diff --git a/packages/block-editor/src/components/block-controls/slot.js b/packages/block-editor/src/components/block-controls/slot.js
index fb2ace0ba17a10..ad800b49ab40db 100644
--- a/packages/block-editor/src/components/block-controls/slot.js
+++ b/packages/block-editor/src/components/block-controls/slot.js
@@ -42,7 +42,7 @@ export default function BlockControlsSlot( { group = 'default', ...props } ) {
 		return null;
 	}
 
-	const slot = <Slot { ...props } fillProps={ fillProps } />;
+	const slot = <Slot { ...props } bubblesVirtually fillProps={ fillProps } />;
 
 	if ( group === 'default' ) {
 		return slot;
diff --git a/packages/block-editor/src/components/block-tools/block-contextual-toolbar.js b/packages/block-editor/src/components/block-tools/block-contextual-toolbar.js
index f27d8bb25e5a87..28126e745f90c4 100644
--- a/packages/block-editor/src/components/block-tools/block-contextual-toolbar.js
+++ b/packages/block-editor/src/components/block-tools/block-contextual-toolbar.js
@@ -9,6 +9,7 @@ import classnames from 'classnames';
 import { __ } from '@wordpress/i18n';
 import { hasBlockSupport, store as blocksStore } from '@wordpress/blocks';
 import { useSelect } from '@wordpress/data';
+import { ESCAPE } from '@wordpress/keycodes';
 
 /**
  * Internal dependencies
@@ -19,40 +20,47 @@ import { store as blockEditorStore } from '../../store';
 import { useHasAnyBlockControls } from '../block-controls/use-has-block-controls';
 
 function BlockContextualToolbar( { focusOnMount, isFixed, ...props } ) {
-	const { blockType, blockEditingMode, hasParents, showParentSelector } =
-		useSelect( ( select ) => {
-			const {
-				getBlockName,
-				getBlockParents,
-				getSelectedBlockClientIds,
-				getBlockEditingMode,
-			} = select( blockEditorStore );
-			const { getBlockType } = select( blocksStore );
-			const selectedBlockClientIds = getSelectedBlockClientIds();
-			const _selectedBlockClientId = selectedBlockClientIds[ 0 ];
-			const parents = getBlockParents( _selectedBlockClientId );
-			const firstParentClientId = parents[ parents.length - 1 ];
-			const parentBlockName = getBlockName( firstParentClientId );
-			const parentBlockType = getBlockType( parentBlockName );
+	const {
+		blockType,
+		blockEditingMode,
+		lastFocus,
+		hasParents,
+		showParentSelector,
+	} = useSelect( ( select ) => {
+		const {
+			getBlockName,
+			getBlockParents,
+			getLastFocus,
+			getSelectedBlockClientIds,
+			getBlockEditingMode,
+		} = select( blockEditorStore );
+		const { getBlockType } = select( blocksStore );
+		const selectedBlockClientIds = getSelectedBlockClientIds();
+		const _selectedBlockClientId = selectedBlockClientIds[ 0 ];
+		const parents = getBlockParents( _selectedBlockClientId );
+		const firstParentClientId = parents[ parents.length - 1 ];
+		const parentBlockName = getBlockName( firstParentClientId );
+		const parentBlockType = getBlockType( parentBlockName );
 
-			return {
-				blockType:
-					_selectedBlockClientId &&
-					getBlockType( getBlockName( _selectedBlockClientId ) ),
-				blockEditingMode: getBlockEditingMode( _selectedBlockClientId ),
-				hasParents: parents.length,
-				showParentSelector:
-					parentBlockType &&
-					getBlockEditingMode( firstParentClientId ) === 'default' &&
-					hasBlockSupport(
-						parentBlockType,
-						'__experimentalParentSelector',
-						true
-					) &&
-					selectedBlockClientIds.length <= 1 &&
-					getBlockEditingMode( _selectedBlockClientId ) === 'default',
-			};
-		}, [] );
+		return {
+			blockType:
+				_selectedBlockClientId &&
+				getBlockType( getBlockName( _selectedBlockClientId ) ),
+			blockEditingMode: getBlockEditingMode( _selectedBlockClientId ),
+			lastFocus: getLastFocus(),
+			hasParents: parents.length,
+			showParentSelector:
+				parentBlockType &&
+				getBlockEditingMode( firstParentClientId ) === 'default' &&
+				hasBlockSupport(
+					parentBlockType,
+					'__experimentalParentSelector',
+					true
+				) &&
+				selectedBlockClientIds.length <= 1 &&
+				getBlockEditingMode( _selectedBlockClientId ) === 'default',
+		};
+	}, [] );
 
 	const isToolbarEnabled =
 		! blockType ||
@@ -78,6 +86,12 @@ function BlockContextualToolbar( { focusOnMount, isFixed, ...props } ) {
 			/* translators: accessibility text for the block toolbar */
 			aria-label={ __( 'Block tools' ) }
 			variant={ isFixed ? 'unstyled' : undefined }
+			onChildrenKeyDown={ ( event ) => {
+				if ( event.keyCode === ESCAPE && lastFocus?.current ) {
+					event.preventDefault();
+					lastFocus.current.focus();
+				}
+			} }
 			{ ...props }
 		>
 			<BlockToolbar hideDragHandle={ isFixed } />
diff --git a/packages/block-editor/src/components/navigable-toolbar/index.js b/packages/block-editor/src/components/navigable-toolbar/index.js
index d26476a866b7aa..f5826e2797bc06 100644
--- a/packages/block-editor/src/components/navigable-toolbar/index.js
+++ b/packages/block-editor/src/components/navigable-toolbar/index.js
@@ -200,6 +200,7 @@ function NavigableToolbar( {
 	shouldUseKeyboardFocusShortcut = true,
 	__experimentalInitialIndex: initialIndex,
 	__experimentalOnIndexChange: onIndexChange,
+	onChildrenKeyDown,
 	...props
 } ) {
 	const ref = useRef();
@@ -214,6 +215,35 @@ function NavigableToolbar( {
 		shouldUseKeyboardFocusShortcut
 	);
 
+	useEffect( () => {
+		const navigableToolbarRef = ref.current;
+		const toolbarButtons = navigableToolbarRef.querySelectorAll(
+			'[data-toolbar-item="true"]'
+		);
+
+		if ( onChildrenKeyDown ) {
+			const handleChildrenKeyDown = ( event ) => {
+				onChildrenKeyDown( event );
+			};
+
+			toolbarButtons.forEach( ( toolbarButton ) => {
+				toolbarButton.addEventListener(
+					'keydown',
+					handleChildrenKeyDown
+				);
+			} );
+
+			return () => {
+				toolbarButtons.forEach( ( toolbarButton ) => {
+					toolbarButton.removeEventListener(
+						'keydown',
+						handleChildrenKeyDown
+					);
+				} );
+			};
+		}
+	}, [ onChildrenKeyDown, children ] );
+
 	if ( isAccessibleToolbar ) {
 		return (
 			<Toolbar label={ props[ 'aria-label' ] } ref={ ref } { ...props }>