diff --git a/.changeset/eighty-dragons-search.md b/.changeset/eighty-dragons-search.md
new file mode 100644
index 0000000000..83a72c88e8
--- /dev/null
+++ b/.changeset/eighty-dragons-search.md
@@ -0,0 +1,5 @@
+---
+'svelte': patch
+---
+
+perf: inline module variables into template
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/types.d.ts b/packages/svelte/src/compiler/phases/3-transform/client/types.d.ts
index e44cc0239c..cf41afc0d5 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/types.d.ts
+++ b/packages/svelte/src/compiler/phases/3-transform/client/types.d.ts
@@ -54,7 +54,10 @@ export interface ComponentClientTransformState extends ClientTransformState {
 	/** Stuff that happens after the render effect (control blocks, dynamic elements, bindings, actions, etc) */
 	readonly after_update: Statement[];
 	/** The HTML template string */
-	readonly template: string[];
+	readonly template: {
+		push_quasi: (q: string) => void;
+		push_expression: (e: Expression) => void;
+	};
 	readonly locations: SourceLocation[];
 	readonly metadata: {
 		namespace: Namespace;
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/utils.js b/packages/svelte/src/compiler/phases/3-transform/client/utils.js
index d1a825d231..9463d909bc 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/utils.js
+++ b/packages/svelte/src/compiler/phases/3-transform/client/utils.js
@@ -311,3 +311,18 @@ export function create_derived_block_argument(node, context) {
 export function create_derived(state, arg) {
 	return b.call(state.analysis.runes ? '$.derived' : '$.derived_safe_equal', arg);
 }
+
+/**
+ * Whether a variable can be referenced directly from template string.
+ * @param {import('#compiler').Binding | undefined} binding
+ * @returns {boolean}
+ */
+export function can_inline_variable(binding) {
+	return (
+		!!binding &&
+		// in a `<script module>` block
+		!binding.scope.parent &&
+		// to prevent the need for escaping
+		binding.initial?.type === 'Literal'
+	);
+}
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/visitors/AwaitBlock.js b/packages/svelte/src/compiler/phases/3-transform/client/visitors/AwaitBlock.js
index 62c61151bb..9342cc7568 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/visitors/AwaitBlock.js
+++ b/packages/svelte/src/compiler/phases/3-transform/client/visitors/AwaitBlock.js
@@ -9,7 +9,7 @@ import { create_derived_block_argument } from '../utils.js';
  * @param {ComponentContext} context
  */
 export function AwaitBlock(node, context) {
-	context.state.template.push('<!>');
+	context.state.template.push_quasi('<!>');
 
 	// Visit {#await <expression>} first to ensure that scopes are in the correct order
 	const expression = b.thunk(/** @type {Expression} */ (context.visit(node.expression)));
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/visitors/Comment.js b/packages/svelte/src/compiler/phases/3-transform/client/visitors/Comment.js
index 24011e62aa..4c0bee53d3 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/visitors/Comment.js
+++ b/packages/svelte/src/compiler/phases/3-transform/client/visitors/Comment.js
@@ -7,5 +7,5 @@
  */
 export function Comment(node, context) {
 	// We'll only get here if comments are not filtered out, which they are unless preserveComments is true
-	context.state.template.push(`<!--${node.data}-->`);
+	context.state.template.push_quasi(`<!--${node.data}-->`);
 }
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/visitors/EachBlock.js b/packages/svelte/src/compiler/phases/3-transform/client/visitors/EachBlock.js
index 495a33e397..28ace3af93 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/visitors/EachBlock.js
+++ b/packages/svelte/src/compiler/phases/3-transform/client/visitors/EachBlock.js
@@ -32,7 +32,7 @@ export function EachBlock(node, context) {
 	);
 
 	if (!each_node_meta.is_controlled) {
-		context.state.template.push('<!>');
+		context.state.template.push_quasi('<!>');
 	}
 
 	if (each_node_meta.array_name !== null) {
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/visitors/Fragment.js b/packages/svelte/src/compiler/phases/3-transform/client/visitors/Fragment.js
index 686d81ce8c..705db02b7d 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/visitors/Fragment.js
+++ b/packages/svelte/src/compiler/phases/3-transform/client/visitors/Fragment.js
@@ -57,6 +57,11 @@ export function Fragment(node, context) {
 	/** @type {Statement | undefined} */
 	let close = undefined;
 
+	/** @type {string[]} */
+	const quasi = [];
+	/** @type {Expression[]} */
+	const expressions = [];
+
 	/** @type {ComponentClientTransformState} */
 	const state = {
 		...context.state,
@@ -64,7 +69,22 @@ export function Fragment(node, context) {
 		init: [],
 		update: [],
 		after_update: [],
-		template: [],
+		template: {
+			push_quasi: (/** @type {string} */ quasi_to_add) => {
+				if (quasi.length === 0) {
+					quasi.push(quasi_to_add);
+					return;
+				}
+				quasi[quasi.length - 1] = quasi[quasi.length - 1].concat(quasi_to_add);
+			},
+			push_expression: (/** @type {Expression} */ expression_to_add) => {
+				if (quasi.length === 0) {
+					quasi.push('');
+				}
+				expressions.push(expression_to_add);
+				quasi.push('');
+			}
+		},
 		locations: [],
 		transform: { ...context.state.transform },
 		metadata: {
@@ -115,7 +135,12 @@ export function Fragment(node, context) {
 		});
 
 		/** @type {Expression[]} */
-		const args = [b.template([b.quasi(state.template.join(''), true)], [])];
+		const args = [
+			b.template(
+				quasi.map((q) => b.quasi(q, true)),
+				expressions
+			)
+		];
 
 		if (state.metadata.context.template_needs_import_node) {
 			args.push(b.literal(TEMPLATE_USE_IMPORT_NODE));
@@ -170,12 +195,15 @@ export function Fragment(node, context) {
 					flags |= TEMPLATE_USE_IMPORT_NODE;
 				}
 
-				if (state.template.length === 1 && state.template[0] === '<!>') {
+				if (quasi.length === 1 && quasi[0] === '<!>') {
 					// special case — we can use `$.comment` instead of creating a unique template
 					body.push(b.var(id, b.call('$.comment')));
 				} else {
 					add_template(template_name, [
-						b.template([b.quasi(state.template.join(''), true)], []),
+						b.template(
+							quasi.map((q) => b.quasi(q, true)),
+							expressions
+						),
 						b.literal(flags)
 					]);
 
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/visitors/HtmlTag.js b/packages/svelte/src/compiler/phases/3-transform/client/visitors/HtmlTag.js
index 32439879de..1c1353f959 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/visitors/HtmlTag.js
+++ b/packages/svelte/src/compiler/phases/3-transform/client/visitors/HtmlTag.js
@@ -9,7 +9,7 @@ import * as b from '../../../../utils/builders.js';
  * @param {ComponentContext} context
  */
 export function HtmlTag(node, context) {
-	context.state.template.push('<!>');
+	context.state.template.push_quasi('<!>');
 
 	// push into init, so that bindings run afterwards, which might trigger another run and override hydration
 	context.state.init.push(
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/visitors/IfBlock.js b/packages/svelte/src/compiler/phases/3-transform/client/visitors/IfBlock.js
index 0aa6e5d24a..6f8894c2c8 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/visitors/IfBlock.js
+++ b/packages/svelte/src/compiler/phases/3-transform/client/visitors/IfBlock.js
@@ -8,7 +8,7 @@ import * as b from '../../../../utils/builders.js';
  * @param {ComponentContext} context
  */
 export function IfBlock(node, context) {
-	context.state.template.push('<!>');
+	context.state.template.push_quasi('<!>');
 
 	const consequent = /** @type {BlockStatement} */ (context.visit(node.consequent));
 
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/visitors/KeyBlock.js b/packages/svelte/src/compiler/phases/3-transform/client/visitors/KeyBlock.js
index a013827f60..14b3d15539 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/visitors/KeyBlock.js
+++ b/packages/svelte/src/compiler/phases/3-transform/client/visitors/KeyBlock.js
@@ -8,7 +8,7 @@ import * as b from '../../../../utils/builders.js';
  * @param {ComponentContext} context
  */
 export function KeyBlock(node, context) {
-	context.state.template.push('<!>');
+	context.state.template.push_quasi('<!>');
 
 	const key = /** @type {Expression} */ (context.visit(node.expression));
 	const body = /** @type {Expression} */ (context.visit(node.fragment));
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/visitors/RegularElement.js b/packages/svelte/src/compiler/phases/3-transform/client/visitors/RegularElement.js
index 339fe25700..816667542b 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/visitors/RegularElement.js
+++ b/packages/svelte/src/compiler/phases/3-transform/client/visitors/RegularElement.js
@@ -19,7 +19,7 @@ import {
 import * as b from '../../../../utils/builders.js';
 import { is_custom_element_node } from '../../../nodes.js';
 import { clean_nodes, determine_namespace_for_children } from '../../utils.js';
-import { build_getter } from '../utils.js';
+import { build_getter, can_inline_variable } from '../utils.js';
 import {
 	get_attribute_name,
 	build_attribute_value,
@@ -54,7 +54,7 @@ export function RegularElement(node, context) {
 	}
 
 	if (node.name === 'noscript') {
-		context.state.template.push('<noscript></noscript>');
+		context.state.template.push_quasi('<noscript></noscript>');
 		return;
 	}
 
@@ -68,7 +68,7 @@ export function RegularElement(node, context) {
 		namespace: determine_namespace_for_children(node, context.state.metadata.namespace)
 	};
 
-	context.state.template.push(`<${node.name}`);
+	context.state.template.push_quasi(`<${node.name}`);
 
 	/** @type {Array<AST.Attribute | AST.SpreadAttribute>} */
 	const attributes = [];
@@ -242,7 +242,7 @@ export function RegularElement(node, context) {
 				const value = is_text_attribute(attribute) ? attribute.value[0].data : true;
 
 				if (name !== 'class' || value) {
-					context.state.template.push(
+					context.state.template.push_quasi(
 						` ${attribute.name}${
 							is_boolean_attribute(name) && value === true
 								? ''
@@ -279,7 +279,7 @@ export function RegularElement(node, context) {
 		context.state.after_update.push(b.stmt(b.call('$.replay_events', node_id)));
 	}
 
-	context.state.template.push('>');
+	context.state.template.push_quasi('>');
 
 	/** @type {SourceLocation[]} */
 	const child_locations = [];
@@ -384,7 +384,7 @@ export function RegularElement(node, context) {
 	}
 
 	if (!is_void(node.name)) {
-		context.state.template.push(`</${node.name}>`);
+		context.state.template.push_quasi(`</${node.name}>`);
 	}
 }
 
@@ -472,7 +472,7 @@ function build_element_spread_attributes(
 				value.type === 'Literal' &&
 				context.state.metadata.namespace === 'html'
 			) {
-				context.state.template.push(` is="${escape_html(value.value, true)}"`);
+				context.state.template.push_quasi(` is="${escape_html(value.value, true)}"`);
 				continue;
 			}
 
@@ -614,6 +614,13 @@ function build_element_attribute_update_assignment(element, node_id, attribute,
 		);
 	}
 
+	const inlinable_expression =
+		attribute.value === true
+			? false // not an expression
+			: is_inlinable_expression(
+					Array.isArray(attribute.value) ? attribute.value : [attribute.value],
+					context.state
+				);
 	if (attribute.metadata.expression.has_state) {
 		if (has_call) {
 			state.init.push(build_update(update));
@@ -622,11 +629,41 @@ function build_element_attribute_update_assignment(element, node_id, attribute,
 		}
 		return true;
 	} else {
-		state.init.push(update);
+		if (inlinable_expression) {
+			context.state.template.push_quasi(` ${name}="`);
+			context.state.template.push_expression(value);
+			context.state.template.push_quasi('"');
+		} else {
+			state.init.push(update);
+		}
 		return false;
 	}
 }
 
+/**
+ * @param {(AST.Text | AST.ExpressionTag)[]} nodes
+ * @param {import('../types.js').ComponentClientTransformState} state
+ */
+function is_inlinable_expression(nodes, state) {
+	let has_expression_tag = false;
+	for (let value of nodes) {
+		if (value.type === 'ExpressionTag') {
+			if (value.expression.type === 'Identifier') {
+				const binding = state.scope
+					.owner(value.expression.name)
+					?.declarations.get(value.expression.name);
+				if (!can_inline_variable(binding)) {
+					return false;
+				}
+			} else {
+				return false;
+			}
+			has_expression_tag = true;
+		}
+	}
+	return has_expression_tag;
+}
+
 /**
  * Like `build_element_attribute_update_assignment` but without any special attribute treatment.
  * @param {Identifier}	node_id
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/visitors/RenderTag.js b/packages/svelte/src/compiler/phases/3-transform/client/visitors/RenderTag.js
index 7da987f6cc..b33e16198f 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/visitors/RenderTag.js
+++ b/packages/svelte/src/compiler/phases/3-transform/client/visitors/RenderTag.js
@@ -9,7 +9,7 @@ import * as b from '../../../../utils/builders.js';
  * @param {ComponentContext} context
  */
 export function RenderTag(node, context) {
-	context.state.template.push('<!>');
+	context.state.template.push_quasi('<!>');
 	const callee = unwrap_optional(node.expression).callee;
 	const raw_args = unwrap_optional(node.expression).arguments;
 
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/visitors/SlotElement.js b/packages/svelte/src/compiler/phases/3-transform/client/visitors/SlotElement.js
index 9a2240a4d6..96bf77de46 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/visitors/SlotElement.js
+++ b/packages/svelte/src/compiler/phases/3-transform/client/visitors/SlotElement.js
@@ -10,7 +10,7 @@ import { build_attribute_value } from './shared/element.js';
  */
 export function SlotElement(node, context) {
 	// <slot {a}>fallback</slot>  -->   $.slot($$slots.default, { get a() { .. } }, () => ...fallback);
-	context.state.template.push('<!>');
+	context.state.template.push_quasi('<!>');
 
 	/** @type {Property[]} */
 	const props = [];
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/visitors/SvelteElement.js b/packages/svelte/src/compiler/phases/3-transform/client/visitors/SvelteElement.js
index 81314d67dd..ab79980f7c 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/visitors/SvelteElement.js
+++ b/packages/svelte/src/compiler/phases/3-transform/client/visitors/SvelteElement.js
@@ -21,7 +21,7 @@ import { build_render_statement, build_update } from './shared/utils.js';
  * @param {ComponentContext} context
  */
 export function SvelteElement(node, context) {
-	context.state.template.push(`<!>`);
+	context.state.template.push_quasi(`<!>`);
 
 	/** @type {Array<AST.Attribute | AST.SpreadAttribute>} */
 	const attributes = [];
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/visitors/shared/component.js b/packages/svelte/src/compiler/phases/3-transform/client/visitors/shared/component.js
index 03d873ba78..3b411b15b0 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/visitors/shared/component.js
+++ b/packages/svelte/src/compiler/phases/3-transform/client/visitors/shared/component.js
@@ -357,7 +357,7 @@ export function build_component(node, component_name, context, anchor = context.
 	}
 
 	if (Object.keys(custom_css_props).length > 0) {
-		context.state.template.push(
+		context.state.template.push_quasi(
 			context.state.metadata.namespace === 'svg'
 				? '<g><!></g>'
 				: '<div style="display: contents"><!></div>'
@@ -369,7 +369,7 @@ export function build_component(node, component_name, context, anchor = context.
 			b.stmt(b.call('$.reset', anchor))
 		);
 	} else {
-		context.state.template.push('<!>');
+		context.state.template.push_quasi('<!>');
 		statements.push(b.stmt(fn(anchor)));
 	}
 
diff --git a/packages/svelte/src/compiler/phases/3-transform/client/visitors/shared/fragment.js b/packages/svelte/src/compiler/phases/3-transform/client/visitors/shared/fragment.js
index 4008dbdfa3..141e283ea8 100644
--- a/packages/svelte/src/compiler/phases/3-transform/client/visitors/shared/fragment.js
+++ b/packages/svelte/src/compiler/phases/3-transform/client/visitors/shared/fragment.js
@@ -62,11 +62,11 @@ export function process_children(nodes, initial, is_element, { visit, state }) {
 	function flush_sequence(sequence) {
 		if (sequence.every((node) => node.type === 'Text')) {
 			skipped += 1;
-			state.template.push(sequence.map((node) => node.raw).join(''));
+			state.template.push_quasi(sequence.map((node) => node.raw).join(''));
 			return;
 		}
 
-		state.template.push(' ');
+		state.template.push_quasi(' ');
 
 		const { has_state, has_call, value } = build_template_literal(sequence, visit, state);
 
diff --git a/packages/svelte/tests/snapshot/samples/inline-module-vars/_expected/client/index.svelte.js b/packages/svelte/tests/snapshot/samples/inline-module-vars/_expected/client/index.svelte.js
new file mode 100644
index 0000000000..69c6901d50
--- /dev/null
+++ b/packages/svelte/tests/snapshot/samples/inline-module-vars/_expected/client/index.svelte.js
@@ -0,0 +1,19 @@
+import "svelte/internal/disclose-version";
+import * as $ from "svelte/internal/client";
+
+const __DECLARED_ASSET_0__ = "__VITE_ASSET__2AM7_y_a__ 1440w, __VITE_ASSET__2AM7_y_b__ 960w";
+const __DECLARED_ASSET_1__ = "__VITE_ASSET__2AM7_y_c__ 1440w, __VITE_ASSET__2AM7_y_d__ 960w";
+const __DECLARED_ASSET_2__ = "__VITE_ASSET__2AM7_y_e__ 1440w, __VITE_ASSET__2AM7_y_f__ 960w";
+const __DECLARED_ASSET_3__ = "__VITE_ASSET__2AM7_y_g__";
+var root = $.template(`<picture><source srcset="${__DECLARED_ASSET_0__}" type="image/avif"> <source srcset="${__DECLARED_ASSET_1__}" type="image/webp"> <source srcset="${__DECLARED_ASSET_2__}" type="image/png"> <img src="${__DECLARED_ASSET_3__}" alt="production test" width="1440" height="1440"></picture>`);
+
+export default function Inline_module_vars($$anchor) {
+	var picture = root();
+	var source = $.child(picture);
+	var source_1 = $.sibling(source, 2);
+	var source_2 = $.sibling(source_1, 2);
+	var img = $.sibling(source_2, 2);
+
+	$.reset(picture);
+	$.append($$anchor, picture);
+}
\ No newline at end of file
diff --git a/packages/svelte/tests/snapshot/samples/inline-module-vars/_expected/server/index.svelte.js b/packages/svelte/tests/snapshot/samples/inline-module-vars/_expected/server/index.svelte.js
new file mode 100644
index 0000000000..6a9027e41f
--- /dev/null
+++ b/packages/svelte/tests/snapshot/samples/inline-module-vars/_expected/server/index.svelte.js
@@ -0,0 +1,10 @@
+import * as $ from "svelte/internal/server";
+
+const __DECLARED_ASSET_0__ = "__VITE_ASSET__2AM7_y_a__ 1440w, __VITE_ASSET__2AM7_y_b__ 960w";
+const __DECLARED_ASSET_1__ = "__VITE_ASSET__2AM7_y_c__ 1440w, __VITE_ASSET__2AM7_y_d__ 960w";
+const __DECLARED_ASSET_2__ = "__VITE_ASSET__2AM7_y_e__ 1440w, __VITE_ASSET__2AM7_y_f__ 960w";
+const __DECLARED_ASSET_3__ = "__VITE_ASSET__2AM7_y_g__";
+
+export default function Inline_module_vars($$payload) {
+	$$payload.out += `<picture><source${$.attr("srcset", __DECLARED_ASSET_0__)} type="image/avif"> <source${$.attr("srcset", __DECLARED_ASSET_1__)} type="image/webp"> <source${$.attr("srcset", __DECLARED_ASSET_2__)} type="image/png"> <img${$.attr("src", __DECLARED_ASSET_3__)} alt="production test" width="1440" height="1440"></picture>`;
+}
diff --git a/packages/svelte/tests/snapshot/samples/inline-module-vars/index.svelte b/packages/svelte/tests/snapshot/samples/inline-module-vars/index.svelte
new file mode 100644
index 0000000000..b46a86dc0b
--- /dev/null
+++ b/packages/svelte/tests/snapshot/samples/inline-module-vars/index.svelte
@@ -0,0 +1,15 @@
+<svelte:options runes={true} />
+
+<script module>
+	const __DECLARED_ASSET_0__ = "__VITE_ASSET__2AM7_y_a__ 1440w, __VITE_ASSET__2AM7_y_b__ 960w";
+	const __DECLARED_ASSET_1__ = "__VITE_ASSET__2AM7_y_c__ 1440w, __VITE_ASSET__2AM7_y_d__ 960w";
+	const __DECLARED_ASSET_2__ = "__VITE_ASSET__2AM7_y_e__ 1440w, __VITE_ASSET__2AM7_y_f__ 960w";
+	const __DECLARED_ASSET_3__ = "__VITE_ASSET__2AM7_y_g__";
+</script>
+
+<picture>
+	<source srcset={__DECLARED_ASSET_0__} type="image/avif" />
+	<source srcset={__DECLARED_ASSET_1__} type="image/webp" />
+	<source srcset={__DECLARED_ASSET_2__} type="image/png" />
+	<img src={__DECLARED_ASSET_3__} alt="production test" width=1440 height=1440 />
+</picture>