diff --git a/src/TwigComponent/src/Twig/TwigPreLexer.php b/src/TwigComponent/src/Twig/TwigPreLexer.php
index b0516cfb9af..ce44eb9ad62 100644
--- a/src/TwigComponent/src/Twig/TwigPreLexer.php
+++ b/src/TwigComponent/src/Twig/TwigPreLexer.php
@@ -30,10 +30,7 @@ public function __construct(int $startingLine = 1)
         $this->line = $startingLine;
     }
 
-    /**
-     * @param bool $insideOfBlock Are we sub-parsing the content inside a block?
-     */
-    public function preLexComponents(string $input, bool $insideOfBlock = false): string
+    public function preLexComponents(string $input): string
     {
         $this->input = $input;
         $this->length = \strlen($input);
@@ -79,11 +76,10 @@ public function preLexComponents(string $input, bool $insideOfBlock = false): st
                     continue;
                 }
 
-                // if we're already inside a component, and we're not inside a block,
+                // if we're already inside a component,
                 // *and* we've just found a new component, then we should try to
                 // open the default block
-                if (!$insideOfBlock
-                    && !empty($this->currentComponents)
+                if (!empty($this->currentComponents)
                     && !$this->currentComponents[\count($this->currentComponents) - 1]['hasDefaultBlock']) {
                     $output .= $this->addDefaultBlock();
                 }
@@ -365,7 +361,7 @@ private function consumeBlock(string $componentName): string
         $blockContents = $this->consumeUntilEndBlock();
 
         $subLexer = new self($this->line);
-        $output .= $subLexer->preLexComponents($blockContents, true);
+        $output .= $subLexer->preLexComponents($blockContents);
 
         $this->consume($closingTag);
         $output .= '{% endblock %}';
diff --git a/src/TwigComponent/tests/Unit/TwigPreLexerTest.php b/src/TwigComponent/tests/Unit/TwigPreLexerTest.php
index 3e1f118084c..e8b368a6b75 100644
--- a/src/TwigComponent/tests/Unit/TwigPreLexerTest.php
+++ b/src/TwigComponent/tests/Unit/TwigPreLexerTest.php
@@ -62,11 +62,21 @@ public function getLexTests(): iterable
             'Hello {% block foo_block %}Foo{% endblock %}{{ component(\'foo\') }}{% block bar_block %}Bar{% endblock %}',
         ];
 
-        yield 'component_with_embedded_component_inside_block' => [
+        yield 'component_with_component_inside_block' => [
             '<twig:foo><twig:block name="foo_block"><twig:bar /></twig:block></twig:foo>',
             '{% component \'foo\' %}{% block foo_block %}{{ component(\'bar\') }}{% endblock %}{% endcomponent %}',
         ];
 
+        yield 'component_with_embedded_component_inside_block' => [
+            '<twig:foo><twig:block name="foo_block"><twig:bar><twig:baz /></twig:bar></twig:block></twig:foo>',
+            '{% component \'foo\' %}{% block foo_block %}{% component \'bar\' %}{% block content %}{{ component(\'baz\') }}{% endblock %}{% endcomponent %}{% endblock %}{% endcomponent %}',
+        ];
+
+        yield 'component_with_embedded_component' => [
+            '<twig:foo>foo_content<twig:bar><twig:baz /></twig:bar></twig:foo>',
+            '{% component \'foo\' %}{% block content %}foo_content{% component \'bar\' %}{% block content %}{{ component(\'baz\') }}{% endblock %}{% endcomponent %}{% endblock %}{% endcomponent %}',
+        ];
+
         yield 'attribute_with_no_value' => [
             '<twig:foo bar />',
             '{{ component(\'foo\', { bar: true }) }}',