diff --git a/doc/docs.md b/doc/docs.md
index c9c0e2ab20..de5cefd3b7 100644
--- a/doc/docs.md
+++ b/doc/docs.md
@@ -1286,6 +1286,7 @@ Module {
 }
 ```
 
+
 * Add these lines to the top of your module:
 ```v
 #flag -I @VROOT/c
@@ -1293,6 +1294,9 @@ Module {
 #include "header.h"
 ```
 NB: @VROOT will be replaced by V with the *nearest parent folder, where there is a v.mod file*.
+Any .v file beside or below the folder where the v.mod file is, can use #flag @VROOT/abc to refer to this folder.
+The @VROOT folder is also *prepended* to the module lookup path, so you can *import* other 
+modules under your @VROOT, by just naming them.
 
 The instructions above will make V look for an compiled .o file in your module folder/c/implementation.o .
 If V finds it, the .o file will get linked to the main executable, that used the module.
diff --git a/vlib/compiler/comptime.v b/vlib/compiler/comptime.v
index 055200beac..8a2888c7f0 100644
--- a/vlib/compiler/comptime.v
+++ b/vlib/compiler/comptime.v
@@ -254,6 +254,11 @@ fn (p mut Parser) chash() {
 				}
 				flag = flag.replace('@VROOT', vmod_file_location.vmod_folder )
 			}
+			for deprecated in ['@VMOD', '@VMODULE', '@VPATH', '@VLIB_PATH'] {
+				if flag.contains(deprecated) {
+					p.error('${deprecated} had been deprecated, use @VROOT instead.')
+				}
+			}
 			// p.log('adding flag "$flag"')
 			_ = p.table.parse_cflag(flag, p.mod, p.v.pref.compile_defines_all ) or {
 				p.error_with_token_index(err, p.cur_tok_index() - 1)
diff --git a/vlib/compiler/modules.v b/vlib/compiler/modules.v
index 7d59c14da5..2dadf6d6aa 100644
--- a/vlib/compiler/modules.v
+++ b/vlib/compiler/modules.v
@@ -182,9 +182,18 @@ fn (v mut V) set_module_lookup_paths() {
 	}
 }
 
-fn (p &Parser) find_module_path(mod string) ?string {
+fn (p mut Parser) find_module_path(mod string) ?string {
+	vmod_file_location := p.v.mod_file_cacher.get( p.file_path_dir )
+	mut module_lookup_paths := []string
+	if vmod_file_location.vmod_file.len != 0 {
+		if ! vmod_file_location.vmod_folder in p.v.module_lookup_paths {
+			module_lookup_paths << vmod_file_location.vmod_folder
+		}
+	}
+	module_lookup_paths << p.v.module_lookup_paths
+
 	mod_path := p.v.module_path(mod)
-	for lookup_path in p.v.module_lookup_paths {
+	for lookup_path in module_lookup_paths {
 		try_path := filepath.join(lookup_path,mod_path)
 		if p.v.pref.is_verbose {
 			println('  >> trying to find $mod in $try_path ...')
@@ -196,7 +205,7 @@ fn (p &Parser) find_module_path(mod string) ?string {
 			return try_path
 		}
 	}
-	return error('module "$mod" not found in ${p.v.module_lookup_paths}')
+	return error('module "$mod" not found in ${module_lookup_paths}')
 }
 
 [inline]
diff --git a/vlib/compiler/tests/project_with_modules_having_submodules/.gitignore b/vlib/compiler/tests/project_with_modules_having_submodules/.gitignore
new file mode 100644
index 0000000000..93150b0578
--- /dev/null
+++ b/vlib/compiler/tests/project_with_modules_having_submodules/.gitignore
@@ -0,0 +1,2 @@
+/bin/main
+/tests/submodule_test
diff --git a/vlib/compiler/tests/project_with_modules_having_submodules/README.md b/vlib/compiler/tests/project_with_modules_having_submodules/README.md
new file mode 100644
index 0000000000..306d2be23e
--- /dev/null
+++ b/vlib/compiler/tests/project_with_modules_having_submodules/README.md
@@ -0,0 +1,16 @@
+
+This projects demonstrates how v.mod lookup can be used so that 
+a project/module can be as selfcontained as possible.
+
+The programs under bin/ can find the modules mod1, 
+because the project has a 'v.mod' file, so v module lookup for 
+the programs under bin/ can still find the parent sibling folder
+mod1/ through relation to the parent 'v.mod' file.
+
+Note also that mod1/ also has its own 'v.mod' file.
+This allows mod1 submodules to find and import themselves 
+in relation to it too.
+
+Finally, there is a test/ folder, so you can put all your tests
+in there, without cluttering your top level folder, or your module
+folders if you so desire.
diff --git a/vlib/compiler/tests/project_with_modules_having_submodules/bin/a_program_under_bin_can_find_mod1_test.v b/vlib/compiler/tests/project_with_modules_having_submodules/bin/a_program_under_bin_can_find_mod1_test.v
new file mode 100644
index 0000000000..98a720d940
--- /dev/null
+++ b/vlib/compiler/tests/project_with_modules_having_submodules/bin/a_program_under_bin_can_find_mod1_test.v
@@ -0,0 +1,12 @@
+import mod1.submodule as m
+
+fn test_mod1_can_still_be_found_through_parent_project_vmod(){
+   assert 1051 == m.f()
+}   
+
+/* 
+NB: this main program is under bin/ , but it still
+can find mod1, because the parent project has v.mod, 
+so v module lookup for this program will find mod1 through
+relation to the parent v.mod file
+*/
diff --git a/vlib/compiler/tests/project_with_modules_having_submodules/bin/main.vsh b/vlib/compiler/tests/project_with_modules_having_submodules/bin/main.vsh
new file mode 100755
index 0000000000..6470923aa2
--- /dev/null
+++ b/vlib/compiler/tests/project_with_modules_having_submodules/bin/main.vsh
@@ -0,0 +1,14 @@
+#!/usr/local/bin/v run
+import mod1.submodule as m
+
+println('This script is located inside: ' + resource_abs_path(''))
+
+println('The result of calling m.f is: ' + m.f().str() )
+
+
+/* 
+NB: this main program v script is under bin/ , 
+but it *still* can find mod1, because the parent project has v.mod, 
+so v module lookup for this bin/main.vsh file will find mod1 through 
+relation to the parent ../v.mod file
+*/
diff --git a/vlib/compiler/tests/project_with_modules_having_submodules/mod1/m.v b/vlib/compiler/tests/project_with_modules_having_submodules/mod1/m.v
new file mode 100644
index 0000000000..18e701e5d3
--- /dev/null
+++ b/vlib/compiler/tests/project_with_modules_having_submodules/mod1/m.v
@@ -0,0 +1,5 @@
+module mod1
+
+pub fn f() int {
+	return 1
+}
diff --git a/vlib/compiler/tests/project_with_modules_having_submodules/mod1/mod11/m.v b/vlib/compiler/tests/project_with_modules_having_submodules/mod1/mod11/m.v
new file mode 100644
index 0000000000..8ec5084ab3
--- /dev/null
+++ b/vlib/compiler/tests/project_with_modules_having_submodules/mod1/mod11/m.v
@@ -0,0 +1,5 @@
+module mod11
+
+pub fn f() int {
+	return 11
+}
diff --git a/vlib/compiler/tests/project_with_modules_having_submodules/mod1/mod12/m.v b/vlib/compiler/tests/project_with_modules_having_submodules/mod1/mod12/m.v
new file mode 100644
index 0000000000..f6a683ab1f
--- /dev/null
+++ b/vlib/compiler/tests/project_with_modules_having_submodules/mod1/mod12/m.v
@@ -0,0 +1,5 @@
+module mod12
+
+pub fn f() int {
+	return 12
+}
diff --git a/vlib/compiler/tests/project_with_modules_having_submodules/mod1/mod13/m.v b/vlib/compiler/tests/project_with_modules_having_submodules/mod1/mod13/m.v
new file mode 100644
index 0000000000..ad04ce0c3e
--- /dev/null
+++ b/vlib/compiler/tests/project_with_modules_having_submodules/mod1/mod13/m.v
@@ -0,0 +1,5 @@
+module mod13
+
+pub fn f() int {
+	return 13
+}
diff --git a/vlib/compiler/tests/project_with_modules_having_submodules/mod1/mod14/m.v b/vlib/compiler/tests/project_with_modules_having_submodules/mod1/mod14/m.v
new file mode 100644
index 0000000000..25e7768240
--- /dev/null
+++ b/vlib/compiler/tests/project_with_modules_having_submodules/mod1/mod14/m.v
@@ -0,0 +1,7 @@
+module mod14
+
+import math
+
+pub fn f() int {
+	return 14 + int(math.cos(0))
+}
diff --git a/vlib/compiler/tests/project_with_modules_having_submodules/mod1/submodule/m.v b/vlib/compiler/tests/project_with_modules_having_submodules/mod1/submodule/m.v
new file mode 100644
index 0000000000..2afa4b95d8
--- /dev/null
+++ b/vlib/compiler/tests/project_with_modules_having_submodules/mod1/submodule/m.v
@@ -0,0 +1,16 @@
+module submodule
+
+/* 
+This submodule just imports its sibling submodules.
+Note that they are NOT under 'submodule' itself, 
+but are in its parent mod1 , and mod1 has a 'v.mod' file.
+*/
+
+import mod11
+import mod12
+import mod13
+import mod14
+
+pub fn f() int {
+	return 1000 + mod11.f() + mod12.f() + mod13.f() + mod14.f()
+}
diff --git a/vlib/compiler/tests/project_with_modules_having_submodules/mod1/v.mod b/vlib/compiler/tests/project_with_modules_having_submodules/mod1/v.mod
new file mode 100644
index 0000000000..cd35a03796
--- /dev/null
+++ b/vlib/compiler/tests/project_with_modules_having_submodules/mod1/v.mod
@@ -0,0 +1,7 @@
+#V Module#
+
+Module {
+	name: 'mod1',
+	description: 'A module with several submodules.',
+	dependencies: []
+}
diff --git a/vlib/compiler/tests/project_with_modules_having_submodules/tests/submodule_test.v b/vlib/compiler/tests/project_with_modules_having_submodules/tests/submodule_test.v
new file mode 100644
index 0000000000..9d914e3790
--- /dev/null
+++ b/vlib/compiler/tests/project_with_modules_having_submodules/tests/submodule_test.v
@@ -0,0 +1,11 @@
+import mod1
+
+import mod1.submodule
+
+fn test_mod1(){
+	assert 1 == mod1.f()
+}
+
+fn test_mod1_submodule_can_find_and_use_all_its_sibling_submodules(){
+  assert 1051 == submodule.f()
+}
diff --git a/vlib/compiler/tests/project_with_modules_having_submodules/v.mod b/vlib/compiler/tests/project_with_modules_having_submodules/v.mod
new file mode 100644
index 0000000000..941d275c67
--- /dev/null
+++ b/vlib/compiler/tests/project_with_modules_having_submodules/v.mod
@@ -0,0 +1,7 @@
+#V Project#
+
+Module {
+	name: 'project_with_modules_having_submodules',
+	description: 'This project was created with `v create` to prevent regressions with the way V module import lookup works.',
+	dependencies: []
+}
diff --git a/vlib/compiler/v_mod_cache.v b/vlib/compiler/v_mod_cache.v
index b066294b82..f30e63a871 100644
--- a/vlib/compiler/v_mod_cache.v
+++ b/vlib/compiler/v_mod_cache.v
@@ -79,9 +79,6 @@ fn (mcache mut ModFileCacher) traverse(mfolder string) ([]string, ModFileAndFold
 	mut folders_so_far := [cfolder]
 	mut levels := 0
 	for {
-		$if debug {
-			eprintln('pdir2vmod mfolder: ${mfolder:-32s} | cfolder: ${cfolder:-20s} | levels: $levels')
-		}
 		if levels > 255 {
 			break
 		}
@@ -102,10 +99,6 @@ fn (mcache mut ModFileCacher) traverse(mfolder string) ([]string, ModFileAndFold
 			// TODO: actually read the v.mod file and parse its contents to see
 			// if its source folder is different
 			res := ModFileAndFolder{ vmod_file: filepath.join( cfolder, 'v.mod'), vmod_folder: cfolder }
-			$if debug {
-				eprintln('FOUND v.mod:')
-				eprintln(' ModFileAndFolder{ vmod_file: $res.vmod_file , vmod_folder: $res.vmod_folder } ')
-			}
 			return folders_so_far, res
 		}
 		if mcache.check_for_stop( cfolder, files ) {