diff --git a/src/xml.c b/src/xml.c
index 663d3e3..aa35fb4 100644
--- a/src/xml.c
+++ b/src/xml.c
@@ -262,12 +262,6 @@
                 sectname = "Comment";
                 endtag = "-->";
                 endtag_len = ly_strlen_const("-->");
-            } else if (!strncmp(xmlctx->in->current, "[CDATA[", ly_strlen_const("[CDATA["))) {
-                /* CDATA section */
-                move_input(xmlctx, ly_strlen_const("[CDATA["));
-                sectname = "CData";
-                endtag = "]]>";
-                endtag_len = ly_strlen_const("]]>");
             } else if (!strncmp(xmlctx->in->current, "DOCTYPE", ly_strlen_const("DOCTYPE"))) {
                 /* Document type declaration - not supported */
                 LOGVAL(ctx,  LY_VCODE_NSUPP, "Document Type Declaration");
@@ -322,6 +316,53 @@
 }
 
 /**
+ * @brief Prepare buffer for new data.
+ *
+ * @param[in] ctx Context for logging.
+ * @param[in,out] in XML input data.
+ * @param[in,out] offset Current offset in @p in.
+ * @param[in] need_space Needed additional free space that is allocated.
+ * @param[in,out] buf Dynamic buffer.
+ * @param[in,out] len Current @p buf length (used characters).
+ * @param[in,out] size Current @p buf size (allocated characters).
+ * @return LY_ERR value.
+ */
+static LY_ERR
+lyxml_parse_value_use_buf(const struct ly_ctx *ctx, const char **in, size_t *offset, size_t need_space, char **buf,
+        size_t *len, size_t *size)
+{
+#define BUFSIZE 24
+#define BUFSIZE_STEP 128
+
+    if (!*buf) {
+        /* prepare output buffer */
+        *buf = malloc(BUFSIZE);
+        LY_CHECK_ERR_RET(!*buf, LOGMEM(ctx), LY_EMEM);
+        *size = BUFSIZE;
+    }
+
+    /* allocate needed space */
+    while (*len + *offset + need_space >= *size) {
+        *buf = ly_realloc(*buf, *size + BUFSIZE_STEP);
+        LY_CHECK_ERR_RET(!*buf, LOGMEM(ctx), LY_EMEM);
+        *size += BUFSIZE_STEP;
+    }
+
+    if (*offset) {
+        /* store what we have so far */
+        memcpy(&(*buf)[*len], *in, *offset);
+        *len += *offset;
+        *in += *offset;
+        *offset = 0;
+    }
+
+    return LY_SUCCESS;
+
+#undef BUFSIZE
+#undef BUFSIZE_STEP
+}
+
+/**
  * @brief Parse XML text content (value).
  *
  * @param[in] xmlctx XML context to use.
@@ -335,9 +376,6 @@
 static LY_ERR
 lyxml_parse_value(struct lyxml_ctx *xmlctx, char endchar, char **value, size_t *length, ly_bool *ws_only, ly_bool *dynamic)
 {
-#define BUFSIZE 24
-#define BUFSIZE_STEP 128
-
     const struct ly_ctx *ctx = xmlctx->ctx; /* shortcut */
     const char *in = xmlctx->in->current, *start, *in_aux;
     char *buf = NULL;
@@ -361,29 +399,10 @@
             /* non WS */
             ws = 0;
 
-            if (!buf) {
-                /* prepare output buffer */
-                buf = malloc(BUFSIZE);
-                LY_CHECK_ERR_RET(!buf, LOGMEM(ctx), LY_EMEM);
-                size = BUFSIZE;
-            }
-
-            /* allocate enough for the offset and next character,
+            /* use buffer and allocate enough for the offset and next character,
              * we will need 4 bytes at most since we support only the predefined
              * (one-char) entities and character references */
-            while (len + offset + 4 >= size) {
-                buf = ly_realloc(buf, size + BUFSIZE_STEP);
-                LY_CHECK_ERR_RET(!buf, LOGMEM(ctx), LY_EMEM);
-                size += BUFSIZE_STEP;
-            }
-
-            if (offset) {
-                /* store what we have so far */
-                memcpy(&buf[len], in, offset);
-                len += offset;
-                in += offset;
-                offset = 0;
-            }
+            LY_CHECK_RET(lyxml_parse_value_use_buf(ctx, &in, &offset, 4, &buf, &len, &size));
 
             ++offset;
             if (in[offset] != '#') {
@@ -434,18 +453,50 @@
 
                 }
 
-                LY_CHECK_ERR_GOTO(in[offset] != ';',
-                        LOGVAL(ctx, LY_VCODE_INSTREXP,
-                        LY_VCODE_INSTREXP_len(&in[offset]), &in[offset], ";"),
-                        error);
+                if (in[offset] != ';') {
+                    LOGVAL(ctx, LY_VCODE_INSTREXP, LY_VCODE_INSTREXP_len(&in[offset]), &in[offset], ";");
+                    goto error;
+                }
                 ++offset;
-                LY_CHECK_ERR_GOTO(ly_pututf8(&buf[len], n, &u),
-                        LOGVAL(ctx, LYVE_SYNTAX, "Invalid character reference \"%.*s\" (0x%08x).", 12, p, n),
-                        error);
+                if (ly_pututf8(&buf[len], n, &u)) {
+                    LOGVAL(ctx, LYVE_SYNTAX, "Invalid character reference \"%.*s\" (0x%08x).", 12, p, n);
+                    goto error;
+                }
                 len += u;
                 in += offset;
                 offset = 0;
             }
+        } else if (!strncmp(in + offset, "<![CDATA[", ly_strlen_const("<![CDATA["))) {
+            /* CDATA, find the end */
+            in_aux = strstr(in + offset + ly_strlen_const("<![CDATA["), "]]>");
+            if (!in_aux) {
+                LOGVAL(xmlctx->ctx, LY_VCODE_NTERM, "CDATA");
+                goto error;
+            }
+            u = in_aux - (in + offset + ly_strlen_const("<![CDATA["));
+
+            /* use buffer, allocate enough for the whole CDATA */
+            LY_CHECK_RET(lyxml_parse_value_use_buf(ctx, &in, &offset, u, &buf, &len, &size));
+
+            /* skip CDATA tag */
+            in += ly_strlen_const("<![CDATA[");
+            assert(!offset);
+
+            /* analyze CDATA for non WS and newline chars */
+            for (n = 0; n < u; ++n) {
+                if (in[n] == '\n') {
+                    LY_IN_NEW_LINE(xmlctx->in);
+                } else if (!is_xmlws(in[n])) {
+                    ws = 0;
+                }
+            }
+
+            /* copy CDATA */
+            memcpy(buf + len, in, u);
+            len += u;
+
+            /* move input skipping the end tag */
+            in += u + ly_strlen_const("]]>");
         } else if (in[offset] == endchar) {
             /* end of string */
             if (buf) {
@@ -502,9 +553,6 @@
 
     xmlctx->in->current = in;
     return LY_SUCCESS;
-
-#undef BUFSIZE
-#undef BUFSIZE_STEP
 }
 
 /**