diff --git a/packages/Avalonia/AvaloniaBuildTasks.targets b/packages/Avalonia/AvaloniaBuildTasks.targets
index f98b1fe4f4..51cb04a3a1 100644
--- a/packages/Avalonia/AvaloniaBuildTasks.targets
+++ b/packages/Avalonia/AvaloniaBuildTasks.targets
@@ -37,14 +37,14 @@
       EmbeddedResources="@(EmbeddedResources)"/>
     <Exec 
       Condition="'$(_AvaloniaUseExternalMSBuild)' == 'true'"
-      Command="dotnet msbuild /nodereuse:false $(MSBuildProjectFile) /t:GenerateAvaloniaResources /p:_AvaloniaForceInternalMSBuild=true /p:Configuration=$(Configuration)"/>
+      Command="dotnet msbuild /nodereuse:false $(MSBuildProjectFile) /t:GenerateAvaloniaResources /p:_AvaloniaForceInternalMSBuild=true /p:Configuration=$(Configuration) /p:BuildProjectReferences=false"/>
 
   </Target>
 
   <Target
     Name="CompileAvaloniaXaml"
     AfterTargets="AfterCompile"
-    Condition="Exists('@(IntermediateAssembly)') And $(DesignTimeBuild) != true And $(EnableAvaloniaXamlCompilation) == true"
+    Condition="Exists('@(IntermediateAssembly)') And $(DesignTimeBuild) != true And $(EnableAvaloniaXamlCompilation) != false"
     Inputs="@(IntermediateAssembly);"
     Outputs="$(IntermediateOutputPath)$(MSBuildProjectFile).Fody.CopyLocal.cache">
     <PropertyGroup>
@@ -61,10 +61,11 @@
       AssemblyFile="@(IntermediateAssembly)"
       ReferencesFilePath="$(AvaloniaXamlReferencesTemporaryFilePath)"
       OriginalCopyPath="$(AvaloniaXamlOriginalCopyFilePath)"
+      ProjectDirectory="$(MSBuildProjectDirectory)"
     />
     <Exec
       Condition="'$(_AvaloniaUseExternalMSBuild)' == 'true'"
-      Command="dotnet msbuild /nodereuse:false $(MSBuildProjectFile) /t:CompileAvaloniaXaml /p:_AvaloniaForceInternalMSBuild=true /p:Configuration=$(Configuration)"/>
+      Command="dotnet msbuild /nodereuse:false $(MSBuildProjectFile) /t:CompileAvaloniaXaml /p:_AvaloniaForceInternalMSBuild=true /p:Configuration=$(Configuration) /p:BuildProjectReferences=false"/>
   </Target>
 
   
diff --git a/samples/ControlCatalog/SideBar.xaml b/samples/ControlCatalog/SideBar.xaml
index fea55bcb07..8534c022f8 100644
--- a/samples/ControlCatalog/SideBar.xaml
+++ b/samples/ControlCatalog/SideBar.xaml
@@ -1,6 +1,6 @@
 <Styles xmlns="https://github.com/avaloniaui"
         xmlns:x="http://schemas.microsoft.com/winfx/2006/xaml"
-        x:Class="ControlCatalog.SideBar">
+>
     <Design.PreviewWith>
         <Border Padding="20">
             <TabControl Classes="sidebar">
diff --git a/src/Avalonia.Build.Tasks/CompileAvaloniaXamlTask.cs b/src/Avalonia.Build.Tasks/CompileAvaloniaXamlTask.cs
index 028643f7c0..54db830f2f 100644
--- a/src/Avalonia.Build.Tasks/CompileAvaloniaXamlTask.cs
+++ b/src/Avalonia.Build.Tasks/CompileAvaloniaXamlTask.cs
@@ -21,12 +21,15 @@ namespace Avalonia.Build.Tasks
                 File.Delete(AssemblyFile);
             }
 
-            var data = XamlCompilerTaskExecutor.Compile(BuildEngine, input,
-                File.ReadAllLines(ReferencesFilePath).Where(l => !string.IsNullOrWhiteSpace(l)).ToArray());
-            if(data == null)
+            var res = XamlCompilerTaskExecutor.Compile(BuildEngine, input,
+                File.ReadAllLines(ReferencesFilePath).Where(l => !string.IsNullOrWhiteSpace(l)).ToArray(),
+                ProjectDirectory);
+            if (!res.Success)
+                return false;
+            if (res.Data == null)
                 File.Copy(input, OutputPath);
             else
-                File.WriteAllBytes(OutputPath, data);
+                File.WriteAllBytes(OutputPath, res.Data);
 
             return true;
         }
@@ -39,6 +42,8 @@ namespace Avalonia.Build.Tasks
         public string ReferencesFilePath { get; set; }
         [Required]
         public string OriginalCopyPath { get; set; }
+        [Required]
+        public string ProjectDirectory { get; set; }
         
         public string OutputPath { get; set; }
         
diff --git a/src/Avalonia.Build.Tasks/Program.cs b/src/Avalonia.Build.Tasks/Program.cs
index 2f206acf2a..c2d0950264 100644
--- a/src/Avalonia.Build.Tasks/Program.cs
+++ b/src/Avalonia.Build.Tasks/Program.cs
@@ -1,5 +1,6 @@
 using System;
 using System.Collections;
+using System.IO;
 using Microsoft.Build.Framework;
 
 namespace Avalonia.Build.Tasks
@@ -19,7 +20,8 @@ namespace Avalonia.Build.Tasks
                 AssemblyFile = args[0],
                 ReferencesFilePath = args[1],
                 OutputPath = args[2],
-                BuildEngine = new ConsoleBuildEngine()
+                BuildEngine = new ConsoleBuildEngine(),
+                ProjectDirectory = Directory.GetCurrentDirectory()
             }.Execute() ?
                 0 :
                 2;
diff --git a/src/Avalonia.Build.Tasks/XamlCompilerTaskExecutor.cs b/src/Avalonia.Build.Tasks/XamlCompilerTaskExecutor.cs
index acaa80b608..5addf939eb 100644
--- a/src/Avalonia.Build.Tasks/XamlCompilerTaskExecutor.cs
+++ b/src/Avalonia.Build.Tasks/XamlCompilerTaskExecutor.cs
@@ -10,6 +10,8 @@ using Mono.Cecil;
 using XamlIl.TypeSystem;
 using Avalonia.Utilities;
 using Mono.Cecil.Rocks;
+using XamlIl;
+using XamlIl.Ast;
 using XamlIl.Parsers;
 using XamlIl.Transform;
 using TypeAttributes = Mono.Cecil.TypeAttributes;
@@ -47,7 +49,19 @@ namespace Avalonia.Build.Tasks
             return rv;
         }
         
-        public static byte[] Compile(IBuildEngine engine, string input, string[] references)
+        public class CompileResult
+        {
+            public bool Success { get; set; }
+            public byte[] Data { get; set; }
+
+            public CompileResult(bool success, byte[] data = null)
+            {
+                Success = success;
+                Data = data;
+            }
+        }
+        
+        public static CompileResult Compile(IBuildEngine engine, string input, string[] references, string projectDirectory)
         {
             var typeSystem = new CecilTypeSystem(references.Concat(new[] {input}), input);
             var asm = typeSystem.TargetAssemblyDefinition;
@@ -55,7 +69,7 @@ namespace Avalonia.Build.Tasks
             var avares = ReadAvaloniaXamlResources(asm);
             if (avares.Count == 0 && emres.Count == 0)
                 // Nothing to do
-                return null;
+                return new CompileResult(true);
             var xamlLanguage = AvaloniaXamlIlLanguage.Configure(typeSystem);
             var compilerConfig = new XamlIlTransformerConfiguration(typeSystem,
                 typeSystem.TargetAssembly,
@@ -80,7 +94,8 @@ namespace Avalonia.Build.Tasks
                 asm.MainModule.ImportReference(editorBrowsableAttribute.GetConstructors()
                     .First(c => c.Parameters.Count == 1));
 
-            void CompileGroup(Dictionary<string, byte[]> resources, string name, Func<string, string> uriTransform)
+            bool CompileGroup(Dictionary<string, byte[]> resources, string name, Func<string, string> uriTransform,
+                Func<string, string> pathTransform)
             {
                 var typeDef = new TypeDefinition("CompiledAvaloniaXaml", name,
                     TypeAttributes.Class, asm.MainModule.TypeSystem.Object);
@@ -94,23 +109,63 @@ namespace Avalonia.Build.Tasks
                 var builder = typeSystem.CreateTypeBuilder(typeDef);
                 foreach (var res in resources)
                 {
-                    var xaml = Encoding.UTF8.GetString(res.Value);
-                    var parsed = XDocumentXamlIlParser.Parse(xaml);
-                    compiler.Transform(parsed);
-                    compiler.Compile(parsed, builder, contextClass,
-                        "Populate:" + res.Key, "Build:" + res.Key,
-                        "NamespaceInfo:" + res.Key, uriTransform(res.Key));
+                    try
+                    {
+                        // StreamReader is needed here to handle BOM
+                        var xaml = new StreamReader(new MemoryStream(res.Value)).ReadToEnd();
+                        var parsed = XDocumentXamlIlParser.Parse(xaml);
+
+                        var initialRoot = (XamlIlAstObjectNode)parsed.Root;
+                        var classDirective = initialRoot.Children.OfType<XamlIlAstXmlDirective>()
+                            .FirstOrDefault(d => d.Namespace == XamlNamespaces.Xaml2006 && d.Name == "Class");
+
+                        if (classDirective != null)
+                        {
+                            if (classDirective.Values.Count != 1 || !(classDirective.Values[0] is XamlIlAstTextNode tn))
+                                throw new XamlIlParseException("x:Class should have a string value", classDirective);
+                            var classType = typeSystem.TargetAssembly.FindType(tn.Text);
+                            if (classType == null)
+                                throw new XamlIlParseException($"Unable to find type `{tn.Text}`", classDirective);
+                            initialRoot.Type = new XamlIlAstClrTypeReference(classDirective, classType);
+                        }
+                        
+                        
+                        compiler.Transform(parsed);
+                        compiler.Compile(parsed, builder, contextClass,
+                            "Populate:" + res.Key, "Build:" + res.Key,
+                            "NamespaceInfo:" + res.Key, uriTransform(res.Key));
+                    }
+                    catch (Exception e)
+                    {
+                        int lineNumber = 0, linePosition = 0;
+                        if (e is XamlIlParseException xe)
+                        {
+                            lineNumber = xe.Line;
+                            linePosition = xe.Position;
+                        }
+                        engine.LogErrorEvent(new BuildErrorEventArgs("Avalonia", "XAMLIL", pathTransform(res.Key),
+                            lineNumber, linePosition, lineNumber, linePosition,
+                            e.Message, "", "Avalonia"));
+                        return false;
+                    }
                 }
+
+                return true;
             }
 
             if (emres.Count != 0)
-                CompileGroup(emres, "EmbeddedResource", name => $"resm:{name}?assembly={asm.Name}");
+                if (!CompileGroup(emres, "EmbeddedResource",
+                    name => $"resm:{name}?assembly={asm.Name}", name => name))
+                    return new CompileResult(false);
             if (avares.Count != 0)
-                CompileGroup(avares, "AvaloniaResource", name => $"avares://{asm.Name}/{name}");
+                if (!CompileGroup(avares, "AvaloniaResource",
+                    name => $"avares://{asm.Name}/{name}",
+                    name => Path.Combine(projectDirectory, name.TrimStart('/'))))
+                    return new CompileResult(false);
             
             var ms = new MemoryStream();
             asm.Write(ms);
-            return ms.ToArray();
+            return new CompileResult(true, ms.ToArray());
         }
         
     }
diff --git a/src/Avalonia.Themes.Default/Avalonia.Themes.Default.csproj b/src/Avalonia.Themes.Default/Avalonia.Themes.Default.csproj
index 045cc49142..ea53f308ab 100644
--- a/src/Avalonia.Themes.Default/Avalonia.Themes.Default.csproj
+++ b/src/Avalonia.Themes.Default/Avalonia.Themes.Default.csproj
@@ -1,7 +1,6 @@
 <Project Sdk="Microsoft.NET.Sdk">
   <PropertyGroup>
     <TargetFramework>netstandard2.0</TargetFramework>
-    <EnableAvaloniaXamlCompilation>true</EnableAvaloniaXamlCompilation>
   </PropertyGroup>
   <ItemGroup>
     <ProjectReference Include="..\Markup\Avalonia.Markup.Xaml\Avalonia.Markup.Xaml.csproj" />
diff --git a/src/Markup/Avalonia.Markup.Xaml/XamlIl/xamlil.github b/src/Markup/Avalonia.Markup.Xaml/XamlIl/xamlil.github
index ddc2490b8f..570fa4d67e 160000
--- a/src/Markup/Avalonia.Markup.Xaml/XamlIl/xamlil.github
+++ b/src/Markup/Avalonia.Markup.Xaml/XamlIl/xamlil.github
@@ -1 +1 @@
-Subproject commit ddc2490b8f0437c42c9bc4662b25c2f693255278
+Subproject commit 570fa4d67ed0da7fc5b6e36c3100f0ccbba5aa5a