diff --git a/src/components/App.tsx b/src/components/App.tsx
index 91a6cbe7f..bbb90f0c5 100644
--- a/src/components/App.tsx
+++ b/src/components/App.tsx
@@ -2399,7 +2399,6 @@ class App extends React.Component<AppProps, AppState> {
         );
       }
     }
-
     const element = existingTextElement
       ? existingTextElement
       : newTextElement({
diff --git a/src/element/newElement.ts b/src/element/newElement.ts
index 2d6a12afe..848ab0dc8 100644
--- a/src/element/newElement.ts
+++ b/src/element/newElement.ts
@@ -21,7 +21,12 @@ import { AppState } from "../types";
 import { getElementAbsoluteCoords } from ".";
 import { adjustXYWithRotation } from "../math";
 import { getResizedElementAbsoluteCoords } from "./bounds";
-import { getContainerElement, measureText, wrapText } from "./textElement";
+import {
+  getContainerElement,
+  getContainerDims,
+  measureText,
+  wrapText,
+} from "./textElement";
 import { BOUND_TEXT_PADDING, VERTICAL_ALIGN } from "../constants";
 
 type ElementConstructorOpts = MarkOptional<
@@ -164,7 +169,9 @@ const getAdjustedDimensions = (
   let maxWidth = null;
   const container = getContainerElement(element);
   if (container) {
-    maxWidth = container.width - BOUND_TEXT_PADDING * 2;
+    const containerDims = getContainerDims(container);
+
+    maxWidth = containerDims.width - BOUND_TEXT_PADDING * 2;
   }
   const {
     width: nextWidth,
@@ -224,16 +231,21 @@ const getAdjustedDimensions = (
   // make sure container dimensions are set properly when
   // text editor overflows beyond viewport dimensions
   if (container) {
-    let height = container.height;
-    let width = container.width;
+    const containerDims = getContainerDims(container);
+    let { width, height } = containerDims;
     if (nextHeight > height - BOUND_TEXT_PADDING * 2) {
       height = nextHeight + BOUND_TEXT_PADDING * 2;
     }
     if (nextWidth > width - BOUND_TEXT_PADDING * 2) {
       width = nextWidth + BOUND_TEXT_PADDING * 2;
     }
-    if (height !== container.height || width !== container.width) {
-      mutateElement(container, { height, width });
+    if (height !== containerDims.height || width !== containerDims.height) {
+      const diffHeight = height - containerDims.height;
+      const diffWidth = width - containerDims.width;
+      mutateElement(container, {
+        height: container.height + diffHeight,
+        width: container.width + diffWidth,
+      });
     }
   }
   return {
@@ -259,7 +271,11 @@ export const updateTextElement = (
 ): ExcalidrawTextElement => {
   const container = getContainerElement(element);
   if (container) {
-    text = wrapText(text, getFontString(element), container.width);
+    text = wrapText(
+      text,
+      getFontString(element),
+      getContainerDims(container).width,
+    );
   }
   const dimensions = getAdjustedDimensions(element, text);
   return newElementWith(element, {
diff --git a/src/element/textElement.ts b/src/element/textElement.ts
index f1969a89e..604ff8f82 100644
--- a/src/element/textElement.ts
+++ b/src/element/textElement.ts
@@ -16,16 +16,20 @@ export const redrawTextBoundingBox = (
   element: ExcalidrawTextElement,
   container: ExcalidrawElement | null,
 ) => {
-  const maxWidth = container
-    ? container.width - BOUND_TEXT_PADDING * 2
+  let containerDims;
+  if (container) {
+    containerDims = getContainerDims(container);
+  }
+  const maxWidth = containerDims
+    ? containerDims.width - BOUND_TEXT_PADDING * 2
     : undefined;
   let text = element.text;
 
-  if (container) {
+  if (containerDims) {
     text = wrapText(
       element.originalText,
       getFontString(element),
-      container.width,
+      containerDims.width,
     );
   }
   const metrics = measureText(
@@ -37,18 +41,24 @@ export const redrawTextBoundingBox = (
   let coordX = element.x;
   // Resize container and vertically center align the text
   if (container) {
-    let nextHeight = container.height;
-    coordX = container.x + BOUND_TEXT_PADDING;
+    const containerDims = getContainerDims(container);
+    const containerCoords = getBoundTextContainerCoords(container);
+    let nextHeight = containerDims.height;
+    coordX = containerCoords.x + BOUND_TEXT_PADDING;
     if (element.verticalAlign === VERTICAL_ALIGN.TOP) {
-      coordY = container.y + BOUND_TEXT_PADDING;
+      coordY = containerCoords.y + BOUND_TEXT_PADDING;
     } else if (element.verticalAlign === VERTICAL_ALIGN.BOTTOM) {
       coordY =
-        container.y + container.height - metrics.height - BOUND_TEXT_PADDING;
+        containerCoords.y +
+        containerDims.height -
+        metrics.height -
+        BOUND_TEXT_PADDING;
     } else {
-      coordY = container.y + container.height / 2 - metrics.height / 2;
-      if (metrics.height > container.height - BOUND_TEXT_PADDING * 2) {
+      coordY =
+        containerCoords.y + containerDims.height / 2 - metrics.height / 2;
+      if (metrics.height > containerDims.height - BOUND_TEXT_PADDING * 2) {
         nextHeight = metrics.height + BOUND_TEXT_PADDING * 2;
-        coordY = container.y + nextHeight / 2 - metrics.height / 2;
+        coordY = containerCoords.y + nextHeight / 2 - metrics.height / 2;
       }
     }
     mutateElement(container, { height: nextHeight });
@@ -121,7 +131,7 @@ export const handleBindTextResize = (
           text = wrapText(
             textElement.originalText,
             getFontString(textElement),
-            element.width,
+            getContainerDims(element).width,
           );
         }
 
@@ -474,3 +484,28 @@ export const getContainerElement = (
   }
   return null;
 };
+
+export const getContainerDims = (element: ExcalidrawElement) => {
+  if (element.type === "ellipse") {
+    return {
+      width: Math.round((element.width / 2) * Math.sqrt(2)),
+      height: Math.round((element.height / 2) * Math.sqrt(2)),
+    };
+  }
+  return { width: element.width, height: element.height };
+};
+
+export const getBoundTextContainerCoords = (container: ExcalidrawElement) => {
+  if (container.type === "ellipse") {
+    const offsetX = (container.width / 2) * (1 - Math.sqrt(2) / 2);
+    const offsetY = (container.height / 2) * (1 - Math.sqrt(2) / 2);
+    return {
+      x: container.x + offsetX,
+      y: container.y + offsetY,
+    };
+  }
+  return {
+    x: container.x,
+    y: container.y,
+  };
+};
diff --git a/src/element/textWysiwyg.tsx b/src/element/textWysiwyg.tsx
index 1bd940deb..6d5618ecb 100644
--- a/src/element/textWysiwyg.tsx
+++ b/src/element/textWysiwyg.tsx
@@ -19,7 +19,9 @@ import {
   getApproxLineHeight,
   getBoundTextElementId,
   getContainerElement,
+  getContainerDims,
   wrapText,
+  getBoundTextContainerCoords,
 } from "./textElement";
 import {
   actionDecreaseFontSize,
@@ -126,26 +128,28 @@ export const textWysiwyg = ({
           updatedElement,
           editable,
         );
+        const containerDims = getContainerDims(container);
         // using editor.style.height to get the accurate height of text editor
         const editorHeight = Number(editable.style.height.slice(0, -2));
         if (editorHeight > 0) {
           height = editorHeight;
         }
         if (propertiesUpdated) {
-          originalContainerHeight = container.height;
+          originalContainerHeight = containerDims.height;
 
           // update height of the editor after properties updated
           height = updatedElement.height;
         }
         if (!originalContainerHeight) {
-          originalContainerHeight = container.height;
+          originalContainerHeight = containerDims.height;
         }
-        maxWidth = container.width - BOUND_TEXT_PADDING * 2;
-        maxHeight = container.height - BOUND_TEXT_PADDING * 2;
+        maxWidth = containerDims.width - BOUND_TEXT_PADDING * 2;
+        maxHeight = containerDims.height - BOUND_TEXT_PADDING * 2;
         width = maxWidth;
+        const boundTextCoords = getBoundTextContainerCoords(container);
         // The coordinates of text box set a distance of
         // 5px to preserve padding
-        coordX = container.x + BOUND_TEXT_PADDING;
+        coordX = boundTextCoords.x + BOUND_TEXT_PADDING;
         // autogrow container height if text exceeds
         if (height > maxHeight) {
           const diff = Math.min(height - maxHeight, approxLineHeight);
@@ -154,7 +158,7 @@ export const textWysiwyg = ({
         } else if (
           // autoshrink container height until original container height
           // is reached when text is removed
-          container.height > originalContainerHeight &&
+          containerDims.height > originalContainerHeight &&
           height < maxHeight
         ) {
           const diff = Math.min(maxHeight - height, approxLineHeight);
@@ -165,11 +169,14 @@ export const textWysiwyg = ({
         else {
           // vertically center align the text
           if (verticalAlign === VERTICAL_ALIGN.MIDDLE) {
-            coordY = container.y + container.height / 2 - height / 2;
+            coordY = boundTextCoords.y + containerDims.height / 2 - height / 2;
           }
           if (verticalAlign === VERTICAL_ALIGN.BOTTOM) {
             coordY =
-              container.y + container.height - height - BOUND_TEXT_PADDING;
+              boundTextCoords.y +
+              containerDims.height -
+              height -
+              BOUND_TEXT_PADDING;
           }
         }
       }
@@ -303,7 +310,7 @@ export const textWysiwyg = ({
           const actualLineCount = wrapText(
             editable.value,
             font,
-            container!.width,
+            getContainerDims(container!).width,
           ).split("\n").length;
           // This is browser behaviour when setting height to "auto"
           // It sets the height needed for 2 lines even if actual