diff --git a/src/utils.ts b/src/utils.ts
index 4b3cda783..78d328763 100644
--- a/src/utils.ts
+++ b/src/utils.ts
@@ -15,11 +15,13 @@ export function batched(callback: Callback): Callback {
     await Promise.resolve();
     if (!called) {
       called = true;
-      callback();
       // wait for all calls in this microtick to fall through before resetting "called"
-      // so that only the first call to the batched function calls the original callback
-      await Promise.resolve();
-      called = false;
+      // so that only the first call to the batched function calls the original callback.
+      // Schedule this before calling the callback so that calls to the batched function
+      // within the callback will proceed only after resetting called to false, and have
+      // a chance to execute the callback again
+      Promise.resolve().then(() => (called = false));
+      callback();
     }
   };
 }
diff --git a/tests/reactivity.test.ts b/tests/reactivity.test.ts
index 8a832024b..8d36d9258 100644
--- a/tests/reactivity.test.ts
+++ b/tests/reactivity.test.ts
@@ -208,6 +208,46 @@ describe("Reactivity", () => {
     expect(n).toBe(1); // two operations but only one notification
   });
 
+  test("batched: modifying the reactive in the callback doesn't break reactivity", async () => {
+    let n = 0;
+    let obj = { a: 1 };
+    const state = createReactive(
+      obj,
+      batched(() => {
+        state.a; // subscribe to a
+        state.a = 2;
+        n++;
+      })
+    );
+    expect(n).toBe(0);
+    state.a = 2;
+    expect(n).toBe(0);
+    await nextMicroTick();
+    expect(n).toBe(0); // key has not be read yet
+    state.a = state.a + 5; // key is read and then modified
+    expect(n).toBe(0);
+    await nextMicroTick();
+    expect(n).toBe(1);
+    // the write a = 2 inside the batched callback triggered another notification, wait for it
+    await nextMicroTick();
+    expect(n).toBe(2);
+    // Should now be stable as we're writing the same value again
+    await nextMicroTick();
+    expect(n).toBe(2);
+
+    // Do it again to check it's not broken
+    state.a = state.a + 5; // key is read and then modified
+    expect(n).toBe(2);
+    await nextMicroTick();
+    expect(n).toBe(3);
+    // the write a = 2 inside the batched callback triggered another notification, wait for it
+    await nextMicroTick();
+    expect(n).toBe(4);
+    // Should now be stable as we're writing the same value again
+    await nextMicroTick();
+    expect(n).toBe(4);
+  });
+
   test("setting property to same value does not trigger callback", async () => {
     let n = 0;
     const state = createReactive({ a: 1 }, () => n++);
diff --git a/tests/utils.test.ts b/tests/utils.test.ts
index 19081358c..e2a795006 100644
--- a/tests/utils.test.ts
+++ b/tests/utils.test.ts
@@ -50,4 +50,24 @@ describe("batched", () => {
     await nextMicroTick();
     expect(n).toBe(1);
   });
+
+  test("calling batched function from within the callback is not treated as part of the original batch", async () => {
+    let n = 0;
+    let fn = batched(() => {
+      n++;
+      if (n === 1) {
+        fn();
+      }
+    });
+
+    expect(n).toBe(0);
+    fn();
+    expect(n).toBe(0);
+    await nextMicroTick(); // First batch
+    expect(n).toBe(1);
+    await nextMicroTick(); // Second batch initiated from within the callback
+    expect(n).toBe(2);
+    await nextMicroTick();
+    expect(n).toBe(2);
+  });
 });