diff --git a/java/java-tests/testSrc/com/intellij/codeInsight/template/LiveTemplateTest.groovy b/java/java-tests/testSrc/com/intellij/codeInsight/template/LiveTemplateTest.groovy
index 3ab71c0b61fa..bd1d6d00879d 100644
--- a/java/java-tests/testSrc/com/intellij/codeInsight/template/LiveTemplateTest.groovy
+++ b/java/java-tests/testSrc/com/intellij/codeInsight/template/LiveTemplateTest.groovy
@@ -616,4 +616,10 @@ class Foo {
     assert myFixture.lookupElementStrings == ['value', 'value1']
   }
 
+  public void "test invoke surround template by tab"() {
+    myFixture.configureByText "a.txt", "B<caret>"
+    myFixture.type('\t')
+    myFixture.checkResult("{<caret>}")
+  }
+
 }
diff --git a/platform/lang-impl/src/com/intellij/codeInsight/template/impl/LiveTemplateCompletionContributor.java b/platform/lang-impl/src/com/intellij/codeInsight/template/impl/LiveTemplateCompletionContributor.java
index bfe6d921015f..47ea649fa042 100644
--- a/platform/lang-impl/src/com/intellij/codeInsight/template/impl/LiveTemplateCompletionContributor.java
+++ b/platform/lang-impl/src/com/intellij/codeInsight/template/impl/LiveTemplateCompletionContributor.java
@@ -100,7 +100,7 @@ public class LiveTemplateCompletionContributor extends CompletionContributor {
 
     final ArrayList<TemplateImpl> result = ContainerUtil.newArrayList();
     for (final TemplateImpl template : TemplateSettings.getInstance().getTemplates()) {
-      if (!template.isDeactivated() && !template.isSelectionTemplate() && TemplateManagerImpl.isApplicable(template, contextTypes)) {
+      if (!template.isDeactivated() && TemplateManagerImpl.isApplicable(template, contextTypes)) {
         result.add(template);
       }
     }
diff --git a/platform/lang-impl/src/com/intellij/codeInsight/template/impl/SurroundWithTemplateHandler.java b/platform/lang-impl/src/com/intellij/codeInsight/template/impl/SurroundWithTemplateHandler.java
index 352acfbc854f..08034b248fe9 100644
--- a/platform/lang-impl/src/com/intellij/codeInsight/template/impl/SurroundWithTemplateHandler.java
+++ b/platform/lang-impl/src/com/intellij/codeInsight/template/impl/SurroundWithTemplateHandler.java
@@ -104,10 +104,10 @@ public class SurroundWithTemplateHandler implements CodeInsightActionHandler {
     return template.isApplicable(file, editor.getSelectionModel().getSelectionStart(), true);
   }
 
-  public static ArrayList<TemplateImpl> getApplicableTemplates(Editor editor, PsiFile file, boolean selection) {
+  public static ArrayList<TemplateImpl> getApplicableTemplates(Editor editor, PsiFile file, boolean selectionOnly) {
 
     int startOffset = editor.getCaretModel().getOffset();
-    if (selection && editor.getSelectionModel().hasSelection()) {
+    if (editor.getSelectionModel().hasSelection()) {
       startOffset = editor.getSelectionModel().getSelectionStart();
     }
 
@@ -116,7 +116,7 @@ public class SurroundWithTemplateHandler implements CodeInsightActionHandler {
     ArrayList<TemplateImpl> list = new ArrayList<TemplateImpl>();
     for (TemplateImpl template : TemplateSettings.getInstance().getTemplates()) {
       if (!template.isDeactivated() &&
-          template.isSelectionTemplate() == selection &&
+          (!selectionOnly || template.isSelectionTemplate()) &&
           TemplateManagerImpl.isApplicable(file, startOffset, template)) {
         list.add(template);
       }
diff --git a/platform/lang-impl/src/com/intellij/codeInsight/template/impl/TemplateSettings.java b/platform/lang-impl/src/com/intellij/codeInsight/template/impl/TemplateSettings.java
index 1bf6071eb5d8..fb2350b2dbe4 100644
--- a/platform/lang-impl/src/com/intellij/codeInsight/template/impl/TemplateSettings.java
+++ b/platform/lang-impl/src/com/intellij/codeInsight/template/impl/TemplateSettings.java
@@ -734,9 +734,6 @@ public class TemplateSettings implements PersistentStateComponent<Element>, Expo
       if (shortcutChar != null && getShortcutChar(template) != shortcutChar) {
         continue;
       }
-      if (template.isSelectionTemplate()) {
-        continue;
-      }
       if (hasArgument && !template.hasArgument()) {
         continue;
       }
diff --git a/platform/lang-impl/src/com/intellij/codeInsight/template/impl/TemplateState.java b/platform/lang-impl/src/com/intellij/codeInsight/template/impl/TemplateState.java
index cd46113bcd7f..dc9a918af2e3 100644
--- a/platform/lang-impl/src/com/intellij/codeInsight/template/impl/TemplateState.java
+++ b/platform/lang-impl/src/com/intellij/codeInsight/template/impl/TemplateState.java
@@ -846,6 +846,11 @@ public class TemplateState implements Disposable {
     else {
       if (!myTemplate.isSelectionTemplate() && !myTemplate.isInline()) { //do not move caret to the end of range for selection templates
         offset = myTemplateRange.getEndOffset();
+      } else {
+        int selectionSegment = myTemplate.getVariableSegmentNumber(TemplateImpl.SELECTION);
+        if (selectionSegment >= 0 && mySegments.getSegmentStart(selectionSegment) == mySegments.getSegmentEnd(selectionSegment)) {
+          offset = mySegments.getSegmentStart(selectionSegment);
+        }
       }
     }