diff --git a/packages/svelte/src/compiler/phases/3-transform/server/transform-server.js b/packages/svelte/src/compiler/phases/3-transform/server/transform-server.js
index b9d6a5bc4d..86079bd724 100644
--- a/packages/svelte/src/compiler/phases/3-transform/server/transform-server.js
+++ b/packages/svelte/src/compiler/phases/3-transform/server/transform-server.js
@@ -36,7 +36,8 @@ import {
 	BLOCK_ANCHOR,
 	BLOCK_CLOSE,
 	BLOCK_CLOSE_ELSE,
-	BLOCK_OPEN
+	BLOCK_OPEN,
+	BLOCK_OPEN_ELSE
 } from '../../../../internal/server/hydration.js';
 import { filename, locator } from '../../../state.js';
 
@@ -1006,7 +1007,8 @@ function serialize_inline_component(node, expression, context) {
 	} else if (context.state.skip_hydration_boundaries) {
 		context.state.template.push(statement);
 	} else {
-		context.state.template.push(block_open, statement, block_close);
+		context.state.template.push(statement);
+		// context.state.template.push(block_open, statement, block_close);
 	}
 }
 
@@ -1411,12 +1413,15 @@ const template_visitors = {
 			? /** @type {import('estree').BlockStatement} */ (context.visit(node.alternate))
 			: b.block([]);
 
-		consequent.body.push(b.stmt(b.assignment('+=', b.id('$$payload.out'), b.literal(BLOCK_CLOSE))));
-		alternate.body.push(
-			b.stmt(b.assignment('+=', b.id('$$payload.out'), b.literal(BLOCK_CLOSE_ELSE)))
+		consequent.body.unshift(
+			b.stmt(b.assignment('+=', b.id('$$payload.out'), b.literal(BLOCK_OPEN)))
+		);
+
+		alternate.body.unshift(
+			b.stmt(b.assignment('+=', b.id('$$payload.out'), b.literal(BLOCK_OPEN_ELSE)))
 		);
 
-		context.state.template.push(block_open, b.if(test, consequent, alternate));
+		context.state.template.push(b.if(test, consequent, alternate), block_close);
 	},
 	AwaitBlock(node, context) {
 		context.state.template.push(
diff --git a/packages/svelte/src/constants.js b/packages/svelte/src/constants.js
index a8963d6854..0c7efcc94c 100644
--- a/packages/svelte/src/constants.js
+++ b/packages/svelte/src/constants.js
@@ -20,6 +20,7 @@ export const TEMPLATE_FRAGMENT = 1;
 export const TEMPLATE_USE_IMPORT_NODE = 1 << 1;
 
 export const HYDRATION_START = '[';
+export const HYDRATION_START_ELSE = '[!';
 export const HYDRATION_END = ']';
 export const HYDRATION_ANCHOR = '';
 export const HYDRATION_END_ELSE = `${HYDRATION_END}!`; // used to indicate that an `{:else}...` block was rendered
diff --git a/packages/svelte/src/internal/client/dom/blocks/await.js b/packages/svelte/src/internal/client/dom/blocks/await.js
index 204c7779b3..e6e76beee6 100644
--- a/packages/svelte/src/internal/client/dom/blocks/await.js
+++ b/packages/svelte/src/internal/client/dom/blocks/await.js
@@ -11,7 +11,7 @@ import {
 import { block, branch, pause_effect, resume_effect } from '../../reactivity/effects.js';
 import { DEV } from 'esm-env';
 import { queue_micro_task } from '../task.js';
-import { hydrate_node, hydrating } from '../hydration.js';
+import { hydrate_node, hydrating, set_hydrate_node } from '../hydration.js';
 import { mutable_source, set, source } from '../../reactivity/sources.js';
 
 const PENDING = 0;
@@ -149,5 +149,6 @@ export function await_block(anchor, get_input, pending_fn, then_fn, catch_fn) {
 
 	if (hydrating) {
 		anchor = hydrate_node.nextSibling;
+		set_hydrate_node(anchor);
 	}
 }
diff --git a/packages/svelte/src/internal/client/dom/blocks/each.js b/packages/svelte/src/internal/client/dom/blocks/each.js
index b60b6f9c01..a9085b529b 100644
--- a/packages/svelte/src/internal/client/dom/blocks/each.js
+++ b/packages/svelte/src/internal/client/dom/blocks/each.js
@@ -8,7 +8,15 @@ import {
 	HYDRATION_END_ELSE,
 	HYDRATION_START
 } from '../../../../constants.js';
-import { hydrate_nodes, hydrate_start, hydrating, set_hydrating } from '../hydration.js';
+import {
+	hydrate_node,
+	hydrate_nodes,
+	hydrate_start,
+	hydrating,
+	set_hydrate_node,
+	set_hydrate_open,
+	set_hydrating
+} from '../hydration.js';
 import { clear_text_content, empty } from '../operations.js';
 import { remove } from '../reconciler.js';
 import {
@@ -144,7 +152,7 @@ export function each(anchor, flags, get_collection, get_key, render_fn, fallback
 		if (hydrating) {
 			var is_else = /** @type {Comment} */ (anchor).data === HYDRATION_END_ELSE;
 
-			if (is_else !== (length === 0) || hydrate_start === undefined) {
+			if (is_else !== (length === 0) || hydrate_node === undefined) {
 				// hydration mismatch — remove the server-rendered DOM and start over
 				remove(hydrate_nodes);
 				set_hydrating(false);
@@ -155,7 +163,7 @@ export function each(anchor, flags, get_collection, get_key, render_fn, fallback
 		// this is separate to the previous block because `hydrating` might change
 		if (hydrating) {
 			/** @type {Node} */
-			var child_anchor = hydrate_start;
+			var child_anchor = hydrate_node;
 
 			/** @type {import('#client').EachItem | null} */
 			var prev = null;
@@ -175,22 +183,27 @@ export function each(anchor, flags, get_collection, get_key, render_fn, fallback
 					break;
 				}
 
+				set_hydrate_open(child_anchor);
+
 				var value = array[i];
 				var key = get_key(value, i);
 				item = create_item(child_anchor, state, prev, null, value, key, i, render_fn, flags);
 				state.items.set(key, item);
-				child_anchor = /** @type {Comment} */ (child_anchor.nextSibling);
+				var close = hydrate_node.nextSibling; // TODO validate. or replace `<!--]--><!--[-->` with `<!---->`
+				set_hydrate_node(close);
+				child_anchor = /** @type {Comment} */ (close.nextSibling);
 
 				prev = item;
 			}
 
 			// remove excess nodes
 			if (length > 0) {
-				while (child_anchor !== anchor) {
-					var next = /** @type {import('#client').TemplateNode} */ (child_anchor.nextSibling);
-					/** @type {import('#client').TemplateNode} */ (child_anchor).remove();
-					child_anchor = next;
-				}
+				// TODO reinstate
+				// while (child_anchor !== anchor) {
+				// 	var next = /** @type {import('#client').TemplateNode} */ (child_anchor.nextSibling);
+				// 	/** @type {import('#client').TemplateNode} */ (child_anchor).remove();
+				// 	child_anchor = next;
+				// }
 			}
 		}
 
@@ -217,6 +230,11 @@ export function each(anchor, flags, get_collection, get_key, render_fn, fallback
 			set_hydrating(true);
 		}
 	});
+
+	if (hydrating) {
+		anchor = hydrate_node.nextSibling;
+		set_hydrate_node(anchor);
+	}
 }
 
 /**
diff --git a/packages/svelte/src/internal/client/dom/blocks/if.js b/packages/svelte/src/internal/client/dom/blocks/if.js
index 747797cd49..015a774ae1 100644
--- a/packages/svelte/src/internal/client/dom/blocks/if.js
+++ b/packages/svelte/src/internal/client/dom/blocks/if.js
@@ -1,9 +1,14 @@
 import { EFFECT_TRANSPARENT } from '../../constants.js';
-import { hydrate_node, hydrate_nodes, hydrating, set_hydrating } from '../hydration.js';
+import {
+	hydrate_node,
+	hydrate_nodes,
+	hydrating,
+	set_hydrate_node,
+	set_hydrating
+} from '../hydration.js';
 import { remove } from '../reconciler.js';
 import { block, branch, pause_effect, resume_effect } from '../../reactivity/effects.js';
-import { HYDRATION_END_ELSE } from '../../../../constants.js';
-import { current_effect } from '../../runtime.js';
+import { HYDRATION_START_ELSE } from '../../../../constants.js';
 
 /**
  * @param {Comment} anchor
@@ -38,7 +43,7 @@ export function if_block(
 		let mismatch = false;
 
 		if (hydrating) {
-			const is_else = anchor.data === HYDRATION_END_ELSE;
+			const is_else = anchor.data === HYDRATION_START_ELSE;
 
 			if (condition === is_else) {
 				// Hydration mismatch: remove everything inside the anchor and start fresh.
@@ -83,5 +88,6 @@ export function if_block(
 
 	if (hydrating) {
 		anchor = hydrate_node.nextSibling;
+		set_hydrate_node(anchor);
 	}
 }
diff --git a/packages/svelte/src/internal/client/dom/operations.js b/packages/svelte/src/internal/client/dom/operations.js
index 3aa0cc4b63..bb2ac1b0bb 100644
--- a/packages/svelte/src/internal/client/dom/operations.js
+++ b/packages/svelte/src/internal/client/dom/operations.js
@@ -59,12 +59,15 @@ export function empty() {
  */
 /*#__NO_SIDE_EFFECTS__*/
 export function child(node) {
-	const child = node.firstChild;
-	if (!hydrating) return child;
+	if (!hydrating) {
+		return node.firstChild;
+	}
+
+	var child = hydrate_node.firstChild;
 
 	// Child can be null if we have an element with a single child, like `<p>{text}</p>`, where `text` is empty
 	if (child === null) {
-		return node.appendChild(empty());
+		return hydrate_node.appendChild(empty());
 	}
 
 	return child;
diff --git a/packages/svelte/src/internal/client/dom/template.js b/packages/svelte/src/internal/client/dom/template.js
index 65379cc833..34c219599a 100644
--- a/packages/svelte/src/internal/client/dom/template.js
+++ b/packages/svelte/src/internal/client/dom/template.js
@@ -267,15 +267,15 @@ export function append(anchor, dom) {
 	if (hydrating) {
 		/** @type {Effect & { nodes: EffectNodes }} */ (current_effect).nodes.end = hydrate_node;
 
-		// console.log('append', hydrate_node);
+		// console.log('effect.nodes.end', hydrate_node);
 
-		// next node should be a <!--]-->
-		var next = hydrate_node.nextSibling;
-		if (next === null || next.nodeType !== 8) {
-			throw new Error('TODO');
-		}
+		// // next node should be a <!--]-->
+		// var next = hydrate_node.nextSibling;
+		// if (next === null || next.nodeType !== 8) {
+		// 	throw new Error('TODO');
+		// }
 
-		set_hydrate_node(/** @type {Comment} */ (next));
+		// set_hydrate_node(/** @type {Comment} */ (next));
 
 		return;
 	}
diff --git a/packages/svelte/src/internal/server/hydration.js b/packages/svelte/src/internal/server/hydration.js
index d860d759d2..c6a062132c 100644
--- a/packages/svelte/src/internal/server/hydration.js
+++ b/packages/svelte/src/internal/server/hydration.js
@@ -2,10 +2,12 @@ import {
 	HYDRATION_ANCHOR,
 	HYDRATION_END,
 	HYDRATION_END_ELSE,
-	HYDRATION_START
+	HYDRATION_START,
+	HYDRATION_START_ELSE
 } from '../../constants.js';
 
 export const BLOCK_OPEN = `<!--${HYDRATION_START}-->`;
+export const BLOCK_OPEN_ELSE = `<!--${HYDRATION_START_ELSE}-->`;
 export const BLOCK_CLOSE = `<!--${HYDRATION_END}-->`;
 export const BLOCK_ANCHOR = `<!--${HYDRATION_ANCHOR}-->`;
 export const BLOCK_CLOSE_ELSE = `<!--${HYDRATION_END_ELSE}-->`;
diff --git a/playgrounds/demo/server.js b/playgrounds/demo/server.js
index 82a75e70e7..c72ce1b328 100644
--- a/playgrounds/demo/server.js
+++ b/playgrounds/demo/server.js
@@ -23,10 +23,16 @@ async function createServer() {
 
 	app.use('*', async (req, res) => {
 		if (req.originalUrl !== '/') {
-			res.writeHead(200, {
-				'Content-Type': 'application/javascript'
-			});
-			res.end(fs.createReadStream(path.resolve('./dist' + req.originalUrl)));
+			const file = path.resolve('./dist' + req.originalUrl);
+			if (fs.existsSync(file)) {
+				res.writeHead(200, {
+					'Content-Type': 'application/javascript'
+				});
+				res.end(fs.createReadStream(file));
+			} else {
+				res.writeHead(404);
+				res.end('not found');
+			}
 			return;
 		}