diff --git a/packages/playwright-test/src/dispatcher.ts b/packages/playwright-test/src/dispatcher.ts
index 2272a83bbd..f88779b6f8 100644
--- a/packages/playwright-test/src/dispatcher.ts
+++ b/packages/playwright-test/src/dispatcher.ts
@@ -17,10 +17,11 @@
 import child_process from 'child_process';
 import path from 'path';
 import { EventEmitter } from 'events';
-import { RunPayload, TestBeginPayload, TestEndPayload, DonePayload, TestOutputPayload, WorkerInitParams, StepBeginPayload, StepEndPayload } from './ipc';
+import { RunPayload, TestBeginPayload, TestEndPayload, DonePayload, TestOutputPayload, WorkerInitParams, StepBeginPayload, StepEndPayload, SerializedLoaderData } from './ipc';
 import type { TestResult, Reporter, TestStep } from '../types/testReporter';
 import { Suite, TestCase } from './test';
 import { Loader } from './loader';
+import { ManualPromise } from 'playwright-core/src/utils/async';
 
 export type TestGroup = {
   workerHash: string;
@@ -31,17 +32,15 @@ export type TestGroup = {
 };
 
 export class Dispatcher {
-  private _workers = new Set<Worker>();
-  private _freeWorkers: Worker[] = [];
-  private _workerClaimers: (() => void)[] = [];
+  private _workerSlots: { busy: boolean, worker?: Worker }[] = [];
+  private _queue: TestGroup[] = [];
+  private _finished = new ManualPromise<void>();
+  private _isStopped = false;
 
   private _testById = new Map<string, { test: TestCase, result: TestResult, steps: Map<string, TestStep>, stepStack: Set<TestStep> }>();
-  private _queue: TestGroup[] = [];
-  private _stopCallback = () => {};
-  readonly _loader: Loader;
+  private _loader: Loader;
   private _reporter: Reporter;
   private _hasWorkerErrors = false;
-  private _isStopped = false;
   private _failureCount = 0;
 
   constructor(loader: Loader, testGroups: TestGroup[], reporter: Reporter) {
@@ -57,29 +56,77 @@ export class Dispatcher {
     }
   }
 
-  async run() {
-    // Loop in case job schedules more jobs
-    while (this._queue.length && !this._isStopped)
-      await this._dispatchQueue();
+  private async _scheduleJob() {
+    // 1. Find a job to run.
+    if (this._isStopped || !this._queue.length)
+      return;
+    const job = this._queue[0];
+
+    // 2. Find a worker with the same hash, or just some free worker.
+    let index = this._workerSlots.findIndex(w => !w.busy && w.worker && w.worker.hash() === job.workerHash);
+    if (index === -1)
+      index = this._workerSlots.findIndex(w => !w.busy);
+    // No workers available, bail out.
+    if (index === -1)
+      return;
+
+    // 3. Claim both the job and the worker, run the job and release the worker.
+    this._queue.shift();
+    this._workerSlots[index].busy = true;
+    await this._startJobInWorker(index, job);
+    this._workerSlots[index].busy = false;
+
+    // 4. Check the "finished" condition.
+    this._checkFinished();
+
+    // 5. We got a free worker - perhaps we can immediately start another job?
+    this._scheduleJob();
   }
 
-  async _dispatchQueue() {
-    const jobs = [];
-    while (this._queue.length) {
-      if (this._isStopped)
-        break;
-      const testGroup = this._queue.shift()!;
-      const requiredHash = testGroup.workerHash;
-      let worker = await this._obtainWorker(testGroup);
-      while (worker && worker.hash && worker.hash !== requiredHash) {
-        worker.stop();
-        worker = await this._obtainWorker(testGroup);
-      }
-      if (this._isStopped || !worker)
-        break;
-      jobs.push(this._runJob(worker, testGroup));
+  private async _startJobInWorker(index: number, job: TestGroup) {
+    let worker = this._workerSlots[index].worker;
+
+    // 1. Restart the worker if it has the wrong hash.
+    if (worker && worker.hash() !== job.workerHash) {
+      await worker.stop();
+      worker = undefined;
+      if (this._isStopped) // Check stopped signal after async hop.
+        return;
     }
-    await Promise.all(jobs);
+
+    // 2. Start the worker if it is down.
+    if (!worker) {
+      worker = this._createWorker(job.workerHash);
+      this._workerSlots[index].worker = worker;
+      worker.on('exit', () => this._workerSlots[index].worker = undefined);
+      await worker.init(job, this._loader.serialize());
+      if (this._isStopped) // Check stopped signal after async hop.
+        return;
+    }
+
+    // 3. Run the job.
+    await this._runJob(worker, job);
+  }
+
+  private _checkFinished() {
+    const hasMoreJobs = !!this._queue.length && !this._isStopped;
+    const allWorkersFree = this._workerSlots.every(w => !w.busy);
+    if (!hasMoreJobs && allWorkersFree)
+      this._finished.resolve();
+  }
+
+  async run() {
+    this._workerSlots = [];
+    // 1. Allocate workers.
+    for (let i = 0; i < this._loader.fullConfig().workers; i++)
+      this._workerSlots.push({ busy: false });
+    // 2. Schedule enough jobs.
+    for (let i = 0; i < this._workerSlots.length; i++)
+      this._scheduleJob();
+    this._checkFinished();
+    // 3. More jobs are scheduled when the worker becomes free, or a new job is added.
+    // 4. Wait for all jobs to finish.
+    await this._finished;
   }
 
   async _runJob(worker: Worker, testGroup: TestGroup) {
@@ -185,15 +232,12 @@ export class Dispatcher {
       // - we are here not because something failed
       // - no unrecoverable worker error
       if (!remaining.length && !failedTestIds.size && !params.fatalError) {
-        this._freeWorkers.push(worker);
-        this._notifyWorkerClaimer();
         doneWithJob();
         return;
       }
 
       // When worker encounters error, we will stop it and create a new one.
-      worker.stop();
-      worker.didFail = true;
+      worker.stop(true /* didFail */);
 
       // In case of fatal error, report first remaining test as failing with this error,
       // and all others as skipped.
@@ -274,61 +318,30 @@ export class Dispatcher {
         }
       }
 
-      if (remaining.length)
+      if (remaining.length) {
         this._queue.unshift({ ...testGroup, tests: remaining });
+        // Perhaps we can immediately start the new job if there is a worker available?
+        this._scheduleJob();
+      }
 
       // This job is over, we just scheduled another one.
       doneWithJob();
     };
     worker.on('done', onDone);
 
-    const onExit = () => {
-      if (worker.didSendStop)
-        onDone({});
-      else
-        onDone({ fatalError: { value: 'Worker process exited unexpectedly' } });
+    const onExit = (expectedly: boolean) => {
+      onDone(expectedly ? {} : { fatalError: { value: 'Worker process exited unexpectedly' } });
     };
     worker.on('exit', onExit);
 
     return result;
   }
 
-  async _obtainWorker(testGroup: TestGroup) {
-    const claimWorker = (): Promise<Worker> | null => {
-      if (this._isStopped)
-        return null;
-      // Use available worker.
-      if (this._freeWorkers.length)
-        return Promise.resolve(this._freeWorkers.pop()!);
-      // Create a new worker.
-      if (this._workers.size < this._loader.fullConfig().workers)
-        return this._createWorker(testGroup);
-      return null;
-    };
-
-    // Note: it is important to claim the worker synchronously,
-    // so that we won't miss a _notifyWorkerClaimer call while awaiting.
-    let worker = claimWorker();
-    if (!worker) {
-      // Wait for available or stopped worker.
-      await new Promise<void>(f => this._workerClaimers.push(f));
-      worker = claimWorker();
-    }
-    return worker;
-  }
-
-  async _notifyWorkerClaimer() {
-    if (this._isStopped || !this._workerClaimers.length)
-      return;
-    const callback = this._workerClaimers.shift()!;
-    callback();
-  }
-
-  _createWorker(testGroup: TestGroup) {
-    const worker = new Worker(this);
+  _createWorker(hash: string) {
+    const worker = new Worker(hash);
     worker.on('stdOut', (params: TestOutputPayload) => {
       const chunk = chunkFromParams(params);
-      if (worker.didFail) {
+      if (worker.didFail()) {
         // Note: we keep reading stdout from workers that are currently stopping after failure,
         // to debug teardown issues. However, we avoid spoiling the test result from
         // the next retry.
@@ -342,7 +355,7 @@ export class Dispatcher {
     });
     worker.on('stdErr', (params: TestOutputPayload) => {
       const chunk = chunkFromParams(params);
-      if (worker.didFail) {
+      if (worker.didFail()) {
         // Note: we keep reading stderr from workers that are currently stopping after failure,
         // to debug teardown issues. However, we avoid spoiling the test result from
         // the next retry.
@@ -358,26 +371,13 @@ export class Dispatcher {
       this._hasWorkerErrors = true;
       this._reporter.onError?.(error);
     });
-    worker.on('exit', () => {
-      this._workers.delete(worker);
-      this._notifyWorkerClaimer();
-      if (this._stopCallback && !this._workers.size)
-        this._stopCallback();
-    });
-    this._workers.add(worker);
-    return worker.init(testGroup).then(() => worker);
+    return worker;
   }
 
   async stop() {
     this._isStopped = true;
-    if (this._workers.size) {
-      const result = new Promise<void>(f => this._stopCallback = f);
-      for (const worker of this._workers)
-        worker.stop();
-      await result;
-    }
-    while (this._workerClaimers.length)
-      this._workerClaimers.shift()!();
+    await Promise.all(this._workerSlots.map(({ worker }) => worker?.stop()));
+    this._checkFinished();
   }
 
   private _hasReachedMaxFailures() {
@@ -402,30 +402,33 @@ export class Dispatcher {
 let lastWorkerIndex = 0;
 
 class Worker extends EventEmitter {
-  process: child_process.ChildProcess;
-  runner: Dispatcher;
-  hash = '';
-  index: number;
-  didSendStop = false;
-  didFail = false;
+  private process: child_process.ChildProcess;
+  private _hash: string;
+  private workerIndex: number;
+  private didSendStop = false;
+  private _didFail = false;
+  private didExit = false;
 
-  constructor(runner: Dispatcher) {
+  constructor(hash: string) {
     super();
-    this.runner = runner;
-    this.index = lastWorkerIndex++;
+    this.workerIndex = lastWorkerIndex++;
+    this._hash = hash;
 
     this.process = child_process.fork(path.join(__dirname, 'worker.js'), {
       detached: false,
       env: {
         FORCE_COLOR: process.stdout.isTTY ? '1' : '0',
         DEBUG_COLORS: process.stdout.isTTY ? '1' : '0',
-        TEST_WORKER_INDEX: String(this.index),
+        TEST_WORKER_INDEX: String(this.workerIndex),
         ...process.env
       },
       // Can't pipe since piping slows down termination for some reason.
       stdio: ['ignore', 'ignore', process.env.PW_RUNNER_DEBUG ? 'inherit' : 'ignore', 'ipc']
     });
-    this.process.on('exit', () => this.emit('exit'));
+    this.process.on('exit', () => {
+      this.didExit = true;
+      this.emit('exit', this.didSendStop /* expectedly */);
+    });
     this.process.on('error', e => {});  // do not yell at a send to dead process.
     this.process.on('message', (message: any) => {
       const { method, params } = message;
@@ -433,13 +436,12 @@ class Worker extends EventEmitter {
     });
   }
 
-  async init(testGroup: TestGroup) {
-    this.hash = testGroup.workerHash;
+  async init(testGroup: TestGroup, loaderData: SerializedLoaderData) {
     const params: WorkerInitParams = {
-      workerIndex: this.index,
+      workerIndex: this.workerIndex,
       repeatEachIndex: testGroup.repeatEachIndex,
       projectIndex: testGroup.projectIndex,
-      loader: this.runner._loader.serialize(),
+      loader: loaderData,
     };
     this.process.send({ method: 'init', params });
     await new Promise(f => this.process.once('message', f));  // Ready ack
@@ -455,10 +457,24 @@ class Worker extends EventEmitter {
     this.process.send({ method: 'run', params: runPayload });
   }
 
-  stop() {
-    if (!this.didSendStop)
+  didFail() {
+    return this._didFail;
+  }
+
+  hash() {
+    return this._hash;
+  }
+
+  async stop(didFail?: boolean) {
+    if (didFail)
+      this._didFail = true;
+    if (this.didExit)
+      return;
+    if (!this.didSendStop) {
       this.process.send({ method: 'stop' });
-    this.didSendStop = true;
+      this.didSendStop = true;
+    }
+    await new Promise(f => this.once('exit', f));
   }
 }
 
diff --git a/tests/playwright-test/runner.spec.ts b/tests/playwright-test/runner.spec.ts
index ed70a77884..df287a26a7 100644
--- a/tests/playwright-test/runner.spec.ts
+++ b/tests/playwright-test/runner.spec.ts
@@ -14,7 +14,7 @@
  * limitations under the License.
  */
 import path from 'path';
-import { test, expect } from './playwright-test-fixtures';
+import { test, expect, stripAscii } from './playwright-test-fixtures';
 
 test('it should not allow multiple tests with the same name per suite', async ({ runInlineTest }) => {
   const result = await runInlineTest({
@@ -166,3 +166,39 @@ test('worker interrupt should report errors', async ({ runInlineTest }) => {
   expect(result.output).toContain('%%SEND-SIGINT%%');
   expect(result.output).toContain('Error: INTERRUPT');
 });
+
+test('should not stall when workers are available', async ({ runInlineTest }) => {
+  const result = await runInlineTest({
+    'a.spec.js': `
+      const { test } = pwt
+      test('fails-1', async () => {
+        console.log('\\n%%fails-1-started');
+        await new Promise(f => setTimeout(f, 2000));
+        console.log('\\n%%fails-1-done');
+        expect(1).toBe(2);
+      });
+      test('passes-1', async () => {
+        console.log('\\n%%passes-1');
+      });
+    `,
+    'b.spec.js': `
+      const { test } = pwt
+      test('passes-2', async () => {
+        await new Promise(f => setTimeout(f, 1000));
+        console.log('\\n%%passes-2-started');
+        await new Promise(f => setTimeout(f, 3000));
+        console.log('\\n%%passes-2-done');
+      });
+    `,
+  }, { workers: 2 });
+  expect(result.exitCode).toBe(1);
+  expect(result.passed).toBe(2);
+  expect(result.failed).toBe(1);
+  expect(stripAscii(result.output).split('\n').filter(line => line.startsWith('%%'))).toEqual([
+    '%%fails-1-started',
+    '%%passes-2-started',
+    '%%fails-1-done',
+    '%%passes-1',
+    '%%passes-2-done',
+  ]);
+});