diff --git a/frontend/src/components/v2/InfisicalSecretInput/InfisicalSecretInput.tsx b/frontend/src/components/v2/InfisicalSecretInput/InfisicalSecretInput.tsx
index 9cb0a0bbc..c88b26a23 100644
--- a/frontend/src/components/v2/InfisicalSecretInput/InfisicalSecretInput.tsx
+++ b/frontend/src/components/v2/InfisicalSecretInput/InfisicalSecretInput.tsx
@@ -2,14 +2,38 @@
 import React, { forwardRef, TextareaHTMLAttributes, useEffect, useRef, useState } from "react";
 import { twMerge } from "tailwind-merge";
 
-import {
-  REGEX_SECRET_REFERENCE_FIND,
-  REGEX_SECRET_REFERENCE_INVALID
-} from "@app/helpers/secret-reference";
 import { useToggle } from "@app/hooks";
 
 import SecretReferenceSelect, { ReferenceType } from "./SecretReferenceSelect";
 
+const REGEX_SECRET_REFERENCE_FIND = /(\${([^}]*)})/g;
+const REGEX_SECRET_REFERENCE_INVALID = /(?:\/|\\|\n|\.$|^\.)/;
+
+const isValidSecretReferenceValue = (str: string): boolean => {
+  try {
+    if (!str) return true;
+    let skipNext = false;
+    str.split(REGEX_SECRET_REFERENCE_FIND).flatMap((el) => {
+      if (skipNext) {
+        skipNext = false;
+        return [];
+      }
+
+      const isInterpolationSyntax = el.startsWith("${") && el.endsWith("}");
+      if (!isInterpolationSyntax) return [];
+
+      skipNext = true;
+      if (REGEX_SECRET_REFERENCE_INVALID.test(el.slice(2, -1)))
+        throw new Error("Invalid reference");
+
+      return el;
+    });
+    return true;
+  } catch (e) {
+    return false;
+  }
+};
+
 const replaceContentWithDot = (str: string) => {
   let finalStr = "";
   for (let i = 0; i < str.length; i += 1) {
@@ -160,7 +184,6 @@ export const InfisicalSecretInput = forwardRef<HTMLTextAreaElement, Props>(
         const newValue = `${value.slice(0, currCaretPos)}}${value.slice(currCaretPos)}`;
 
         setValue(newValue);
-        // TODO: there should be a better way to do
         onChange?.({ target: { value: newValue } } as any);
         setCaretPos(currCaretPos);
 
@@ -318,9 +341,29 @@ export const InfisicalSecretInput = forwardRef<HTMLTextAreaElement, Props>(
           secretPath={propSecretPath}
           environment={propEnvironment}
           open={showReferencePopup}
-          handleOpenChange={(isOpen) => handleReferenceOpenChange(isOpen)}
+          handleOpenChange={(isOpen) => {
+            if (!isOpen && !isValidSecretReferenceValue(value)) {
+              return;
+            }
+            handleReferenceOpenChange(isOpen);
+          }}
           onSelect={(refValue) => handleReferenceSelect(refValue)}
           onEscapeKeyDown={() => {
+            if (showReferencePopup && !isValidSecretReferenceValue(value)) {
+              // remove incomplete reference
+              const match = isCaretInsideReference(value, lastCaretPos);
+              const referenceStartIndex = match?.index || 0;
+              const referenceEndIndex = referenceStartIndex + (match?.[0]?.length || 0);
+              const [start, end] = [
+                value.slice(0, referenceStartIndex),
+                value.slice(referenceEndIndex)
+              ];
+
+              const newValue = start + end;
+              setValue(newValue);
+              onChange?.({ target: { value: newValue } } as any);
+            }
+
             const timeout = setTimeout(() => {
               setCaretPos(lastCaretPos);
               clearTimeout(timeout);
diff --git a/frontend/src/helpers/secret-reference.ts b/frontend/src/helpers/secret-reference.ts
deleted file mode 100644
index 03af99818..000000000
--- a/frontend/src/helpers/secret-reference.ts
+++ /dev/null
@@ -1,27 +0,0 @@
-export const REGEX_SECRET_REFERENCE_FIND = /(\${([^}]*)})/g;
-export const REGEX_SECRET_REFERENCE_INVALID = /(?:\/|\\|\n|\.$|^\.)/;
-
-export function isValidSecretReferenceValue(str: string): boolean {
-  try {
-    if (!str) return true;
-    let skipNext = false;
-    str.split(REGEX_SECRET_REFERENCE_FIND).flatMap((el) => {
-      if (skipNext) {
-        skipNext = false;
-        return [];
-      }
-
-      const isInterpolationSyntax = el.startsWith("${") && el.endsWith("}");
-      if (!isInterpolationSyntax) return [];
-
-      skipNext = true;
-      if (REGEX_SECRET_REFERENCE_INVALID.test(el.slice(2, -1)))
-        throw new Error("Invalid reference");
-
-      return el;
-    });
-    return true;
-  } catch (e) {
-    return false;
-  }
-}
diff --git a/frontend/src/hooks/api/secrets/mutations.tsx b/frontend/src/hooks/api/secrets/mutations.tsx
index 13767b13e..448daee3b 100644
--- a/frontend/src/hooks/api/secrets/mutations.tsx
+++ b/frontend/src/hooks/api/secrets/mutations.tsx
@@ -7,7 +7,6 @@ import {
   encryptSymmetric
 } from "@app/components/utilities/cryptography/crypto";
 import { apiRequest } from "@app/config/request";
-import { isValidSecretReferenceValue } from "@app/helpers/secret-reference";
 
 import { secretApprovalRequestKeys } from "../secretApprovalRequest/queries";
 import { secretSnapshotKeys } from "../secretSnapshots/queries";
@@ -84,7 +83,6 @@ export const useCreateSecretV3 = ({
       secretComment,
       skipMultilineEncoding
     }) => {
-      if (!isValidSecretReferenceValue(secretValue)) throw new Error("Invalid secret reference");
       const PRIVATE_KEY = localStorage.getItem("PRIVATE_KEY") as string;
 
       const randomBytes = latestFileKey
@@ -146,7 +144,6 @@ export const useUpdateSecretV3 = ({
       newSecretName,
       skipMultilineEncoding
     }) => {
-      if (!isValidSecretReferenceValue(secretValue)) throw new Error("Invalid secret reference");
       const PRIVATE_KEY = localStorage.getItem("PRIVATE_KEY") as string;
 
       const randomBytes = latestFileKey