diff --git a/cmd/testworkflow-init/main.go b/cmd/testworkflow-init/main.go
index 74300096c1..75a7384e64 100644
--- a/cmd/testworkflow-init/main.go
+++ b/cmd/testworkflow-init/main.go
@@ -150,7 +150,8 @@ func main() {
 	delayedPauses := make([]string, 0)
 
 	// Interpret the operations
-	for _, action := range state.GetActions(int(groupIndex)) {
+	actions := state.GetActions(int(groupIndex))
+	for i, action := range actions {
 		switch action.Type() {
 		case lite.ActionTypeDeclare:
 			state.GetStep(action.Declare.Ref).
@@ -175,7 +176,19 @@ func main() {
 
 		case lite.ActionTypeContainerTransition:
 			orchestration.Setup.SetConfig(action.Container.Config)
-			orchestration.Setup.AdvanceEnv()
+			err := orchestration.Setup.AdvanceEnv()
+			// Attach the error to the next consecutive step
+			if err != nil {
+				for _, next := range actions[i:] {
+					if next.Type() != lite.ActionTypeStart || *next.Start == "" {
+						continue
+					}
+					step := state.GetStep(*next.Start)
+					orchestration.Start(step)
+					break
+				}
+				output.ExitErrorf(data.CodeInputError, err.Error())
+			}
 			stdout.SetSensitiveWords(orchestration.Setup.GetSensitiveWords())
 			currentContainer = *action.Container
 
@@ -225,10 +238,13 @@ func main() {
 			orchestration.End(step)
 
 		case lite.ActionTypeSetup:
-			orchestration.Setup.UseEnv(constants.EnvGroupDebug)
+			err := orchestration.Setup.UseEnv(constants.EnvGroupDebug)
+			if err != nil {
+				output.ExitErrorf(data.CodeInputError, err.Error())
+			}
 			stdout.SetSensitiveWords(orchestration.Setup.GetSensitiveWords())
 			step := state.GetStep(data.InitStepName)
-			err := commands.Setup(*action.Setup)
+			err = commands.Setup(*action.Setup)
 			if err == nil {
 				step.SetStatus(data.StepStatusPassed)
 			} else {
@@ -257,7 +273,10 @@ func main() {
 			}
 
 			// Configure the environment
-			orchestration.Setup.UseCurrentEnv()
+			err := orchestration.Setup.UseCurrentEnv()
+			if err != nil {
+				output.ExitErrorf(data.CodeInputError, err.Error())
+			}
 			if action.Execute.Toolkit {
 				serialized, _ := json.Marshal(state.InternalConfig)
 				_ = os.Setenv("TK_CFG", string(serialized))
diff --git a/cmd/testworkflow-init/orchestration/setup.go b/cmd/testworkflow-init/orchestration/setup.go
index 503430d83e..09ea0b497c 100644
--- a/cmd/testworkflow-init/orchestration/setup.go
+++ b/cmd/testworkflow-init/orchestration/setup.go
@@ -8,6 +8,8 @@ import (
 	"regexp"
 	"strings"
 
+	"github.com/pkg/errors"
+
 	"github.com/kubeshop/testkube/cmd/testworkflow-init/constants"
 	"github.com/kubeshop/testkube/cmd/testworkflow-init/data"
 	"github.com/kubeshop/testkube/cmd/testworkflow-init/output"
@@ -168,7 +170,7 @@ func (c *setup) GetInternalConfig() (config testworkflowconfig.InternalConfig) {
 	return config
 }
 
-func (c *setup) UseEnv(group string) {
+func (c *setup) UseEnv(group string) error {
 	c.UseBaseEnv()
 	c.envSelectedGroup = group
 
@@ -226,20 +228,21 @@ func (c *setup) UseEnv(group string) {
 	for name, expr := range envTemplates {
 		value, err := expressions.CompileAndResolveTemplate(expr, localEnvMachine, addonMachine, expressions.FinalizerFail)
 		if err != nil {
-			output.ExitErrorf(data.CodeInputError, "failed to compute '%s' environment variable: %s", name, err.Error())
+			return errors.Wrapf(err, "failed to compute '%s' environment variable", name)
 		}
 		str, _ := value.Static().StringValue()
 		os.Setenv(name, str)
 	}
+	return nil
 }
 
-func (c *setup) UseCurrentEnv() {
-	c.UseEnv(fmt.Sprintf("%d", c.envCurrentGroup))
+func (c *setup) UseCurrentEnv() error {
+	return c.UseEnv(fmt.Sprintf("%d", c.envCurrentGroup))
 }
 
-func (c *setup) AdvanceEnv() {
+func (c *setup) AdvanceEnv() error {
 	c.envCurrentGroup++
-	c.UseCurrentEnv()
+	return c.UseCurrentEnv()
 }
 
 func (c *setup) SetWorkingDir(workingDir string) {