diff --git a/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java b/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
index 282d20c464f7..39406dc5b0f0 100644
--- a/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
+++ b/java/java-analysis-impl/src/com/intellij/codeInsight/daemon/impl/analysis/HighlightUtil.java
@@ -796,7 +796,7 @@ public class HighlightUtil extends HighlightUtilBase {
         return HighlightInfo.newHighlightInfo(HighlightInfoType.ERROR).range(statement).descriptionAndTooltip(message).create();
       }
     }
-    else if (expression != null && !plainRef) {
+    else if (expression != null && (!plainRef || ((PsiReferenceExpression)expression).resolve() instanceof PsiVariable)) {
       String message = JavaErrorMessages.message("value.break.unexpected");
       return HighlightInfo.newHighlightInfo(HighlightInfoType.ERROR).range(statement).descriptionAndTooltip(message).create();
     }
diff --git a/java/java-psi-impl/src/com/intellij/psi/impl/source/tree/java/PsiReferenceExpressionImpl.java b/java/java-psi-impl/src/com/intellij/psi/impl/source/tree/java/PsiReferenceExpressionImpl.java
index fde2bbef7bd0..7d5f0e3fc5cc 100644
--- a/java/java-psi-impl/src/com/intellij/psi/impl/source/tree/java/PsiReferenceExpressionImpl.java
+++ b/java/java-psi-impl/src/com/intellij/psi/impl/source/tree/java/PsiReferenceExpressionImpl.java
@@ -306,8 +306,15 @@ public class PsiReferenceExpressionImpl extends ExpressionPsiElement implements
         labels = new JavaResolveResult[]{new CandidateInfo(labeled, PsiSubstitutor.EMPTY)};
       }
 
-      PsiElement context = PsiImplUtil.findEnclosingSwitchOrLoop(breakStatement);
-      if (!(context instanceof PsiSwitchExpression)) {
+      boolean insideSwitchExpression = false;
+      PsiElement context = breakStatement;
+      while ((context = PsiImplUtil.findEnclosingSwitchOrLoop(context.getParent())) != null) {
+        if (context instanceof PsiSwitchExpression) {
+          insideSwitchExpression = true;
+          break;
+        }
+      }
+      if (!insideSwitchExpression) {
         return labels;
       }
       else if (labels.length > 0) {
diff --git a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting12/ValueBreaks.java b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting12/ValueBreaks.java
index 1afbb3aa2481..99c7068e9156 100644
--- a/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting12/ValueBreaks.java
+++ b/java/java-tests/testData/codeInsight/daemonCodeAnalyzer/advHighlighting12/ValueBreaks.java
@@ -18,14 +18,30 @@ class ValueBreaks {
 
     sink(switch (0) {
       case 0 -> { while (true) <error descr="Value break outside switch expression">break 42;</error> }
-      case 1 -> { while (true) break <error descr="Undefined label: 'ref'">ref</error>; }
+      case 1 -> { while (true) <error descr="Value break outside switch expression">break ref;</error> }
       case 2 -> { while (true) break <error descr="Undefined label: 'wtf'">wtf</error>; }
       case 3 -> { break ref; }
       case 4 -> { break (ref); }
       case 5 -> { break <error descr="Cannot resolve symbol 'wtf'">wtf</error>; }
+      case 6 -> {
+        int a = 0;
+        a: switch (0) {
+          default: break <error descr="Reference to 'a' is ambiguous, both 'a:' and 'variable a' match">a</error>;
+        }
+      }
       default -> throw new RuntimeException();
     });
 
+    switch (0) {
+      case 0 -> { while (true) break <error descr="Undefined label: 'ref'">ref</error>; }
+      case 1 -> {
+        int a = 0;
+        a: switch (0) {
+          default: break a;
+        }
+      }
+    }
+
     ref: sink(switch (0) {
       default: break <error descr="Reference to 'ref' is ambiguous, both 'ref:' and 'ValueBreaks.ref' match">ref</error>;
     });