diff --git a/CHANGELOG.md b/CHANGELOG.md
index d2b7d61..2d2a0b7 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -4,6 +4,7 @@
 
 - New #155: Add ability to specify recursion depth for recursive modifier (@vjik)
 - Enh #157: Remove unnecessary code in `PackagesListBuilder` (@vjik)
+- Bug #153: Do not throw "Duplicate key…" exception when using nested groups (@vjik)
 
 ## 1.4.0 November 17, 2023
 
diff --git a/src/Composer/MergePlanCollector.php b/src/Composer/MergePlanCollector.php
new file mode 100644
index 0000000..50f3422
--- /dev/null
+++ b/src/Composer/MergePlanCollector.php
@@ -0,0 +1,180 @@
+<?php
+
+declare(strict_types=1);
+
+namespace Yiisoft\Config\Composer;
+
+use ErrorException;
+use Yiisoft\Config\MergePlan;
+use Yiisoft\Config\Options;
+
+use function in_array;
+
+/**
+ * @internal
+ *
+ * @psalm-import-type FileType from MergePlan
+ * @psalm-import-type MergePlanType from MergePlan
+ */
+final class MergePlanCollector
+{
+    private const PACKAGES_ORDER = [
+        Options::VENDOR_OVERRIDE_PACKAGE_NAME => 1,
+        Options::ROOT_PACKAGE_NAME => 2,
+    ];
+
+    /**
+     * @psalm-var array<string, array<string, list<FileType>>>
+     */
+    private array $mergePlan = [];
+
+    /**
+     * @psalm-var array<string,true|null>
+     */
+    private array $processedGroups = [];
+
+    /**
+     * Adds an item to the merge plan.
+     *
+     * @param array|string $file The config file.
+     * @param string $package The package name.
+     * @param string $group The group name.
+     *
+     * @psalm-param array{0:string,1:string}|string $file
+     */
+    public function add(array|string $file, string $package, string $group): void
+    {
+        $this->mergePlan[$group][$package][] = $file;
+    }
+
+    /**
+     * Adds a multiple items to the merge plan.
+     *
+     * @param array $files The config files.
+     * @param string $package The package name.
+     * @param string $group The group name.
+     *
+     * @psalm-param list<string|array{0:string,1:string}> $files
+     */
+    public function addMultiple(
+        array $files,
+        string $package,
+        string $group,
+    ): void {
+        $this->mergePlan[$group][$package] = $files;
+    }
+
+    /**
+     * Add empty group if it doesn't exist.
+     *
+     * @param string $group The group name.
+     */
+    public function addGroup(string $group): void
+    {
+        if (!isset($this->mergePlan[$group])) {
+            $this->mergePlan[$group] = [];
+        }
+    }
+
+    /**
+     * Returns the merge plan as an array.
+     *
+     * @psalm-return MergePlanType
+     */
+    public function asArray(): array
+    {
+        $groups = [];
+        foreach ($this->mergePlan as $group => $packages) {
+            $groups[$group] = $this->expandVariablesInPackages($packages);
+        }
+
+        $environments = [];
+        foreach ($groups as $packages) {
+            foreach ($packages as $files) {
+                foreach ($files as $file) {
+                    if (is_array($file)) {
+                        $environments[$file[0]] = true;
+                    }
+                }
+            }
+        }
+
+        return [
+            'groups' => $groups,
+            'environments' => array_keys($environments),
+        ];
+    }
+
+    /**
+     * @throws ErrorException
+     *
+     * @psalm-param array<string, list<FileType>> $packages
+     * @psalm-return array<string, list<FileType>>
+     */
+    private function expandVariablesInPackages(array $packages, ?string $targetGroup = null): array
+    {
+        if ($targetGroup !== null) {
+            if (!isset($this->mergePlan[$targetGroup])) {
+                throw new ErrorException(
+                    sprintf('The "%s" configuration group does not exist.', $targetGroup),
+                    severity: E_USER_ERROR
+                );
+            }
+
+            if (isset($this->processedGroups[$targetGroup])) {
+                throw new ErrorException('Circular references in configuration.', severity: E_USER_ERROR);
+            }
+            $this->processedGroups[$targetGroup] = true;
+            $groupPackages = $this->expandVariablesInPackages($this->mergePlan[$targetGroup]);
+            $this->processedGroups[$targetGroup] = null;
+
+            $variable = '$' . $targetGroup;
+            foreach ($groupPackages as $groupPackage => $groupItems) {
+                $packageItems = $packages[$groupPackage] ?? [];
+                $packages[$groupPackage] = in_array($variable, $packageItems, true)
+                    ? $this->replaceVariableToFiles($packageItems, $variable, $groupItems)
+                    : array_merge($packageItems, $groupItems);
+            }
+            foreach ($packages as $package => $items) {
+                $packages[$package] = array_values(
+                    array_filter(
+                        $items,
+                        static fn($item) => $item !== $variable,
+                    )
+                );
+            }
+            uksort(
+                $packages,
+                static fn(string $a, string $b) => (self::PACKAGES_ORDER[$a] ?? 0) <=> (self::PACKAGES_ORDER[$b] ?? 0),
+            );
+        }
+
+        foreach ($packages as $items) {
+            foreach ($items as $item) {
+                if (!is_array($item) && Options::isVariable($item)) {
+                    return $this->expandVariablesInPackages($packages, substr($item, 1));
+                }
+            }
+        }
+
+        return $packages;
+    }
+
+    /**
+     * @psalm-param list<FileType> $items
+     * @psalm-param list<FileType> $files
+     * @psalm-return list<FileType>
+     */
+    private function replaceVariableToFiles(array $items, string $variable, array $files): array
+    {
+        $result = [];
+        foreach ($items as $item) {
+            if ($item === $variable) {
+                $result = array_merge($result, $files);
+            } else {
+                $result[] = $item;
+            }
+        }
+        return $result;
+    }
+}
diff --git a/src/Composer/MergePlanProcess.php b/src/Composer/MergePlanProcess.php
index a4ad495..5211f31 100644
--- a/src/Composer/MergePlanProcess.php
+++ b/src/Composer/MergePlanProcess.php
@@ -7,7 +7,6 @@
 use Composer\Composer;
 use Composer\Package\PackageInterface;
 use Composer\Util\Filesystem;
-use Yiisoft\Config\MergePlan;
 use Yiisoft\Config\Options;
 use Yiisoft\VarDumper\VarDumper;
 
@@ -24,7 +23,7 @@
  */
 final class MergePlanProcess
 {
-    private MergePlan $mergePlan;
+    private MergePlanCollector $mergePlanCollector;
     private ProcessHelper $helper;
 
     /**
@@ -32,7 +31,7 @@ final class MergePlanProcess
      */
     public function __construct(Composer $composer)
     {
-        $this->mergePlan = new MergePlan();
+        $this->mergePlanCollector = new MergePlanCollector();
         $this->helper = new ProcessHelper($composer);
 
         if (!$this->helper->shouldBuildMergePlan()) {
@@ -43,7 +42,6 @@ public function __construct(Composer $composer)
         $this->addPackagesConfigsToMergePlan(true);
 
         $this->addRootPackageConfigToMergePlan();
-        $this->addEnvironmentsConfigsToMergePlan();
 
         $this->updateMergePlan();
     }
@@ -57,7 +55,7 @@ private function addPackagesConfigsToMergePlan(bool $isVendorOverrideLayer): voi
             $packageName = $isVendorOverrideLayer ? Options::VENDOR_OVERRIDE_PACKAGE_NAME : $name;
 
             foreach ($this->helper->getPackageConfig($package) as $group => $files) {
-                $this->mergePlan->addGroup($group);
+                $this->mergePlanCollector->addGroup($group);
 
                 foreach ((array) $files as $file) {
                     $isOptional = false;
@@ -68,7 +66,7 @@ private function addPackagesConfigsToMergePlan(bool $isVendorOverrideLayer): voi
                     }
 
                     if (Options::isVariable($file)) {
-                        $this->mergePlan->add($file, $packageName, $group);
+                        $this->mergePlanCollector->add($file, $packageName, $group);
                         continue;
                     }
 
@@ -82,7 +80,7 @@ private function addPackagesConfigsToMergePlan(bool $isVendorOverrideLayer): voi
                         }
 
                         foreach ($matches as $match) {
-                            $this->mergePlan->add(
+                            $this->mergePlanCollector->add(
                                 $this->normalizePackageFilePath($package, $match, $isVendorOverrideLayer),
                                 $packageName,
                                 $group,
@@ -96,7 +94,7 @@ private function addPackagesConfigsToMergePlan(bool $isVendorOverrideLayer): voi
                         continue;
                     }
 
-                    $this->mergePlan->add(
+                    $this->mergePlanCollector->add(
                         $this->normalizePackageFilePath($package, $absoluteFilePath, $isVendorOverrideLayer),
                         $packageName,
                         $group,
@@ -109,7 +107,7 @@ private function addPackagesConfigsToMergePlan(bool $isVendorOverrideLayer): voi
     private function addRootPackageConfigToMergePlan(): void
     {
         foreach ($this->helper->getRootPackageConfig() as $group => $files) {
-            $this->mergePlan->addMultiple(
+            $this->mergePlanCollector->addMultiple(
                 (array) $files,
                 Options::ROOT_PACKAGE_NAME,
                 $group,
@@ -117,32 +115,9 @@ private function addRootPackageConfigToMergePlan(): void
         }
     }
 
-    private function addEnvironmentsConfigsToMergePlan(): void
-    {
-        foreach ($this->helper->getEnvironmentConfig() as $environment => $groups) {
-            if ($environment === Options::DEFAULT_ENVIRONMENT) {
-                continue;
-            }
-
-            if (empty($groups)) {
-                $this->mergePlan->addEnvironmentWithoutConfigs($environment);
-                continue;
-            }
-
-            foreach ($groups as $group => $files) {
-                $this->mergePlan->addMultiple(
-                    (array) $files,
-                    Options::ROOT_PACKAGE_NAME,
-                    $group,
-                    $environment,
-                );
-            }
-        }
-    }
-
     private function updateMergePlan(): void
     {
-        $mergePlan = $this->mergePlan->toArray();
+        $mergePlan = $this->mergePlanCollector->asArray();
         ksort($mergePlan);
 
         $filePath = $this->helper->getPaths()->absolute(
diff --git a/src/Composer/ProcessHelper.php b/src/Composer/ProcessHelper.php
index 692baea..9877b11 100644
--- a/src/Composer/ProcessHelper.php
+++ b/src/Composer/ProcessHelper.php
@@ -190,19 +190,6 @@ public function getRootPackageConfig(): array
         return (array) ($this->rootPackageExtra['config-plugin'] ?? []);
     }
 
-    /**
-     * Returns the environment configuration.
-     *
-     * @return array The environment configuration.
-     *
-     * @psalm-return array<string, array<string, string|string[]>>
-     * @psalm-suppress MixedReturnTypeCoercion
-     */
-    public function getEnvironmentConfig(): array
-    {
-        return (array) ($this->rootPackageExtra['config-plugin-environments'] ?? []);
-    }
-
     /**
      * Returns the config paths instance.
      *
diff --git a/src/Config.php b/src/Config.php
index d559fbd..d577af2 100644
--- a/src/Config.php
+++ b/src/Config.php
@@ -11,7 +11,6 @@
 use function restore_error_handler;
 use function set_error_handler;
 use function sprintf;
-use function substr;
 
 /**
  * Config takes merge plan prepared by {@see \Yiisoft\Config\Composer\EventHandler}
@@ -39,17 +38,14 @@ final class Config implements ConfigInterface
      */
     public function __construct(
         ConfigPaths $paths,
-        string $environment = null,
+        ?string $environment = null,
         array $modifiers = [],
         private ?string $paramsGroup = 'params',
         string $mergePlanFile = Options::DEFAULT_MERGE_PLAN_FILE,
     ) {
-        $environment = empty($environment) ? Options::DEFAULT_ENVIRONMENT : $environment;
+        $mergePlan = new MergePlan($paths->absolute($mergePlanFile));
 
-        /** @psalm-suppress UnresolvableInclude, MixedArgument */
-        $mergePlan = new MergePlan(require $paths->absolute($mergePlanFile));
-
-        if (!$mergePlan->hasEnvironment($environment)) {
+        if ($environment !== null && !$mergePlan->hasEnvironment($environment)) {
             $this->throwException(sprintf('The "%s" configuration environment does not exist.', $environment));
         }
 
@@ -117,46 +113,14 @@ private function buildGroup(string $group): void
         $this->build[$group] = [];
 
         foreach ($this->filesExtractor->extract($group) as $file => $context) {
-            if (Options::isVariable($file)) {
-                $variable = $this->prepareVariable($file, $group);
-                $array = $this->get($variable);
-            } else {
-                $array = $this->buildFile($file);
-            }
-
             $this->build[$group] = $this->merger->merge(
                 $context,
                 $this->build[$group],
-                $array,
+                $this->buildFile($file),
             );
         }
     }
 
-    /**
-     * Checks the configuration variable and returns its name.
-     *
-     * @param string $variable The variable.
-     * @param string $group The group name.
-     *
-     * @throws ErrorException If the variable name is not valid.
-     *
-     * @return string The variable name.
-     */
-    private function prepareVariable(string $variable, string $group): string
-    {
-        $name = substr($variable, 1);
-
-        if ($name === $group) {
-            $this->throwException(sprintf(
-                'The variable "%s" must not be located inside the "%s" config group.',
-                "$variable",
-                "$name",
-            ));
-        }
-
-        return $name;
-    }
-
     /**
      * Builds the configuration from the file.
      *
diff --git a/src/Context.php b/src/Context.php
index 280e5d5..ee0b6b9 100644
--- a/src/Context.php
+++ b/src/Context.php
@@ -19,7 +19,6 @@ public function __construct(
         private string $package,
         private int $layer,
         private string $file,
-        private bool $isVariable,
     ) {
     }
 
@@ -42,9 +41,4 @@ public function file(): string
     {
         return $this->file;
     }
-
-    public function isVariable(): bool
-    {
-        return $this->isVariable;
-    }
 }
diff --git a/src/DataModifiers.php b/src/DataModifiers.php
index 3d36730..68630af 100644
--- a/src/DataModifiers.php
+++ b/src/DataModifiers.php
@@ -123,12 +123,8 @@ public function isReverseMergeGroup(string $group): bool
         return array_key_exists($group, $this->reverseMergeGroupsIndex);
     }
 
-    public function shouldRemoveGroupFromVendor(string $package, string $group, int $layer): bool
+    public function shouldRemoveGroupFromVendor(string $package, string $group): bool
     {
-        if ($layer !== Context::VENDOR) {
-            return false;
-        }
-
         return array_key_exists('*~*', $this->removeFromVendorGroupsIndex)
             || array_key_exists('*~' . $group, $this->removeFromVendorGroupsIndex)
             || array_key_exists($package . '~*', $this->removeFromVendorGroupsIndex)
diff --git a/src/FilesExtractor.php b/src/FilesExtractor.php
index a40be43..16f00eb 100644
--- a/src/FilesExtractor.php
+++ b/src/FilesExtractor.php
@@ -6,7 +6,6 @@
 
 use ErrorException;
 
-use function array_merge;
 use function glob;
 use function is_file;
 use function sprintf;
@@ -21,7 +20,7 @@ public function __construct(
         private ConfigPaths $paths,
         private MergePlan $mergePlan,
         private DataModifiers $dataModifiers,
-        private string $environment,
+        private ?string $environment,
     ) {
     }
 
@@ -36,61 +35,35 @@ public function __construct(
      */
     public function extract(string $group): array
     {
-        $environment = $this->prepareEnvironment($group);
-
-        $result = $this->process(Options::DEFAULT_ENVIRONMENT, $group, $this->mergePlan->getGroup($group));
-
-        if ($environment !== Options::DEFAULT_ENVIRONMENT) {
-            $result = array_merge(
-                $result,
-                $this->process(
-                    $environment,
-                    $group,
-                    $this->mergePlan->getGroup($group, $environment)
-                )
-            );
+        if (!$this->mergePlan->hasGroup($group)) {
+            $this->throwException(sprintf('The "%s" configuration group does not exist.', $group));
         }
 
-        return $result;
-    }
-
-    /**
-     * Checks whether the group exists in the merge plan.
-     *
-     * @param string $group The group name.
-     *
-     * @return bool Whether the group exists in the merge plan.
-     */
-    public function hasGroup(string $group): bool
-    {
-        return $this->mergePlan->hasGroup($group, $this->environment) || (
-            $this->environment !== Options::DEFAULT_ENVIRONMENT &&
-            $this->mergePlan->hasGroup($group, Options::DEFAULT_ENVIRONMENT)
-        );
-    }
-
-    /**
-     * @psalm-param array<string, string[]> $data
-     *
-     * @throws ErrorException If an error occurred during the process.
-     *
-     * @psalm-return array<string, Context>
-     */
-    private function process(string $environment, string $group, array $data): array
-    {
         $result = [];
 
-        foreach ($data as $package => $items) {
-            $layer = $this->detectLayer($environment, $package);
+        foreach ($this->mergePlan->getGroup($group) as $package => $items) {
+            $defaultLayer = match ($package) {
+                Options::ROOT_PACKAGE_NAME => Context::APPLICATION,
+                Options::VENDOR_OVERRIDE_PACKAGE_NAME => Context::VENDOR_OVERRIDE,
+                default => Context::VENDOR,
+            };
 
-            if ($this->dataModifiers->shouldRemoveGroupFromVendor($package, $group, $layer)) {
+            if (
+                $defaultLayer === Context::VENDOR
+                && $this->dataModifiers->shouldRemoveGroupFromVendor($package, $group)
+            ) {
                 continue;
             }
 
             foreach ($items as $item) {
-                if (Options::isVariable($item)) {
-                    $result[$item] = new Context($group, $package, $layer, $item, true);
-                    continue;
+                if (is_array($item)) {
+                    if ($item[0] !== $this->environment) {
+                        continue;
+                    }
+                    $item = $item[1];
+                    $layer = Context::ENVIRONMENT;
+                } else {
+                    $layer = $defaultLayer;
                 }
 
                 $isOptional = Options::isOptional($item);
@@ -104,9 +77,12 @@ private function process(string $environment, string $group, array $data): array
 
                 foreach ($files as $file) {
                     if (is_file($file)) {
-                        $result[$file] = new Context($group, $package, $layer, $file, false);
+                        $result[$file] = new Context($group, $package, $layer, $file);
                     } elseif (!$isOptional) {
-                        $this->throwException(sprintf('The "%s" file does not found.', $file));
+                        $message = Options::isVariable($item)
+                            ? sprintf('Don\'t allow to use variables in environments. Found variable "%s".', $item)
+                            : sprintf('The "%s" file does not found.', $file);
+                        $this->throwException($message);
                     }
                 }
             }
@@ -116,49 +92,15 @@ private function process(string $environment, string $group, array $data): array
     }
 
     /**
-     * Calculates the layer for the context.
-     *
-     * @param string $environment The environment name.
-     * @param string $package The package name.
-     *
-     * @return int The layer for the context.
-     */
-    private function detectLayer(string $environment, string $package): int
-    {
-        if ($package !== Options::ROOT_PACKAGE_NAME) {
-            return $package === Options::VENDOR_OVERRIDE_PACKAGE_NAME ? Context::VENDOR_OVERRIDE : Context::VENDOR;
-        }
-
-        if ($environment === Options::DEFAULT_ENVIRONMENT) {
-            return Context::APPLICATION;
-        }
-
-        return Context::ENVIRONMENT;
-    }
-
-    /**
-     * Checks the group name and returns actual environment name.
+     * Checks whether the group exists in the merge plan.
      *
      * @param string $group The group name.
      *
-     * @throws ErrorException If the group does not exist.
-     *
-     * @return string The actual environment name.
+     * @return bool Whether the group exists in the merge plan.
      */
-    private function prepareEnvironment(string $group): string
+    public function hasGroup(string $group): bool
     {
-        if (!$this->mergePlan->hasGroup($group, $this->environment)) {
-            if (
-                $this->environment === Options::DEFAULT_ENVIRONMENT ||
-                !$this->mergePlan->hasGroup($group, Options::DEFAULT_ENVIRONMENT)
-            ) {
-                $this->throwException(sprintf('The "%s" configuration group does not exist.', $group));
-            }
-
-            return Options::DEFAULT_ENVIRONMENT;
-        }
-
-        return $this->environment;
+        return $this->mergePlan->hasGroup($group);
     }
 
     /**
diff --git a/src/MergePlan.php b/src/MergePlan.php
index f6d7ac1..6ac8d45 100644
--- a/src/MergePlan.php
+++ b/src/MergePlan.php
@@ -6,108 +6,48 @@
 
 /**
  * @internal
+ *
+ * @psalm-type FileType = string|array{0:string,1:string}
+ * @psalm-type MergePlanType = array{
+ *     groups: array<string, array<string, list<FileType>>>,
+ *     environments: list<string>,
+ * }
  */
 final class MergePlan
 {
     /**
-     * @psalm-param array<string, array<string, array<string, string[]>>> $mergePlan
+     * @psalm-var MergePlanType
      */
-    public function __construct(
-        private array $mergePlan = [],
-    ) {
-    }
-
-    /**
-     * Adds an item to the merge plan.
-     *
-     * @param string $file The config file.
-     * @param string $package The package name.
-     * @param string $group The group name.
-     * @param string $environment The environment name.
-     */
-    public function add(
-        string $file,
-        string $package,
-        string $group,
-        string $environment = Options::DEFAULT_ENVIRONMENT
-    ): void {
-        $this->mergePlan[$environment][$group][$package][] = $file;
-    }
-
-    /**
-     * Adds a multiple items to the merge plan.
-     *
-     * @param string[] $files The config files.
-     * @param string $package The package name.
-     * @param string $group The group name.
-     * @param string $environment The environment name.
-     */
-    public function addMultiple(
-        array $files,
-        string $package,
-        string $group,
-        string $environment = Options::DEFAULT_ENVIRONMENT
-    ): void {
-        $this->mergePlan[$environment][$group][$package] = $files;
-    }
+    private array $mergePlan;
 
-    /**
-     * Adds an empty environment item to the merge plan.
-     *
-     * @param string $environment The environment name.
-     */
-    public function addEnvironmentWithoutConfigs(string $environment): void
-    {
-        $this->mergePlan[$environment] = [];
-    }
-
-    /**
-     * Add empty group if it not exists.
-     *
-     * @param string $group The group name.
-     * @param string $environment The environment name.
-     */
-    public function addGroup(string $group, string $environment = Options::DEFAULT_ENVIRONMENT): void
+    public function __construct(string $file)
     {
-        if (!isset($this->mergePlan[$environment][$group])) {
-            $this->mergePlan[$environment][$group] = [];
-        }
+        /** @psalm-suppress UnresolvableInclude */
+        $this->mergePlan = require $file;
     }
 
     /**
      * Returns the merge plan group.
      *
      * @param string $group The group name.
-     * @param string $environment The environment name.
-     *
-     * @return array<string, string[]>
-     */
-    public function getGroup(string $group, string $environment = Options::DEFAULT_ENVIRONMENT): array
-    {
-        return $this->mergePlan[$environment][$group] ?? [];
-    }
-
-    /**
-     * Returns the merge plan as an array.
      *
-     * @psalm-return array<string, array<string, array<string, string[]>>>
+     * @return array<string, list<FileType>>
      */
-    public function toArray(): array
+    public function getGroup(string $group): array
     {
-        return $this->mergePlan;
+        return $this->mergePlan['groups'][$group] ?? [];
     }
 
     /**
      * Checks whether the group exists in the merge plan.
      *
      * @param string $group The group name.
-     * @param string $environment The environment name.
      *
      * @return bool Whether the group exists in the merge plan.
      */
-    public function hasGroup(string $group, string $environment): bool
+    public function hasGroup(string $group): bool
     {
-        return isset($this->mergePlan[$environment][$group]);
+        return isset($this->mergePlan['groups'][$group]);
     }
 
     /**
@@ -119,6 +59,6 @@ public function hasGroup(string $group, string $environment): bool
      */
     public function hasEnvironment(string $environment): bool
     {
-        return isset($this->mergePlan[$environment]);
+        return in_array($environment, $this->mergePlan['environments']);
     }
 }
diff --git a/src/Merger.php b/src/Merger.php
index 77cad9d..2943504 100644
--- a/src/Merger.php
+++ b/src/Merger.php
@@ -135,6 +135,14 @@ private function performMerge(
 
             $existKey = array_key_exists($k, $result);
 
+            if (
+                $existKey
+                && $context->layer() !== Context::ENVIRONMENT
+                && isset($this->cacheKeys[Context::ENVIRONMENT][$k])
+            ) {
+                continue;
+            }
+
             if ($existKey && !$isReverseMerge) {
                 /** @var string|null $file */
                 $file = ArrayHelper::getValue(
@@ -150,7 +158,7 @@ private function performMerge(
             if (!$isReverseMerge || !$existKey) {
                 $isSet = $this->setValue($context, $fullKeyPath, $result, $k, $v);
 
-                if ($isSet && !$isReverseMerge && !$context->isVariable()) {
+                if ($isSet && !$isReverseMerge) {
                     /** @psalm-suppress MixedPropertyTypeCoercion */
                     ArrayHelper::setValue(
                         $this->cacheKeys,
@@ -197,11 +205,6 @@ private function prepareArrayForReverse(
                 continue;
             }
 
-            if ($context->isVariable()) {
-                $result[$key] = $value;
-                continue;
-            }
-
             $recursiveKeyPath[] = $key;
 
             /** @var string|null $file */
diff --git a/src/Options.php b/src/Options.php
index 9c5bd88..81a54f7 100644
--- a/src/Options.php
+++ b/src/Options.php
@@ -66,6 +66,9 @@ public static function isOptional(string $file): bool
         return str_starts_with($file, '?');
     }
 
+    /**
+     * @psalm-param string $file
+     */
     public static function isVariable(string $file): bool
     {
         return str_starts_with($file, '$');
diff --git a/tests/Integration/BaseWithEnvironment/BaseWithEnvironmentTest.php b/tests/Integration/BaseWithEnvironment/BaseWithEnvironmentTest.php
index 29aef24..d520cea 100644
--- a/tests/Integration/BaseWithEnvironment/BaseWithEnvironmentTest.php
+++ b/tests/Integration/BaseWithEnvironment/BaseWithEnvironmentTest.php
@@ -17,43 +17,12 @@ public function testBase(): void
             ],
             extra: [
                 'config-plugin' => [
-                    'params' => 'params.php',
-                    'web' => [],
-                ],
-                'config-plugin-environments' => [
-                    'dev' => [
-                        'params' => 'params-dev.php',
+                    'params' => [
+                        'params.php',
+                        ['dev', 'params-dev.php'],
                     ],
-                ],
-            ],
-            environment: 'dev',
-        );
-
-        $this->assertSame(
-            [
-                'a' => 1,
-                'b' => 99,
-                'c' => 3,
-            ],
-            $config->get('params')
-        );
-    }
-
-    public function testEmptyEnvironment(): void
-    {
-        $config = $this->runComposerUpdateAndCreateConfig(
-            rootPath: __DIR__,
-            packages: [
-                'test/a' => __DIR__ . '/packages/a',
-            ],
-            extra: [
-                'config-plugin' => [
-                    'params' => 'params.php',
                     'web' => [],
                 ],
-                'config-plugin-environments' => [
-                    'dev' => [],
-                ],
             ],
             environment: 'dev',
         );
@@ -61,7 +30,7 @@ public function testEmptyEnvironment(): void
         $this->assertSame(
             [
                 'a' => 1,
-                'b' => 2,
+                'b' => 99,
                 'c' => 3,
             ],
             $config->get('params')
diff --git a/tests/Integration/Complex/ComplexTest.php b/tests/Integration/Complex/ComplexTest.php
index f403b55..d02a28e 100644
--- a/tests/Integration/Complex/ComplexTest.php
+++ b/tests/Integration/Complex/ComplexTest.php
@@ -55,10 +55,10 @@ public function testBase(): void
                 'ba-web' => true,
                 'c-web' => true,
                 'custom-source-web' => true,
-                'd-dev-c-web' => true,
-                'a-web' => true,
                 'custom-source-common-a' => true,
                 'custom-source-common-b' => true,
+                'd-dev-c-web' => true,
+                'a-web' => true,
                 'common' => 99,
                 'web' => 7,
             ],
diff --git a/tests/Integration/Dummy/DummyTest.php b/tests/Integration/Dummy/DummyTest.php
index 968060f..c29068a 100644
--- a/tests/Integration/Dummy/DummyTest.php
+++ b/tests/Integration/Dummy/DummyTest.php
@@ -20,15 +20,6 @@ public function testHas(): void
         $this->assertFalse($config->has('not-exist'));
     }
 
-    public function testHasWithEmptyEnvironment(): void
-    {
-        $config = $this->prepareConfig('empty');
-
-        $this->assertTrue($config->has('web'));
-        $this->assertTrue($config->has('empty'));
-        $this->assertFalse($config->has('not-exist'));
-    }
-
     public function testHasWithEnvironment(): void
     {
         $config = $this->prepareConfig('alfa');
@@ -83,76 +74,6 @@ public function testGet(): void
                 'b-web-environment-override-key' => 'c-web-override-value',
                 'c-web-key' => 'c-web-value',
                 'c-web-environment-override-key' => 'c-web-override-value',
-                'a-common-key' => 'a-common-value',
-                'a-common-root-override-key' => 'common-root-override-value',
-                'b-common-key' => 'b-common-value',
-                'b-common-root-override-key' => 'common-root-override-value',
-                'c-common-key' => 'c-common-value',
-                'c-common-root-override-key' => 'common-root-override-value',
-                'root-common-key-1' => 'root-common-value-1',
-                'root-common-key-2' => 'root-common-value-2',
-                'root-common-nested-key-1' => 'root-common-nested-value-1',
-                'root-common-nested-key-2' => 'root-common-nested-value-2',
-                'root-web-key' => 'root-web-value',
-            ],
-            $config->get('web')
-        );
-    }
-
-    public function testGetWithEmptyEnvironment(): void
-    {
-        $config = $this->prepareConfig('empty');
-
-        $this->assertSame([], $config->get('empty'));
-        $this->assertSame([], $config->get('emptyVariable'));
-
-        $this->assertSame(
-            [
-                'a-common-key' => 'a-common-value',
-                'a-common-root-override-key' => 'common-root-override-value',
-                'b-common-key' => 'b-common-value',
-                'b-common-root-override-key' => 'common-root-override-value',
-                'c-common-key' => 'c-common-value',
-                'c-common-root-override-key' => 'common-root-override-value',
-                'root-common-key-1' => 'root-common-value-1',
-                'root-common-key-2' => 'root-common-value-2',
-                'root-common-nested-key-1' => 'root-common-nested-value-1',
-                'root-common-nested-key-2' => 'root-common-nested-value-2',
-            ],
-            $config->get('common')
-        );
-
-        $this->assertSame(
-            [
-                'a-params-key' => 'a-params-value',
-                'a-params-over-vendor-override-key' => 'c-params-over-vendor-override-value',
-                'b-params-key' => 'b-params-value',
-                'b-params-over-vendor-override-key' => 'c-params-over-vendor-override-value',
-                'c-params-key' => 'c-params-value',
-                'root-params-key' => 'root-params-value',
-                'root-params-local-key' => 'root-params-local-value',
-            ],
-            $config->get('params')
-        );
-
-        $this->assertSame(
-            [
-                'a-web-key' => 'a-web-value',
-                'a-web-environment-override-key' => 'a-web-override-value',
-                'b-web-key' => 'b-web-value',
-                'b-web-environment-override-key' => 'c-web-override-value',
-                'c-web-key' => 'c-web-value',
-                'c-web-environment-override-key' => 'c-web-override-value',
-                'a-common-key' => 'a-common-value',
-                'a-common-root-override-key' => 'common-root-override-value',
-                'b-common-key' => 'b-common-value',
-                'b-common-root-override-key' => 'common-root-override-value',
-                'c-common-key' => 'c-common-value',
-                'c-common-root-override-key' => 'common-root-override-value',
-                'root-common-key-1' => 'root-common-value-1',
-                'root-common-key-2' => 'root-common-value-2',
-                'root-common-nested-key-1' => 'root-common-nested-value-1',
-                'root-common-nested-key-2' => 'root-common-nested-value-2',
                 'root-web-key' => 'root-web-value',
             ],
             $config->get('web')
@@ -184,26 +105,10 @@ public function testGetWithEnvironment(): void
 
         $this->assertSame(
             [
-                'a-web-key' => 'a-web-value',
+                'alfa-main-key' => 'alfa-main-value',
                 'a-web-environment-override-key' => 'alfa-web-override-value',
-                'b-web-key' => 'b-web-value',
                 'b-web-environment-override-key' => 'alfa-web-override-value',
-                'c-web-key' => 'c-web-value',
                 'c-web-environment-override-key' => 'alfa-web-override-value',
-                'a-common-key' => 'a-common-value',
-                'a-common-root-override-key' => 'common-root-override-value',
-                'b-common-key' => 'b-common-value',
-                'b-common-root-override-key' => 'common-root-override-value',
-                'c-common-key' => 'c-common-value',
-                'c-common-root-override-key' => 'common-root-override-value',
-                'root-common-key-1' => 'root-common-value-1',
-                'root-common-key-2' => 'root-common-value-2',
-                'root-common-nested-key-1' => 'root-common-nested-value-1',
-                'root-common-nested-key-2' => 'root-common-nested-value-2',
-                'root-web-key' => 'root-web-value',
-                'alfa-web-key' => 'alfa-web-value',
-                'alfa-web2-key' => 'alfa-web2-value',
-                'alfa-main-key' => 'alfa-main-value',
             ],
             $config->get('main')
         );
@@ -227,19 +132,10 @@ public function testGetWithEnvironment(): void
                 'a-web-key' => 'a-web-value',
                 'a-web-environment-override-key' => 'a-web-override-value',
                 'b-web-key' => 'b-web-value',
-                'b-web-environment-override-key' => 'c-web-override-value',
+                'b-web-environment-override-key' => 'b-web-override-value',
                 'c-web-key' => 'c-web-value',
+                'b-web-environment-override-key' => 'c-web-override-value',
                 'c-web-environment-override-key' => 'c-web-override-value',
-                'a-common-key' => 'a-common-value',
-                'a-common-root-override-key' => 'common-root-override-value',
-                'b-common-key' => 'b-common-value',
-                'b-common-root-override-key' => 'common-root-override-value',
-                'c-common-key' => 'c-common-value',
-                'c-common-root-override-key' => 'common-root-override-value',
-                'root-common-key-1' => 'root-common-value-1',
-                'root-common-key-2' => 'root-common-value-2',
-                'root-common-nested-key-1' => 'root-common-nested-value-1',
-                'root-common-nested-key-2' => 'root-common-nested-value-2',
                 'root-web-key' => 'root-web-value',
                 'alfa-web-key' => 'alfa-web-value',
                 'alfa-web2-key' => 'alfa-web2-value',
@@ -279,16 +175,6 @@ public function testGetWithScopeExistenceCheck(): void
                 'b-web-environment-override-key' => 'beta-web-override-value',
                 'c-web-key' => 'c-web-value',
                 'c-web-environment-override-key' => 'beta-web-override-value',
-                'a-common-key' => 'a-common-value',
-                'a-common-root-override-key' => 'common-root-override-value',
-                'b-common-key' => 'b-common-value',
-                'b-common-root-override-key' => 'common-root-override-value',
-                'c-common-key' => 'c-common-value',
-                'c-common-root-override-key' => 'common-root-override-value',
-                'root-common-key-1' => 'root-common-value-1',
-                'root-common-key-2' => 'root-common-value-2',
-                'root-common-nested-key-1' => 'root-common-nested-value-1',
-                'root-common-nested-key-2' => 'root-common-nested-value-2',
                 'root-web-key' => 'root-web-value',
                 'beta-web-key' => 'beta-web-value',
                 'beta-web-isset-config' => true,
@@ -308,16 +194,6 @@ public function testGetWithEnvironmentVariableExistAndRootVariableNotExist(): vo
         $this->assertSame(
             [
                 'root-events-key' => 'root-events-value',
-                'a-common-key' => 'a-common-value',
-                'a-common-root-override-key' => 'common-root-override-value',
-                'b-common-key' => 'b-common-value',
-                'b-common-root-override-key' => 'common-root-override-value',
-                'c-common-key' => 'c-common-value',
-                'c-common-root-override-key' => 'common-root-override-value',
-                'root-common-key-1' => 'root-common-value-1',
-                'root-common-key-2' => 'root-common-value-2',
-                'root-common-nested-key-1' => 'root-common-nested-value-1',
-                'root-common-nested-key-2' => 'root-common-nested-value-2',
                 'beta-events-key' => 'beta-events-value',
             ],
             $config->get('events')
@@ -369,16 +245,6 @@ public function testConfigWithReverseMerge(): void
                 'b-web-environment-override-key' => 'c-web-override-value',
                 'c-web-key' => 'c-web-value',
                 'c-web-environment-override-key' => 'c-web-override-value',
-                'root-common-nested-key-2' => 'root-common-nested-value-2',
-                'root-common-nested-key-1' => 'root-common-nested-value-1',
-                'a-common-root-override-key' => 'common-root-override-value',
-                'b-common-root-override-key' => 'common-root-override-value',
-                'c-common-root-override-key' => 'common-root-override-value',
-                'root-common-key-2' => 'root-common-value-2',
-                'root-common-key-1' => 'root-common-value-1',
-                'c-common-key' => 'c-common-value',
-                'b-common-key' => 'b-common-value',
-                'a-common-key' => 'a-common-value',
                 'root-web-key' => 'root-web-value',
             ],
             $config->get('web')
@@ -389,7 +255,7 @@ public function testGetThrowExceptionForEnvironmentNotExist(): void
     {
         $this->expectException(ErrorException::class);
         $this->expectExceptionMessage('The "not-exist" configuration environment does not exist.');
-        $this->prepareConfig('not-exist', echoOutputOnException: false);
+        $this->prepareConfig('not-exist');
     }
 
     public function testGetThrowExceptionForGroupNotExist(): void
@@ -401,59 +267,10 @@ public function testGetThrowExceptionForGroupNotExist(): void
         $config->get('not-exist');
     }
 
-    public function testGetEnvironmentThrowExceptionForGroupNotExist(): void
-    {
-        $config = $this->prepareConfig('alfa');
-
-        $this->expectException(ErrorException::class);
-        $this->expectExceptionMessage('The "not-exist" configuration group does not exist.');
-        $config->get('not-exist');
-    }
-
-    public function testGetThrowExceptionForVariableGroupEqual(): void
-    {
-        $config = $this->prepareConfig();
-
-        $this->expectException(ErrorException::class);
-        $this->expectExceptionMessage(
-            'The variable "$failVariableGroupEqual" must not be located inside the "failVariableGroupEqual" config group.'
-        );
-        $config->get('failVariableGroupEqual');
-    }
-
-    public function testGetEnvironmentThrowExceptionForVariableGroupEqual(): void
-    {
-        $config = $this->prepareConfig('alfa');
-
-        $this->expectException(ErrorException::class);
-        $this->expectExceptionMessage(
-            'The variable "$failVariableGroupEqual" must not be located inside the "failVariableGroupEqual" config group.'
-        );
-        $config->get('failVariableGroupEqual');
-    }
-
-    public function testGetThrowExceptionForVariableGroupNotExist(): void
-    {
-        $config = $this->prepareConfig();
-
-        $this->expectException(ErrorException::class);
-        $this->expectExceptionMessage('The "failVariableNotExist" configuration group does not exist.');
-        $config->get('failVariableNotExist');
-    }
-
-    public function testGetEnvironmentThrowExceptionForVariableGroupNotExist(): void
-    {
-        $config = $this->prepareConfig('alfa');
-
-        $this->expectException(ErrorException::class);
-        $this->expectExceptionMessage('The "failVariableNotExist" configuration group does not exist.');
-        $config->get('failVariableNotExist');
-    }
-
     private function prepareConfig(
         ?string $environment = null,
         array $modifiers = [],
-        bool $echoOutputOnException = true,
+        bool $echoOutputOnException = false,
     ): Config {
         return $this->runComposerUpdateAndCreateConfig(
             rootPath: __DIR__,
@@ -470,9 +287,10 @@ private function prepareConfig(
                 'config-plugin' => [
                     'empty' => [],
                     'emptyVariable' => '$empty',
-                    'events' => 'events.php',
-                    'failVariableGroupEqual' => '$failVariableGroupEqual',
-                    'failVariableGroupNotExist' => '$failVariableNotExist',
+                    'events' => [
+                        'events.php',
+                        ['beta', 'beta/events.php'],
+                    ],
                     'common' => [
                         'common/*.php',
                         'common/*/*.php',
@@ -480,35 +298,18 @@ private function prepareConfig(
                     'params' => [
                         'params.php',
                         '?params-local.php',
+                        ['alfa', 'alfa/params.php'],
+                        ['beta', 'beta/params.php'],
                     ],
                     'web' => [
-                        '$common',
                         'web.php',
+                        ['alfa', 'alfa/web.php'],
+                        ['alfa', 'alfa/web2.php'],
+                        ['beta', 'beta/web.php'],
                     ],
-                ],
-                'config-plugin-environments' => [
-                    'alfa' => [
-                        'failVariableGroupEqual' => '$failVariableGroupEqual',
-                        'failVariableGroupNotExist' => '$failVariableNotExist',
-                        'main' => [
-                            '$web',
-                            'alfa/main.php',
-                        ],
-                        'params' => 'alfa/params.php',
-                        'web' => [
-                            'alfa/web.php',
-                            'alfa/web2.php',
-                        ],
+                    'main' => [
+                        ['alfa', 'alfa/main.php'],
                     ],
-                    'beta' => [
-                        'events' => [
-                            '$common',
-                            'beta/events.php',
-                        ],
-                        'web' => 'beta/web.php',
-                        'params' => 'beta/params.php',
-                    ],
-                    'empty' => [],
                 ],
             ],
             configDirectory: 'config',
diff --git a/tests/Integration/DuplicateEnvironmentKeys/DuplicateEnvironmentKeysTest.php b/tests/Integration/DuplicateEnvironmentKeys/DuplicateEnvironmentKeysTest.php
index e137d68..4b05a08 100644
--- a/tests/Integration/DuplicateEnvironmentKeys/DuplicateEnvironmentKeysTest.php
+++ b/tests/Integration/DuplicateEnvironmentKeys/DuplicateEnvironmentKeysTest.php
@@ -23,11 +23,9 @@ public function testBase(): void
                     'source-directory' => 'config',
                 ],
                 'config-plugin' => [
-                    'params' => 'params/*.php',
-                ],
-                'config-plugin-environments' => [
-                    'environment' => [
-                        'params' => 'environment/params/*.php',
+                    'params' => [
+                        'params/*.php',
+                        ['environment', 'environment/params/*.php'],
                     ],
                 ],
             ],
@@ -57,11 +55,9 @@ public function testWithReverseMerge(): void
                     'source-directory' => 'config',
                 ],
                 'config-plugin' => [
-                    'params' => 'params/*.php',
-                ],
-                'config-plugin-environments' => [
-                    'environment' => [
-                        'params' => 'environment/params/*.php',
+                    'params' => [
+                        'params/*.php',
+                        ['environment', 'environment/params/*.php'],
                     ],
                 ],
             ],
diff --git a/tests/Integration/IntegrationTestCase.php b/tests/Integration/IntegrationTestCase.php
index 6d0ae51..998c2e9 100644
--- a/tests/Integration/IntegrationTestCase.php
+++ b/tests/Integration/IntegrationTestCase.php
@@ -105,7 +105,7 @@ protected function runComposerUpdateAndCreateConfig(
         ?string $environment = null,
         ?string $paramsGroup = 'params',
         array $modifiers = [],
-        bool $echoOutputOnException = true,
+        bool $echoOutputOnException = false,
     ): Config {
         $output = $this->runComposerUpdate($rootPath, $packages, $extra, $configDirectory, $mergePlanFile);
 
diff --git a/tests/Integration/InvalidVariable/InvalidVariableTest.php b/tests/Integration/InvalidVariable/InvalidVariableTest.php
new file mode 100644
index 0000000..b4dc01a
--- /dev/null
+++ b/tests/Integration/InvalidVariable/InvalidVariableTest.php
@@ -0,0 +1,42 @@
+<?php
+
+declare(strict_types=1);
+
+namespace Yiisoft\Config\Tests\Integration\InvalidVariable;
+
+use Yiisoft\Config\Tests\Integration\IntegrationTestCase;
+
+final class InvalidVariableTest extends IntegrationTestCase
+{
+    public function testNotExist(): void
+    {
+        $output = $this->runComposerUpdate(
+            rootPath: __DIR__,
+            extra: [
+                'config-plugin' => [
+                    'params' => 'params.php',
+                    'params-web' => '$unknown',
+                ],
+            ],
+        );
+
+        $this->assertStringContainsString('The "unknown" configuration group does not exist.', $output);
+    }
+
+    public function testCircularDependency(): void
+    {
+        $output = $this->runComposerUpdate(
+            rootPath: __DIR__,
+            extra: [
+                'config-plugin' => [
+                    'params' => 'params.php',
+                    'params1' => '$params2',
+                    'params2' => '$params3',
+                    'params3' => '$params1',
+                ],
+            ],
+        );
+
+        $this->assertStringContainsString('Circular references in configuration.', $output);
+    }
+}
diff --git a/tests/Integration/NestedGroup/NestedGroupTest.php b/tests/Integration/NestedGroup/NestedGroupTest.php
new file mode 100644
index 0000000..fe8a5f5
--- /dev/null
+++ b/tests/Integration/NestedGroup/NestedGroupTest.php
@@ -0,0 +1,54 @@
+<?php
+
+declare(strict_types=1);
+
+namespace Yiisoft\Config\Tests\Integration\NestedGroup;
+
+use Yiisoft\Config\Tests\Integration\IntegrationTestCase;
+
+final class NestedGroupTest extends IntegrationTestCase
+{
+    public function testBase(): void
+    {
+        $config = $this->runComposerUpdateAndCreateConfig(
+            rootPath: __DIR__,
+            packages: [
+                'test/a' => __DIR__ . '/packages/a',
+            ],
+            extra: [
+                'config-plugin' => [
+                    'params' => [],
+                    'di' => 'di.php',
+                    'di-web' => ['$di', 'di-web.php'],
+                ],
+            ],
+        );
+
+        $this->assertSame(['key' => 42], $config->get('di'));
+        $this->assertSame(['key' => 42, 'over' => 1, 'test' => 19], $config->get('di-web'));
+    }
+
+    public function testVendorOverrideLayer(): void
+    {
+        $config = $this->runComposerUpdateAndCreateConfig(
+            rootPath: __DIR__,
+            packages: [
+                'test/a' => __DIR__ . '/packages/a',
+                'test/over' => __DIR__ . '/packages/over',
+            ],
+            extra: [
+                'config-plugin' => [
+                    'params' => [],
+                    'di' => 'di.php',
+                    'di-web' => ['$di', 'di-web.php'],
+                ],
+                'config-plugin-options' => [
+                    'vendor-override-layer' => 'test/over',
+                ],
+            ],
+        );
+
+        $this->assertSame(['key' => 42], $config->get('di'));
+        $this->assertSame(['key' => 42, 'over' => 2, 'test' => 19], $config->get('di-web'));
+    }
+}
diff --git a/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/web.php b/tests/Integration/NestedGroup/di-web.php
similarity index 52%
rename from tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/web.php
rename to tests/Integration/NestedGroup/di-web.php
index 59713f0..efee593 100644
--- a/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/web.php
+++ b/tests/Integration/NestedGroup/di-web.php
@@ -3,5 +3,5 @@
 declare(strict_types=1);
 
 return [
-    'root-web-key' => 'root-web-value',
+    'test' => 19,
 ];
diff --git a/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/alfa/web.php b/tests/Integration/NestedGroup/di.php
similarity index 52%
rename from tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/alfa/web.php
rename to tests/Integration/NestedGroup/di.php
index dbe0217..95ae27a 100644
--- a/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/alfa/web.php
+++ b/tests/Integration/NestedGroup/di.php
@@ -3,5 +3,5 @@
 declare(strict_types=1);
 
 return [
-    'alfa-web-key' => 'alfa-web-value',
+    'key' => 42,
 ];
diff --git a/tests/Integration/NestedGroup/packages/a/composer.json b/tests/Integration/NestedGroup/packages/a/composer.json
new file mode 100644
index 0000000..8eed753
--- /dev/null
+++ b/tests/Integration/NestedGroup/packages/a/composer.json
@@ -0,0 +1,9 @@
+{
+    "name": "test/a",
+    "version": "1.0.0",
+    "extra": {
+        "config-plugin": {
+            "di-web": "di-web.php"
+        }
+    }
+}
diff --git a/tests/Integration/NestedGroup/packages/a/di-web.php b/tests/Integration/NestedGroup/packages/a/di-web.php
new file mode 100644
index 0000000..1fced08
--- /dev/null
+++ b/tests/Integration/NestedGroup/packages/a/di-web.php
@@ -0,0 +1,8 @@
+<?php
+
+declare(strict_types=1);
+
+return [
+    'key' => 7,
+    'over' => 1,
+];
diff --git a/tests/Integration/NestedGroup/packages/over/composer.json b/tests/Integration/NestedGroup/packages/over/composer.json
new file mode 100644
index 0000000..3fa5e59
--- /dev/null
+++ b/tests/Integration/NestedGroup/packages/over/composer.json
@@ -0,0 +1,9 @@
+{
+    "name": "test/over",
+    "version": "1.0.0",
+    "extra": {
+        "config-plugin": {
+            "di-web": "di-web.php"
+        }
+    }
+}
diff --git a/tests/Integration/NestedGroup/packages/over/di-web.php b/tests/Integration/NestedGroup/packages/over/di-web.php
new file mode 100644
index 0000000..8802938
--- /dev/null
+++ b/tests/Integration/NestedGroup/packages/over/di-web.php
@@ -0,0 +1,8 @@
+<?php
+
+declare(strict_types=1);
+
+return [
+    'over' => 2,
+    'test' => 53,
+];
diff --git a/tests/Integration/NestedGroupWithEnvironment/NestedGroupWithEnvironmentTest.php b/tests/Integration/NestedGroupWithEnvironment/NestedGroupWithEnvironmentTest.php
new file mode 100644
index 0000000..3b8e89a
--- /dev/null
+++ b/tests/Integration/NestedGroupWithEnvironment/NestedGroupWithEnvironmentTest.php
@@ -0,0 +1,36 @@
+<?php
+
+declare(strict_types=1);
+
+namespace Yiisoft\Config\Tests\Integration\NestedGroupWithEnvironment;
+
+use Yiisoft\Config\Tests\Integration\IntegrationTestCase;
+
+final class NestedGroupWithEnvironmentTest extends IntegrationTestCase
+{
+    public function testBase(): void
+    {
+        $config = $this->runComposerUpdateAndCreateConfig(
+            rootPath: __DIR__,
+            packages: [
+                'test/a' => __DIR__ . '/packages/a',
+            ],
+            extra: [
+                'config-plugin' => [
+                    'params' => [
+                        'params.php',
+                        ['dev', 'params-dev.php'],
+                    ],
+                    'params-web' => [
+                        '$params',
+                        'params-web.php',
+                    ],
+                ],
+            ],
+            environment: 'dev',
+        );
+
+        $this->assertSame(['key' => 'environment'], $config->get('params'));
+        $this->assertSame(['key' => 'environment'], $config->get('params-web'));
+    }
+}
diff --git a/tests/Integration/NestedGroupWithEnvironment/packages/a/composer.json b/tests/Integration/NestedGroupWithEnvironment/packages/a/composer.json
new file mode 100644
index 0000000..96c9695
--- /dev/null
+++ b/tests/Integration/NestedGroupWithEnvironment/packages/a/composer.json
@@ -0,0 +1,9 @@
+{
+    "name": "test/a",
+    "version": "1.0.0",
+    "extra": {
+        "config-plugin": {
+            "params": "params.php"
+        }
+    }
+}
diff --git a/tests/Integration/NestedGroupWithEnvironment/packages/a/params.php b/tests/Integration/NestedGroupWithEnvironment/packages/a/params.php
new file mode 100644
index 0000000..3b75052
--- /dev/null
+++ b/tests/Integration/NestedGroupWithEnvironment/packages/a/params.php
@@ -0,0 +1,7 @@
+<?php
+
+declare(strict_types=1);
+
+return [
+    'key' => 'package',
+];
diff --git a/tests/Integration/NestedGroupWithEnvironment/params-dev.php b/tests/Integration/NestedGroupWithEnvironment/params-dev.php
new file mode 100644
index 0000000..24fbf23
--- /dev/null
+++ b/tests/Integration/NestedGroupWithEnvironment/params-dev.php
@@ -0,0 +1,7 @@
+<?php
+
+declare(strict_types=1);
+
+return [
+    'key' => 'environment',
+];
diff --git a/tests/Integration/NestedGroupWithEnvironment/params-web.php b/tests/Integration/NestedGroupWithEnvironment/params-web.php
new file mode 100644
index 0000000..3d2a385
--- /dev/null
+++ b/tests/Integration/NestedGroupWithEnvironment/params-web.php
@@ -0,0 +1,7 @@
+<?php
+
+declare(strict_types=1);
+
+return [
+    'key' => 'web',
+];
diff --git a/tests/Integration/NestedGroupWithEnvironment/params.php b/tests/Integration/NestedGroupWithEnvironment/params.php
new file mode 100644
index 0000000..0dae23d
--- /dev/null
+++ b/tests/Integration/NestedGroupWithEnvironment/params.php
@@ -0,0 +1,5 @@
+<?php
+
+declare(strict_types=1);
+
+return [];
diff --git a/tests/Integration/NestedInEnvironment/NestedInEnvironmentTest.php b/tests/Integration/NestedInEnvironment/NestedInEnvironmentTest.php
index f06d0ac..e312884 100644
--- a/tests/Integration/NestedInEnvironment/NestedInEnvironmentTest.php
+++ b/tests/Integration/NestedInEnvironment/NestedInEnvironmentTest.php
@@ -18,17 +18,15 @@ public function testBase(): void
                 ],
                 'config-plugin' => [
                     'params' => 'params.php',
-                    'definitions' => 'definitions.php',
+                    'definitions' => [
+                        'definitions.php',
+                        ['environment', 'environment/definitions.php'],
+                    ],
                     'definitions-backend' => [
                         '$definitions',
                         'definitions-backend.php',
                     ],
                 ],
-                'config-plugin-environments' => [
-                    'environment' => [
-                        'definitions' => 'environment/definitions.php',
-                    ],
-                ],
             ],
             configDirectory: 'config',
             environment: 'environment',
diff --git a/tests/Integration/NestedInEnvironment/config/definitions-backend.php b/tests/Integration/NestedInEnvironment/config/definitions-backend.php
index a7b277c..63f756f 100644
--- a/tests/Integration/NestedInEnvironment/config/definitions-backend.php
+++ b/tests/Integration/NestedInEnvironment/config/definitions-backend.php
@@ -6,4 +6,5 @@
 
 return [
     'app-backend' => 2,
+    'env-base' => 100,
 ];
diff --git a/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/ProcessWithIgnoreAdditionalDefaultEnvironmentTest.php b/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/ProcessWithIgnoreAdditionalDefaultEnvironmentTest.php
deleted file mode 100644
index ceddff1..0000000
--- a/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/ProcessWithIgnoreAdditionalDefaultEnvironmentTest.php
+++ /dev/null
@@ -1,70 +0,0 @@
-<?php
-
-declare(strict_types=1);
-
-namespace Yiisoft\Config\Tests\Integration\ProcessWithIgnoreAdditionalDefaultEnvironment;
-
-use Yiisoft\Config\Options;
-use Yiisoft\Config\Tests\Integration\IntegrationTestCase;
-
-final class ProcessWithIgnoreAdditionalDefaultEnvironmentTest extends IntegrationTestCase
-{
-    public function testBase(): void
-    {
-        $config = $this->runComposerUpdateAndCreateConfig(
-            rootPath: __DIR__,
-            extra: [
-                'config-plugin-options' => [
-                    'source-directory' => 'config',
-                ],
-                'config-plugin' => [
-                    'params' => 'params.php',
-                ],
-                'config-plugin-environments' => [
-                    'alfa' => [
-                        'params' => 'alfa/params.php',
-                        'web' => 'alfa/web.php',
-                        'main' => [
-                            '$web',
-                            'alfa/main.php',
-                        ],
-                    ],
-                    Options::DEFAULT_ENVIRONMENT => [
-                        'params' => 'params.php',
-                        'web' => 'web.php',
-                        'main' => [
-                            '$web',
-                            'main.php',
-                        ],
-                    ],
-                ],
-            ],
-            configDirectory: 'config',
-            environment: 'alfa',
-        );
-
-        $this->assertSame(
-            [
-                'root-params-key' => 'root-params-value',
-                'alfa-params-key' => 'alfa-params-value',
-            ],
-            $config->get('params'),
-        );
-        $this->assertSame(
-            [
-                'alfa-web-key' => 'alfa-web-value',
-            ],
-            $config->get('web'),
-        );
-        $this->assertSame(
-            [
-                'alfa-web-key' => 'alfa-web-value',
-                'alfa-main-key' => 'alfa-main-value',
-                'a-web-environment-override-key' => 'alfa-web-override-value',
-                'b-web-environment-override-key' => 'alfa-web-override-value',
-                'c-web-environment-override-key' => 'alfa-web-override-value',
-            ],
-            $config->get('main'),
-        );
-    }
-}
diff --git a/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/alfa/main.php b/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/alfa/main.php
deleted file mode 100644
index 52f7b4b..0000000
--- a/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/alfa/main.php
+++ /dev/null
@@ -1,10 +0,0 @@
-<?php
-
-declare(strict_types=1);
-
-return [
-    'alfa-main-key' => 'alfa-main-value',
-    'a-web-environment-override-key' => 'alfa-web-override-value',
-    'b-web-environment-override-key' => 'alfa-web-override-value',
-    'c-web-environment-override-key' => 'alfa-web-override-value',
-];
diff --git a/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/alfa/params.php b/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/alfa/params.php
deleted file mode 100644
index 48fb9ff..0000000
--- a/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/alfa/params.php
+++ /dev/null
@@ -1,7 +0,0 @@
-<?php
-
-declare(strict_types=1);
-
-return [
-    'alfa-params-key' => 'alfa-params-value',
-];
diff --git a/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/params.php b/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/params.php
deleted file mode 100644
index 5df4498..0000000
--- a/tests/Integration/ProcessWithIgnoreAdditionalDefaultEnvironment/config/params.php
+++ /dev/null
@@ -1,7 +0,0 @@
-<?php
-
-declare(strict_types=1);
-
-return [
-    'root-params-key' => 'root-params-value',
-];
diff --git a/tests/Integration/VariableInEnvironment/VariableInEnvironmentTest.php b/tests/Integration/VariableInEnvironment/VariableInEnvironmentTest.php
new file mode 100644
index 0000000..8f1affd
--- /dev/null
+++ b/tests/Integration/VariableInEnvironment/VariableInEnvironmentTest.php
@@ -0,0 +1,31 @@
+<?php
+
+declare(strict_types=1);
+
+namespace Yiisoft\Config\Tests\Integration\VariableInEnvironment;
+
+use ErrorException;
+use Yiisoft\Config\Tests\Integration\IntegrationTestCase;
+
+final class VariableInEnvironmentTest extends IntegrationTestCase
+{
+    public function testBase(): void
+    {
+        $config = $this->runComposerUpdateAndCreateConfig(
+            rootPath: __DIR__,
+            extra: [
+                'config-plugin' => [
+                    'params' => 'params.php',
+                    'params-web' => [
+                        ['dev', '$params'],
+                    ],
+                ],
+            ],
+            environment: 'dev',
+        );
+
+        $this->expectException(ErrorException::class);
+        $this->expectExceptionMessage('Don\'t allow to use variables in environments. Found variable "$params".');
+        $config->get('params-web');
+    }
+}
diff --git a/tests/Integration/VariableInEnvironment/params.php b/tests/Integration/VariableInEnvironment/params.php
new file mode 100644
index 0000000..0dae23d
--- /dev/null
+++ b/tests/Integration/VariableInEnvironment/params.php
@@ -0,0 +1,5 @@
+<?php
+
+declare(strict_types=1);
+
+return [];
diff --git a/tests/Integration/Variables/VariablesTest.php b/tests/Integration/Variables/VariablesTest.php
index 493bf5b..42544d9 100644
--- a/tests/Integration/Variables/VariablesTest.php
+++ b/tests/Integration/Variables/VariablesTest.php
@@ -44,50 +44,4 @@ public function testReverseWithTwoVariables(): void
             $config->get('web')
         );
     }
-
-    public function dataDefaultEnvironment(): array
-    {
-        return [
-            'null' => [null],
-            'empty-string' => [''],
-            'default-environment' => ['/'],
-        ];
-    }
-
-    /**
-     * @dataProvider dataDefaultEnvironment
-     */
-    public function testDefaultEnvironment(?string $environment): void
-    {
-        $config = $this->runComposerUpdateAndCreateConfig(
-            rootPath: __DIR__,
-            packages: [
-                'test/a' => __DIR__ . '/packages/a',
-            ],
-            extra: [
-                'config-plugin-options' => [
-                    'source-directory' => 'config',
-                ],
-                'config-plugin' => [
-                    'params' => 'params.php',
-                    'web1' => 'web1.php',
-                    'web2' => 'web2.php',
-                    'web' => [
-                        '$web1',
-                        '$web2',
-                    ],
-                ],
-            ],
-            configDirectory: 'config',
-            environment: $environment,
-        );
-
-        $this->assertSame(
-            [
-                'a' => 1,
-                'b' => 2,
-            ],
-            $config->get('web')
-        );
-    }
 }