diff --git a/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/config.json b/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/config.json
deleted file mode 100644
index 59676736cb..0000000000
--- a/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/config.json
+++ /dev/null
@@ -1,6 +0,0 @@
-{
-    "ssrFiles": {
-        "error": "error-ssr.txt",
-        "expected": "expected-ssr.html"
-    }
-}
diff --git a/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/error-ssr.txt b/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/error-ssr.txt
deleted file mode 100644
index 050b0885d3..0000000000
--- a/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/error-ssr.txt
+++ /dev/null
@@ -1 +0,0 @@
-Template compilation failure; see warnings in the console.
diff --git a/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/error.txt b/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/error.txt
index dd1d09f796..e69de29bb2 100644
--- a/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/error.txt
+++ b/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/error.txt
@@ -1 +0,0 @@
-LWC1178: <template> tag with lwc:slot-data directive must be the direct child of a custom element.
\ No newline at end of file
diff --git a/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/expected-ssr.html b/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/expected-ssr.html
deleted file mode 100644
index e69de29bb2..0000000000
diff --git a/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/expected.html b/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/expected.html
index e69de29bb2..8f4236b230 100644
--- a/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/expected.html
+++ b/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/expected.html
@@ -0,0 +1,15 @@
+<x-dynamic-component>
+  <template shadowrootmode="open">
+    <x-test>
+      a
+      <!---->
+      <!---->
+      <span>
+        a - b
+      </span>
+      <!---->
+      <!---->
+      b
+    </x-test>
+  </template>
+</x-dynamic-component>
\ No newline at end of file
diff --git a/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/modules/x/test/test.js b/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/modules/x/test/test.js
index 737a9edf5d..cbf50c2466 100644
--- a/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/modules/x/test/test.js
+++ b/packages/@lwc/engine-server/src/__tests__/fixtures/dynamic-components/slots/scoped-slots/modules/x/test/test.js
@@ -2,4 +2,9 @@ import { LightningElement } from 'lwc';
 
 export default class Test extends LightningElement {
     static renderMode = 'light';
+
+    item = {
+        id: 'a',
+        name: 'b',
+    };
 }
diff --git a/packages/@lwc/template-compiler/src/parser/index.ts b/packages/@lwc/template-compiler/src/parser/index.ts
index f67d72876d..995bad66bb 100644
--- a/packages/@lwc/template-compiler/src/parser/index.ts
+++ b/packages/@lwc/template-compiler/src/parser/index.ts
@@ -83,6 +83,7 @@ import type {
     ScopedSlotFragment,
     LwcComponent,
     Element,
+    Component,
 } from '../shared/types';
 import type State from '../state';
 import type { Token as parse5Token } from 'parse5';
@@ -1282,10 +1283,14 @@ function parseScopedSlotFragment(
         );
     }
 
+    function isComponentOrLwcComponent(node: ParentNode): node is Component | LwcComponent {
+        return ast.isComponent(node) || ast.isLwcComponent(node);
+    }
+
     // <template lwc:slot-data> element should always be the direct child of a custom element
     // The only exception is, a conditional block as parent
     const parentCmp = ctx.findAncestor(
-        ast.isComponent,
+        isComponentOrLwcComponent,
         ({ current }) => current && ast.isConditionalBlock(current)
     );