline/block-utils.ts b/apps/builder/app/builder/features/workspace/canvas-tools/outline/block-utils.ts
index 31eca57611..c20096643c 100644
--- a/apps/builder/app/builder/features/workspace/canvas-tools/outline/block-utils.ts
+++ b/apps/builder/app/builder/features/workspace/canvas-tools/outline/block-utils.ts
@@ -4,6 +4,7 @@ import { shallowEqual } from "shallow-equal";
 import { selectInstance } from "~/shared/awareness";
 import {
   extractWebstudioFragment,
+  findAllEditableInstanceSelector,
   findAvailableDataSources,
   getWebstudioData,
   insertInstanceChildrenMutable,
@@ -12,6 +13,8 @@ import {
 } from "~/shared/instance-utils";
 import {
   $instances,
+  $registeredComponentMetas,
+  $textEditingInstanceSelector,
   findBlockChildSelector,
   findBlockSelector,
 } from "~/shared/nano-states";
@@ -111,8 +114,34 @@ export const insertTemplateAt = (
     const children: Instance["children"] = [
       { type: "id", value: newRootInstanceId },
     ];
+
     insertInstanceChildrenMutable(data, children, target);
 
+    const selectedInstanceSelector = [
+      newRootInstanceId,
+      ...target.parentSelector,
+    ];
+
+    const selectors: InstanceSelector[] = [];
+
+    findAllEditableInstanceSelector(
+      selectedInstanceSelector,
+      data.instances,
+      $registeredComponentMetas.get(),
+      selectors
+    );
+
+    const editableInstanceSelector = selectors[0];
+
+    if (editableInstanceSelector) {
+      $textEditingInstanceSelector.set({
+        selector: editableInstanceSelector,
+        reason: "new",
+      });
+    } else {
+      $textEditingInstanceSelector.set(undefined);
+    }
+
     selectInstance([newRootInstanceId, ...target.parentSelector]);
   });
 };
diff --git a/apps/builder/app/builder/shared/commands.ts b/apps/builder/app/builder/shared/commands.ts
index 03769b0a3f..85521775bd 100644
--- a/apps/builder/app/builder/shared/commands.ts
+++ b/apps/builder/app/builder/shared/commands.ts
@@ -230,7 +230,6 @@ export const { emitCommand, subscribeCommands } = createCommandsEmitter({
   source: "builder",
   externalCommands: [
     "editInstanceText",
-    "newInstanceText",
     "formatBold",
     "formatItalic",
     "formatSuperscript",
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 dc4ad16dfa..3cfdcc4b91 100644
--- a/apps/builder/app/canvas/features/text-editor/text-editor.tsx
+++ b/apps/builder/app/canvas/features/text-editor/text-editor.tsx
@@ -39,6 +39,7 @@ import {
   type NodeKey,
   $getNodeByKey,
   SELECTION_CHANGE_COMMAND,
+  $selectAll,
 } from "lexical";
 import { LinkNode } from "@lexical/link";
 import { LexicalComposer } from "@lexical/react/LexicalComposer";
@@ -61,7 +62,11 @@ import { ToolbarConnectorPlugin } from "./toolbar-connector";
 import { type Refs, $convertToLexical, $convertToUpdates } from "./interop";
 import { colord } from "colord";
 import { useEffectEvent } from "~/shared/hook-utils/effect-event";
-import { findAllEditableInstanceSelector } from "~/shared/instance-utils";
+import {
+  deleteInstanceMutable,
+  findAllEditableInstanceSelector,
+  updateWebstudioData,
+} from "~/shared/instance-utils";
 import {
   $blockChildOutline,
   $hoveredInstanceOutline,
@@ -72,6 +77,7 @@ import {
   $textEditingInstanceSelector,
   $textEditorContextMenu,
   execTextEditorContextMenuCommand,
+  findBlockChildSelector,
   findTemplates,
 } from "~/shared/nano-states";
 import {
@@ -86,6 +92,7 @@ import {
   selectInstance,
 } from "~/shared/awareness";
 import { shallowEqual } from "shallow-equal";
+import { insertTemplateAt } from "~/builder/features/workspace/canvas-tools/outline/block-utils";
 
 const BindInstanceToNodePlugin = ({
   refs,
@@ -709,6 +716,10 @@ const InitCursorPlugin = () => {
 
         return;
       }
+      if (reason === "new") {
+        $selectAll();
+        return;
+      }
 
       reason satisfies never;
     });
@@ -929,38 +940,39 @@ type ContextMenuParams = {
   cursorRect: DOMRect;
 };
 
-type ContextMenuPluginProps = {
+type RichTextContentPluginProps = {
   rootInstanceSelector: InstanceSelector;
   onOpen: (
     editorState: EditorState,
     params: undefined | ContextMenuParams
   ) => void;
+  onNext: (editorState: EditorState, params: HandleNextParams) => void;
 };
 
-const ContextMenuPlugin = (props: ContextMenuPluginProps) => {
-  const [hasTemplates] = useState(() => {
-    const templates = findTemplates(
-      props.rootInstanceSelector,
-      $instances.get()
-    );
-    if (templates === undefined) {
-      return false;
-    }
+const RichTextContentPlugin = (props: RichTextContentPluginProps) => {
+  const [templates] = useState(() =>
+    findTemplates(props.rootInstanceSelector, $instances.get())
+  );
 
-    return templates.length > 0;
-  });
-
-  if (!hasTemplates) {
-    return null;
+  if (templates === undefined) {
+    return;
   }
 
-  return <ContextMenuPluginInternal {...props} />;
+  if (templates.length === 0) {
+    return;
+  }
+
+  return <RichTextContentPluginInternal {...props} templates={templates} />;
 };
 
-const ContextMenuPluginInternal = ({
+const RichTextContentPluginInternal = ({
   rootInstanceSelector,
   onOpen,
-}: ContextMenuPluginProps) => {
+  templates,
+  onNext,
+}: RichTextContentPluginProps & {
+  templates: [instance: Instance, instanceSelector: InstanceSelector][];
+}) => {
   const [editor] = useLexicalComposerContext();
   const [preservedSelection] = useState(rootInstanceSelector);
 
@@ -1002,6 +1014,19 @@ const ContextMenuPluginInternal = ({
 
       if (!isSelectionInSameComponent) {
         node?.remove();
+
+        const rootNodeContent = $getRoot().getTextContent().trim();
+        // Delete current
+        if (rootNodeContent.length === 0) {
+          const blockChildSelector =
+            findBlockChildSelector(rootInstanceSelector);
+
+          if (blockChildSelector) {
+            updateWebstudioData((data) => {
+              deleteInstanceMutable(data, rootInstanceSelector);
+            });
+          }
+        }
       }
 
       // if selection changed, remove the slash node
@@ -1022,11 +1047,6 @@ const ContextMenuPluginInternal = ({
           return false;
         }
 
-        if (!isSingleCursorSelection()) {
-          closeMenu();
-          return false;
-        }
-
         const selection = $getSelection();
 
         if (!$isRangeSelection(selection)) {
@@ -1047,16 +1067,89 @@ const ContextMenuPluginInternal = ({
     const unsubscibeKeyDown = editor.registerCommand(
       KEY_DOWN_COMMAND,
       (event) => {
-        if (!isSingleCursorSelection()) {
-          return false;
-        }
-
         const selection = $getSelection();
 
         if (!$isRangeSelection(selection)) {
           return false;
         }
 
+        if (event.key === "Backspace" || event.key === "Delete") {
+          const rootNodeContent = $getRoot().getTextContent().trim();
+          // Delete current
+          if (rootNodeContent.length === 0) {
+            const blockChildSelector =
+              findBlockChildSelector(rootInstanceSelector);
+
+            if (blockChildSelector) {
+              onNext(editor.getEditorState(), { reason: "left" });
+
+              updateWebstudioData((data) => {
+                deleteInstanceMutable(data, rootInstanceSelector);
+              });
+
+              event.preventDefault();
+              return true;
+            }
+          }
+        }
+
+        if (menuState === "closed") {
+          if (event.key === "Enter" && !event.shiftKey) {
+            // Check if it pressed on the last line, last symbol
+
+            const allowedComponents = ["Paragraph", "Text", "Heading"];
+
+            for (const component of allowedComponents) {
+              const templateSelector = templates.find(
+                ([instance]) => instance.component === component
+              )?.[1];
+
+              if (templateSelector === undefined) {
+                continue;
+              }
+
+              /*
+              @todo Split logic idea
+              // clone root node then
+
+              // getPreviousSibling
+              const removeNextSiblings = (node: LexicalNode) => {
+                let current: LexicalNode | null = node;
+                while (current) {
+                  const next = current.getNextSibling();
+                  if (next) {
+                    next.remove();
+                    continue;
+                  }
+                  // Move up to parent and continue removing siblings
+
+                  current = current.getParent();
+
+                  if ($isRootNode(current)) {
+                    break;
+                  }
+                }
+              };
+
+              const anchorNode = selection.anchor.getNode();
+              const anchorOffset = selection.anchor.offset;
+
+              if (!$isTextNode(anchorNode)) {
+                continue;
+              }
+              anchorNode.splitText(anchorOffset);
+              removeNextSiblings(anchorNode);
+
+              */
+
+              insertTemplateAt(templateSelector, rootInstanceSelector, false);
+
+              event.preventDefault();
+              return true;
+            }
+          }
+        }
+
         if (menuState === "opened") {
           if (event.key === "Escape") {
             closeMenu();
@@ -1192,7 +1285,14 @@ const ContextMenuPluginInternal = ({
       unsubscibeSelectionChange();
       unsubscribeBlurListener();
     };
-  }, [editor, handleOpen, preservedSelection]);
+  }, [
+    editor,
+    handleOpen,
+    onNext,
+    preservedSelection,
+    rootInstanceSelector,
+    templates,
+  ]);
 
   return null;
 };
@@ -1282,13 +1382,14 @@ const AnyKeyDownPlugin = ({
 };
 
 export const TextEditor = ({
-  rootInstanceSelector,
+  rootInstanceSelector: rootInstanceSelectorUnstable,
   instances,
   contentEditable,
   editable,
   onChange,
   onSelectInstance,
 }: TextEditorProps) => {
+  const [rootInstanceSelector] = useState(() => rootInstanceSelectorUnstable);
   // class names must be started with letter so we add a prefix
   const [paragraphClassName] = useState(() => `a${nanoid()}`);
   const [italicClassName] = useState(() => `a${nanoid()}`);
@@ -1314,6 +1415,15 @@ export const TextEditor = ({
 
       setDataCollapsed(rootInstanceSelector[0], false);
     });
+
+    const textEditingSelector = $textEditingInstanceSelector.get()?.selector;
+    if (textEditingSelector === undefined) {
+      return;
+    }
+
+    if (shallowEqual(textEditingSelector, rootInstanceSelector)) {
+      $textEditingInstanceSelector.set(undefined);
+    }
   });
 
   useLayoutEffect(() => {
@@ -1363,7 +1473,7 @@ export const TextEditor = ({
     onError,
   };
 
-  const handleNext = useCallback(
+  const handleNext = useEffectEvent(
     (state: EditorState, args: HandleNextParams) => {
       const rootInstanceId = $selectedPage.get()?.rootInstanceId;
 
@@ -1444,8 +1554,7 @@ export const TextEditor = ({
 
         break;
       }
-    },
-    [handleChange, instances, rootInstanceSelector]
+    }
   );
 
   const handleAnyKeydown = useCallback((event: KeyboardEvent) => {
@@ -1506,9 +1615,10 @@ export const TextEditor = ({
       <HistoryPlugin />
 
       <SwitchBlockPlugin onNext={handleNext} />
-      <ContextMenuPlugin
+      <RichTextContentPlugin
         onOpen={handleContextMenuOpen}
         rootInstanceSelector={rootInstanceSelector}
+        onNext={handleNext}
       />
       <OnChangeOnBlurPlugin onChange={handleChange} />
       <InitCursorPlugin />
diff --git a/apps/builder/app/canvas/instance-hovering.ts b/apps/builder/app/canvas/instance-hovering.ts
index 4679874476..0f6fa03a7c 100644
--- a/apps/builder/app/canvas/instance-hovering.ts
+++ b/apps/builder/app/canvas/instance-hovering.ts
@@ -46,41 +46,47 @@ export const subscribeInstanceHovering = ({
     },
     eventOptions
   );
-  window.addEventListener(
-    "mousemove",
-    () => {
-      // We want the hover outline to appear only if a mouse or trackpad action caused it, not from keyboard navigation.
-      // Otherwise, when we leave the Lexical editor using the keyboard,
-      // the mouseover event triggers on elements created after Lexical loses focus.
-      // This causes an outline to appear on the element under the now-invisible mouse pointer
-      // (as the browser hides the pointer on blur), creating some visual distraction.
-      if (hoveredElement !== undefined) {
-        const instanceSelector = getInstanceSelectorFromElement(hoveredElement);
-        if (instanceSelector) {
-          if (updateOnMouseMove) {
-            $hoveredInstanceSelector.set(instanceSelector);
-            updateEditableChildOutline(instanceSelector);
-          } else {
-            const textSelector = $textEditingInstanceSelector.get()?.selector;
 
-            // We need to update the editable child's outline even if the mouseover event is not triggered.
-            // This can happen if the user enters text editing mode, presses any key, and then moves the mouse.
-            // In this case, the mouseover event does not occur, but we still need to show the editable child's outline.
-            if (
-              textSelector &&
-              isDescendantOrSelf(instanceSelector, textSelector) && // optimisation
-              $blockChildOutline.get() === undefined
-            ) {
-              updateEditableChildOutline(instanceSelector);
-            }
+  const updateEditableOutline = () => {
+    // We want the hover outline to appear only if a mouse or trackpad action caused it, not from keyboard navigation.
+    // Otherwise, when we leave the Lexical editor using the keyboard,
+    // the mouseover event triggers on elements created after Lexical loses focus.
+    // This causes an outline to appear on the element under the now-invisible mouse pointer
+    // (as the browser hides the pointer on blur), creating some visual distraction.
+    if (hoveredElement !== undefined) {
+      const instanceSelector = getInstanceSelectorFromElement(hoveredElement);
+      if (instanceSelector) {
+        if (updateOnMouseMove) {
+          $hoveredInstanceSelector.set(instanceSelector);
+          updateEditableChildOutline(instanceSelector);
+        } else {
+          const textSelector = $textEditingInstanceSelector.get()?.selector;
+
+          // We need to update the editable child's outline even if the mouseover event is not triggered.
+          // This can happen if the user enters text editing mode, presses any key, and then moves the mouse.
+          // In this case, the mouseover event does not occur, but we still need to show the editable child's outline.
+          if (
+            textSelector &&
+            isDescendantOrSelf(instanceSelector, textSelector) && // optimisation
+            $blockChildOutline.get() === undefined
+          ) {
+            updateEditableChildOutline(instanceSelector);
           }
         }
       }
-      updateOnMouseMove = false;
-    },
-    eventOptions
+    }
+    updateOnMouseMove = false;
+  };
+
+  const unsubscribeTextEditingInstance = $textEditingInstanceSelector.listen(
+    () => {
+      // Fixes the bug if initial editable instance is empty and has collapsed paddings
+      setTimeout(updateEditableOutline, 0);
+    }
   );
 
+  window.addEventListener("mousemove", updateEditableOutline, eventOptions);
+
   window.addEventListener(
     "mouseout",
     () => {
@@ -210,5 +216,6 @@ export const subscribeInstanceHovering = ({
     clearTimeout(mouseOutTimeoutId);
     unsubscribeHoveredInstanceId();
     usubscribeSelectedInstanceSelector();
+    unsubscribeTextEditingInstance();
   });
 };
diff --git a/apps/builder/app/canvas/shared/commands.ts b/apps/builder/app/canvas/shared/commands.ts
index 9bb08bc8ed..ef6c4a1f27 100644
--- a/apps/builder/app/canvas/shared/commands.ts
+++ b/apps/builder/app/canvas/shared/commands.ts
@@ -26,58 +26,6 @@ export const { emitCommand, subscribeCommands } = createCommandsEmitter({
   source: "canvas",
   externalCommands: ["clickCanvas"],
   commands: [
-    {
-      name: "newInstanceText",
-      hidden: true,
-      disableHotkeyOutsideApp: true,
-      handler: () => {
-        const selectedInstanceSelector = $selectedInstanceSelector.get();
-        if (selectedInstanceSelector === undefined) {
-          return;
-        }
-
-        if (
-          isDescendantOrSelf(
-            $textEditingInstanceSelector.get()?.selector ?? [],
-            selectedInstanceSelector
-          )
-        ) {
-          // already in text editing mode
-          return;
-        }
-
-        const selectors: InstanceSelector[] = [];
-
-        findAllEditableInstanceSelector(
-          selectedInstanceSelector,
-          $instances.get(),
-          $registeredComponentMetas.get(),
-          selectors
-        );
-
-        if (selectors.length === 0) {
-          $textEditingInstanceSelector.set(undefined);
-          return;
-        }
-
-        const editableInstanceSelector = selectors[0];
-
-        const element = getElementByInstanceSelector(editableInstanceSelector);
-        if (element === undefined) {
-          return;
-        }
-        // When an event is triggered from the Builder,
-        // the canvas element may be unfocused, so it's important to focus the element on the canvas.
-        element.focus();
-        selectInstance(editableInstanceSelector);
-
-        $textEditingInstanceSelector.set({
-          selector: editableInstanceSelector,
-          reason: "enter",
-        });
-      },
-    },
-
     {
       name: "editInstanceText",
       hidden: true,
@@ -146,6 +94,7 @@ export const { emitCommand, subscribeCommands } = createCommandsEmitter({
       name: "escapeSelection",
       hidden: true,
       defaultHotkeys: ["escape"],
+      disableHotkeyOnContentEditable: true,
       // reset selection for canvas, but not for the builder
       disableHotkeyOutsideApp: true,
       handler: () => {
diff --git a/apps/builder/app/shared/nano-states/instances.ts b/apps/builder/app/shared/nano-states/instances.ts
index 86ce9e1454..d2a2a6415a 100644
--- a/apps/builder/app/shared/nano-states/instances.ts
+++ b/apps/builder/app/shared/nano-states/instances.ts
@@ -18,6 +18,10 @@ export const $textEditingInstanceSelector = atom<
       selector: InstanceSelector;
       reason: "right" | "left" | "enter";
     }
+  | {
+      selector: InstanceSelector;
+      reason: "new";
+    }
   | {
       selector: InstanceSelector;
       reason: "click";