diff --git a/crates/engine/src/batch_step_ref_tests.rs b/crates/engine/src/batch_step_ref_tests.rs
index 7474d546..ac69118e 100644
--- a/crates/engine/src/batch_step_ref_tests.rs
+++ b/crates/engine/src/batch_step_ref_tests.rs
@@ -89,3 +89,24 @@ fn text_that_looks_like_a_reference_is_left_alone() {
     let n = s.doc().unwrap().node(id(&results[0])).unwrap().clone();
     assert!(matches!(n.kind, figcraft_doc::NodeKind::Text(t) if t.characters == "$step 0 {\"$step\": 0}"));
 }
+
+#[test]
+fn a_nested_batch_refers_to_its_own_steps() {
+    let mut s = Session::new();
+    let frame = |name: &str| json!({"command": "node.create", "params": {"type": "frame", "name": name, "width": 100, "height": 100}});
+    let results = s
+        .execute(
+            "command.batch",
+            &json!({"commands": [
+                frame("Outer"),
+                {"command": "command.batch", "params": {"commands": [
+                    frame("Inner"),
+                    {"command": "node.create", "params": {"type": "rectangle", "parent": {"$step": 0}, "width": 10, "height": 10}}
+                ]}}
+            ]}),
+        )
+        .unwrap();
+    let inner = &results[1];
+    let rect = s.doc().unwrap().node(id(&inner[1])).unwrap().clone();
+    assert_eq!(rect.parent, Some(id(&inner[0])), "in the nested batch's own first frame, not the outer one");
+}
diff --git a/crates/engine/src/lib.rs b/crates/engine/src/lib.rs
index eee9e17a..1585aa38 100644
--- a/crates/engine/src/lib.rs
+++ b/crates/engine/src/lib.rs
@@ -1124,12 +1124,14 @@ impl Session {
 
     /// Run several commands as one undo step. A param value `{"$step": n}` is replaced by the `id`
     /// in the result of the earlier step `n` (`{"$step": n, "field": "…"}` picks another field),
-    /// so a step can target a layer that an earlier step of the same batch created.
+    /// so a step can target a layer that an earlier step of the same batch created. Any object
+    /// with a `$step` key in a step's params is such a reference, except inside a nested
+    /// `command.batch` step: its references are to its own steps.
     pub fn batch(&mut self, label: &str, cmds: &[(String, Value)]) -> Result<Vec<Value>> {
         self.grouped(label, |s| {
             let mut results: Vec<Value> = Vec::with_capacity(cmds.len());
             for (step, (id, p)) in cmds.iter().enumerate() {
-                let p = resolve_step_refs(p, &results, step, 0)?;
+                let p = if id == "command.batch" { p.clone() } else { resolve_step_refs(p, &results, step, 0)? };
                 results.push(s.execute(id, &p)?);
             }
             Ok(results)
diff --git a/docs/control-protocol.md b/docs/control-protocol.md
index 3e0cf9ba..134a6637 100644
--- a/docs/control-protocol.md
+++ b/docs/control-protocol.md
@@ -63,8 +63,9 @@ JSON or the gradient shorthand `{"type":"linearGradient","stops":["#hex","#hex"]
 ```
 
 Inside `command.batch`, `{"$step": n}` in a step's params stands for the `id` in step `n`'s result
-(zero-based; `{"$step": n, "field": "…"}` for another field), so one batch can create a frame and
-fill it:
+(zero-based; `{"$step": n, "field": "…"}` for another field; any object with a `$step` key is read
+as one, and a nested `command.batch` step keeps its own references to its own steps), so one batch
+can create a frame and fill it:
 
 ```json
 {"id":4,"method":"engine.execute","params":{"command":"command.batch","params":{"commands":[{"command":"node.create","params":{"type":"frame","width":200,"height":100}},{"command":"node.create","params":{"type":"rectangle","parent":{"$step":0},"width":20,"height":20}}]}}}
diff --git a/docs/mcp.md b/docs/mcp.md
index 862ade2d..07d84e60 100644
--- a/docs/mcp.md
+++ b/docs/mcp.md
@@ -1532,7 +1532,10 @@ result. This builds a nested tree in one call and one undo step, without guessin
 
 A reference to the same or a later step, a negative or non-integer index, a missing `field` or any
 other key next to `$step` fails the whole batch, which is rolled back. Only an object whose keys are
-`$step` (and optionally `field`) is a reference: text such as `"$step 0"` is left as written.
+`$step` (and optionally `field`) is a reference: text such as `"$step 0"` is left as written. The
+`$step` key is reserved in step params: an object holding it anywhere (in plugin data or a variable
+value too) is read as a reference. A step that is itself a `command.batch` is passed on as written,
+so the references in its steps are to its own steps, not the outer batch's.
 
 The end-to-end tests in `crates/mcp/tests/agent_tasks.rs` are worked examples of realistic tasks
 (auto layout, a card built in one batch with step references, components and overrides, gradients