diff --git a/cue/testdata/export/issue2119.txtar b/cue/testdata/export/issue2119.txtar
index 4879d953f..5783c9a2f 100644
--- a/cue/testdata/export/issue2119.txtar
+++ b/cue/testdata/export/issue2119.txtar
@@ -10,7 +10,7 @@ simplified: {
 		[R+""][0]
 	}
 	out: yaml.Marshal(x)
-	@test(leq, {x: {d: ".*"}, out: string})
+	@test(eq, {x: {d: ".*"}, out: "d: .*\n"})
 }
 
 original: {
@@ -32,8 +32,27 @@ original: {
 		}
 	}
 	out: yaml.Marshal(rule)
-	// TODO(inline): support multi-line strings.
-	@test(leq, {out: string})
+	@test(eq, {
+		#testableRegexp: {
+			string
+			#test: {
+				in: string
+				out: _|_ @test(err, code=incomplete, contains="original.#testableRegexp.#test.out: non-concrete value string in operand to +", pos=[21:29, 16:21, 17:3])
+			}
+		}
+		rule: {
+			#patterns: {
+				bar: {
+					"(.*)"
+					#test: {in: "testcontent", out: "testcontent"}
+				}
+			}
+		}
+		out: """
+		{}
+
+		"""
+	})
 }
 -- out/errors.txt --
 [incomplete] original.#testableRegexp.#test.out: non-concrete value string in operand to +:
diff --git a/internal/cuetxtar/inline_attr.go b/internal/cuetxtar/inline_attr.go
index 9f3117779..6975b0815 100644
--- a/internal/cuetxtar/inline_attr.go
+++ b/internal/cuetxtar/inline_attr.go
@@ -589,8 +589,12 @@ func isInlineMode(archive *txtar.Archive) bool {
 		if !strings.HasSuffix(f.Name, ".cue") {
 			continue
 		}
-		af, err := parser.ParseFile(f.Name, f.Data)
-		if err != nil {
+		// Use error-recovery parsing so that @test directives are detected
+		// even when the file has parse errors. Without this, a parse error
+		// causes us to skip the file entirely, resulting in a misleading
+		// "archive has no @test directives" report.
+		af, _ := parser.ParseFile(f.Name, f.Data, parser.AllErrors)
+		if af == nil {
 			continue
 		}
 		if declsHaveTestAttrs(af.Decls) {
diff --git a/internal/cuetxtar/inline_format.go b/internal/cuetxtar/inline_format.go
index da86c0910..683600ae6 100644
--- a/internal/cuetxtar/inline_format.go
+++ b/internal/cuetxtar/inline_format.go
@@ -72,6 +72,17 @@ func (r *inlineRunner) eqFillAttrStr(exprStr, atStr string, pa parsedTestAttr) s
 		} else {
 			indent := r.attrLineIndent(pa)
 			exprStr = strings.ReplaceAll(exprStr, "\n", "\n"+indent)
+			// Strip trailing whitespace from blank lines to avoid
+			// "non-matching whitespace" parse errors in multiline strings:
+			// a blank line that is all-whitespace must have zero characters
+			// (not indentation spaces) to satisfy CUE's multiline string rules.
+			lines := strings.Split(exprStr, "\n")
+			for i, line := range lines {
+				if strings.TrimSpace(line) == "" {
+					lines[i] = ""
+				}
+			}
+			exprStr = strings.Join(lines, "\n")
 		}
 	}
 	if atStr != "" {
diff --git a/internal/cuetxtar/inline_test.go b/internal/cuetxtar/inline_test.go
index dbe831fc6..b2e66add9 100644
--- a/internal/cuetxtar/inline_test.go
+++ b/internal/cuetxtar/inline_test.go
@@ -19,6 +19,8 @@ import (
 	"strings"
 	"testing"
 
+	"golang.org/x/tools/txtar"
+
 	"cuelang.org/go/cue"
 	"cuelang.org/go/cue/ast"
 	"cuelang.org/go/cue/cuecontext"
@@ -863,3 +865,21 @@ func TestParseErrArgs(t *testing.T) {
 		}
 	})
 }
+
+// TestIsInlineModeParsedError verifies that isInlineMode returns true for an
+// archive whose CUE file has a parse error in a @test attribute body. Before
+// the AllErrors fix, isInlineMode skipped files with parse errors and returned
+// false, producing a misleading "archive has no @test directives" error.
+func TestIsInlineModeParsedError(t *testing.T) {
+	// A @test attribute whose argument is a multiline string with whitespace
+	// mismatch: the blank line has 1 tab but the closing """ has 2 tabs.
+	// parser.ParseFile fails on this input, but the partial AST still
+	// contains the @test attribute.
+	src := "x: 1 @test(eq, \"\"\"\n\t\thello\n\t\n\t\t\"\"\")"
+	ar := &txtar.Archive{
+		Files: []txtar.File{{Name: "test.cue", Data: []byte(src)}},
+	}
+	if !isInlineMode(ar) {
+		t.Error("isInlineMode returned false for archive with @test in parse-error file; want true")
+	}
+}
diff --git a/internal/cuetxtar/testdata/inline/eq_fill_multiline_blank.txtar b/internal/cuetxtar/testdata/inline/eq_fill_multiline_blank.txtar
new file mode 100644
index 000000000..6c8303723
--- /dev/null
+++ b/internal/cuetxtar/testdata/inline/eq_fill_multiline_blank.txtar
@@ -0,0 +1,23 @@
+# Tests that CUE_UPDATE=1 generates valid (parseable) @test(eq, ...) output when
+# the filled value contains a string with an embedded blank line. The generator
+# re-indents the multiline expression; blank lines must remain completely empty
+# (no trailing whitespace) so CUE's multiline-string whitespace rule is satisfied.
+-- in/test.cue --
+outer: {
+	x: {
+		s: "line1\n\nline2"
+	} @test(eq)
+}
+-- out/update/test.cue --
+outer: {
+	x: {
+		s: "line1\n\nline2"
+	} @test(eq, {s: """
+		line1
+
+		line2
+		"""})
+}
+-- out/status.txt --
+update: output passes run
+force:  identical to update