diff --git a/packages/nuxt/src/app/components/layout.ts b/packages/nuxt/src/app/components/layout.ts
index 13fbeb923b..f82dcf8dc4 100644
--- a/packages/nuxt/src/app/components/layout.ts
+++ b/packages/nuxt/src/app/components/layout.ts
@@ -55,7 +55,46 @@ export default defineComponent({
     // Need to ensure (if we are not a child of `<NuxtPage>`) that we use synchronous route (not deferred)
     const injectedRoute = inject('_route') as RouteLocationNormalizedLoaded
     const route = injectedRoute === useRoute() ? useVueRouterRoute() : injectedRoute
-    const layout = computed(() => unref(props.name) ?? route.meta.layout as string ?? 'default')
+    const layout = computed(() => {
+      const layoutName = unref(props.name) ?? route.meta.layout as string ?? 'default'
+
+      if (typeof layoutName === 'string') {
+        const layoutPath = layoutName.replace(/-/g, '/')
+
+        // Check if layout exists for example `desktop-default` will translate to `layouts/desktop/default`
+        if (layoutPath in layouts) {
+          return layoutPath
+        }
+
+        // Check if layout exists for example `desktop` or `desktop-index` will translate to ` `layouts/desktop/index`
+        if ((layoutPath + '/index') in layouts) {
+          return layoutPath + '/index'
+        }
+
+        // If the directory inside layouts has has a dash in the name such as `desktop-base` we need to check for that
+        if (layoutName.includes('-')) {
+          const layoutPath = layoutName.replace(/-/g, '/')
+
+          // Check if layout exists for example `desktop-base`  will translate to `layouts/desktop/base`
+          if (layoutPath in layouts) {
+            return layoutPath
+          }
+
+          // Check if layout exists for example `desktop-base` will translate to `layouts/desktop-base/base`
+          const layoutPathLast = layoutName.split('-').pop()
+          if (layoutName + '/' + layoutPathLast in layouts) {
+            return layoutName + '/' + layoutPathLast
+          }
+
+          // Check if layout exists for example `desktop-base` will translate to `layouts/desktop-base/index`
+          if (layoutName + '/index' in layouts) {
+            return layoutName + '/index'
+          }
+        }
+      }
+
+      return layoutName
+    })
 
     let vnode: VNode
     let _layout: string | false
diff --git a/packages/nuxt/src/core/app.ts b/packages/nuxt/src/core/app.ts
index e20b5da32f..0e9b458c13 100644
--- a/packages/nuxt/src/core/app.ts
+++ b/packages/nuxt/src/core/app.ts
@@ -5,7 +5,7 @@ import { compileTemplate, findPath, normalizePlugin, normalizeTemplate, resolveA
 import type { Nuxt, NuxtApp, NuxtPlugin, NuxtTemplate, ResolvedNuxtTemplate } from 'nuxt/schema'
 
 import * as defaultTemplates from './templates'
-import { getNameFromPath, hasSuffix, uniqueBy } from './utils'
+import { getNameFromPath, getNameFromPathLocal, hasSuffix, uniqueBy } from './utils'
 
 export function createApp (nuxt: Nuxt, options: Partial<NuxtApp> = {}): NuxtApp {
   return defu(options, {
@@ -85,10 +85,10 @@ export async function resolveApp (nuxt: Nuxt, app: NuxtApp) {
   // Resolve layouts/ from all config layers
   app.layouts = {}
   for (const config of nuxt.options._layers.map(layer => layer.config)) {
-    const layoutFiles = await resolveFiles(config.srcDir, `${config.dir?.layouts || 'layouts'}/*{${nuxt.options.extensions.join(',')}}`)
-    for (const file of layoutFiles) {
-      const name = getNameFromPath(file)
-      app.layouts[name] = app.layouts[name] || { name, file }
+    const layoutFiles = await resolveFiles(config.srcDir, `${config.dir?.layouts || 'layouts'}/**/*{${nuxt.options.extensions.join(',')}}`)
+    for (const file of layoutFiles) {      
+      const name = getNameFromPathLocal(file, config.srcDir + '/layouts')
+      app.layouts[name] = app.layouts[name] || { name, file }  
     }
   }
 
diff --git a/packages/nuxt/src/core/utils.ts b/packages/nuxt/src/core/utils.ts
index 46757ec20b..3dfe496ae4 100644
--- a/packages/nuxt/src/core/utils.ts
+++ b/packages/nuxt/src/core/utils.ts
@@ -1,10 +1,24 @@
 import { basename, extname } from 'pathe'
-import { kebabCase, pascalCase } from 'scule'
+import { kebabCase, pascalCase, snakeCase } from 'scule'
 
 export function getNameFromPath (path: string) {
   return kebabCase(basename(path).replace(extname(path), '')).replace(/["']/g, '')
 }
 
+export function getNameFromPathLocal (path: string, src: string) {  
+  const sourcePath = path
+    .replace(src + '/', '')
+    .split('/')
+    .slice(0, -1)
+    // .map(e => snakeCase(e))
+    .join('/')
+  return (
+    sourcePath +
+    (sourcePath ? '/' : '') +
+    kebabCase(basename(path).replace(extname(path), '')).replace(/["']/g, '')
+  )
+}
+
 export function uniqueBy <T, K extends keyof T> (arr: T[], key: K) {
   const res: T[] = []
   const seen = new Set<T[K]>()