diff --git a/distr/flecs.c b/distr/flecs.c
index 96f111ae4..b1936bd72 100644
--- a/distr/flecs.c
+++ b/distr/flecs.c
@@ -13818,6 +13818,8 @@ void flecs_emit_forward_id(
         return;
     }
 
+    ecs_entity_t old_src = it->sources[0];
+
     it->ids[0] = id;
     it->sources[0] = tgt;
     it->event_id = id;
@@ -13884,6 +13886,8 @@ void flecs_emit_forward_id(
         }
     }
 
+
+    it->sources[0] = old_src;
     it->up_fields = 0;
 }
 
diff --git a/src/observable.c b/src/observable.c
index c3dc0c51e..34e51f4e1 100644
--- a/src/observable.c
+++ b/src/observable.c
@@ -608,6 +608,8 @@ void flecs_emit_forward_id(
         return;
     }
 
+    ecs_entity_t old_src = it->sources[0];
+
     it->ids[0] = id;
     it->sources[0] = tgt;
     it->event_id = id;
@@ -674,6 +676,8 @@ void flecs_emit_forward_id(
         }
     }
 
+
+    it->sources[0] = old_src;
     it->up_fields = 0;
 }
 
diff --git a/test/core/project.json b/test/core/project.json
index 14b446b4e..9950061db 100644
--- a/test/core/project.json
+++ b/test/core/project.json
@@ -1707,6 +1707,7 @@
                 "on_table_create",
                 "on_table_create_is_deferred",
                 "on_table_create_is_deferred_batched",
+                "2_children_w_deferred_set",
                 "cache_test_1",
                 "cache_test_2",
                 "cache_test_3",
diff --git a/test/core/src/Observer.c b/test/core/src/Observer.c
index bb36b8660..e0dd914d0 100644
--- a/test/core/src/Observer.c
+++ b/test/core/src/Observer.c
@@ -9879,3 +9879,65 @@ void Observer_on_table_create_is_deferred_batched(void) {
 
     ecs_fini(world);
 }
+
+void Observer_2_children_w_deferred_set(void) {
+    ecs_world_t *world = ecs_mini();
+
+    ECS_COMPONENT(world, Position);
+
+    Probe ctx = {0};
+
+    ecs_entity_t o = ecs_observer(world, {
+        .query.terms = {{ ecs_id(Position) }},
+        .events = { EcsOnAdd },
+        .callback = Observer_w_field,
+        .ctx = &ctx
+    });
+
+    ecs_entity_t p = ecs_new(world);
+    ecs_set(world, p, Position, {10, 20});
+
+    test_int(ctx.invoked, 1);
+    test_int(ctx.count, 1);
+    test_int(ctx.system, o);
+    test_int(ctx.event, EcsOnAdd);
+    test_uint(ctx.e[0], p);
+    test_uint(ctx.s[0][0], 0);
+    ecs_os_zeromem(&ctx);
+
+    {
+        ecs_defer_begin(world);
+        ecs_entity_t e = ecs_new(world);
+        ecs_add_pair(world, e, EcsChildOf, p);
+        ecs_set(world, e, Position, {20, 30});
+        test_int(ctx.invoked, 0);
+        ecs_defer_end(world);
+
+        test_int(ctx.invoked, 1);
+        test_int(ctx.count, 1);
+        test_int(ctx.system, o);
+        test_int(ctx.event, EcsOnAdd);
+        test_uint(ctx.e[0], e);
+        test_uint(ctx.s[0][0], 0);
+        ecs_os_zeromem(&ctx);
+    }
+
+    {
+        ecs_defer_begin(world);
+        ecs_entity_t e = ecs_new(world);
+        ecs_add_pair(world, e, EcsChildOf, p);
+        ecs_set(world, e, Position, {30, 40});
+        test_int(ctx.invoked, 0);
+        ecs_defer_end(world);
+
+        test_int(ctx.invoked, 1);
+        test_int(ctx.count, 1);
+        test_int(ctx.system, o);
+        test_int(ctx.event, EcsOnAdd);
+        test_uint(ctx.e[0], e);
+        test_uint(ctx.s[0][0], 0);
+        ecs_os_zeromem(&ctx);
+    }
+
+    ecs_fini(world);
+}
diff --git a/test/core/src/main.c b/test/core/src/main.c
index 248ac3da6..b4a00caec 100644
--- a/test/core/src/main.c
+++ b/test/core/src/main.c
@@ -1646,6 +1646,7 @@ void Observer_2_up_terms_w_batched_add(void);
 void Observer_on_table_create(void);
 void Observer_on_table_create_is_deferred(void);
 void Observer_on_table_create_is_deferred_batched(void);
+void Observer_2_children_w_deferred_set(void);
 void Observer_cache_test_1(void);
 void Observer_cache_test_2(void);
 void Observer_cache_test_3(void);
@@ -8735,6 +8736,10 @@ bake_test_case Observer_testcases[] = {
         "on_table_create_is_deferred_batched",
         Observer_on_table_create_is_deferred_batched
     },
+    {
+        "2_children_w_deferred_set",
+        Observer_2_children_w_deferred_set
+    },
     {
         "cache_test_1",
         Observer_cache_test_1
@@ -11650,7 +11655,7 @@ static bake_test_suite suites[] = {
         "Observer",
         NULL,
         NULL,
-        235,
+        236,
         Observer_testcases
     },
     {