diff --git a/community-build/test/scala/dotty/communitybuild/CommunityBuildTest.scala b/community-build/test/scala/dotty/communitybuild/CommunityBuildTest.scala
index 11462dc88146..1c2c8aba7321 100644
--- a/community-build/test/scala/dotty/communitybuild/CommunityBuildTest.scala
+++ b/community-build/test/scala/dotty/communitybuild/CommunityBuildTest.scala
@@ -216,7 +216,7 @@ object projects
 
   lazy val stdLib213 = SbtCommunityProject(
     project       = "stdLib213",
-    sbtTestCommand   = "library/compile",
+    sbtTestCommand   = """;set scalacOptions in Global += "-Yerased-terms" ;library/compile""",
     sbtUpdateCommand = "library/update",
     extraSbtArgs  = List("-Dscala.build.compileWithDotty=true")
   )
diff --git a/compiler/src/dotty/tools/dotc/parsing/Scanners.scala b/compiler/src/dotty/tools/dotc/parsing/Scanners.scala
index 54e1765a7df5..0d3024a8ccee 100644
--- a/compiler/src/dotty/tools/dotc/parsing/Scanners.scala
+++ b/compiler/src/dotty/tools/dotc/parsing/Scanners.scala
@@ -202,7 +202,8 @@ object Scanners {
     private val commentBuf = new mutable.StringBuilder
 
     private def handleMigration(keyword: Token): Token =
-      if (!isScala2CompatMode) keyword
+      if (keyword == ERASED && !ctx.settings.YerasedTerms.value) IDENTIFIER
+      else if (!isScala2CompatMode) keyword
       else if (scala3keywords.contains(keyword)) treatAsIdent()
       else keyword
 
diff --git a/compiler/src/dotty/tools/dotc/typer/Checking.scala b/compiler/src/dotty/tools/dotc/typer/Checking.scala
index 7e71230ebbb1..7df77bcee979 100644
--- a/compiler/src/dotty/tools/dotc/typer/Checking.scala
+++ b/compiler/src/dotty/tools/dotc/typer/Checking.scala
@@ -457,8 +457,7 @@ object Checking {
         sym.setFlag(Private) // break the overriding relationship by making sym Private
       }
     if (sym.is(Erased))
-      if ctx.settings.YerasedTerms.value || sym == defn.Compiletime_erasedValue then checkApplicable(Erased, !sym.isOneOf(MutableOrLazy))
-      else fail("cannot use `erased` without " + ctx.settings.YerasedTerms.name)
+      checkApplicable(Erased, !sym.isOneOf(MutableOrLazy))
   }
 
   /** Check the type signature of the symbol `M` defined by `tree` does not refer
diff --git a/compiler/test/dotty/tools/dotc/CompilationTests.scala b/compiler/test/dotty/tools/dotc/CompilationTests.scala
index feacb283ef40..8e5cf657a624 100644
--- a/compiler/test/dotty/tools/dotc/CompilationTests.scala
+++ b/compiler/test/dotty/tools/dotc/CompilationTests.scala
@@ -224,6 +224,7 @@ class CompilationTests extends ParallelTesting {
     val lib =
       compileList("src", librarySources,
         defaultOptions.and("-Ycheck-reentrant",
+          "-Yerased-terms", // support declaration of scala.compiletime.erasedValue
           //  "-strict",  // TODO: re-enable once we allow : @unchecked in pattern definitions. Right now, lots of narrowing pattern definitions fail.
           "-priorityclasspath", defaultOutputDir))(libGroup)
 
diff --git a/project/Build.scala b/project/Build.scala
index 8f740af54537..daea2b962781 100644
--- a/project/Build.scala
+++ b/project/Build.scala
@@ -737,6 +737,8 @@ object Build {
 
   lazy val `dotty-library` = project.in(file("library")).asDottyLibrary(NonBootstrapped)
   lazy val `dotty-library-bootstrapped`: Project = project.in(file("library")).asDottyLibrary(Bootstrapped)
+    // TODO: move -Yerased-terms to dottyLibrarySettings on reference compiler update
+    .settings(scalacOptions in Compile += "-Yerased-terms") // support declaration of scala.compiletime.erasedValue
 
   def dottyLibrary(implicit mode: Mode): Project = mode match {
     case NonBootstrapped => `dotty-library`
@@ -758,6 +760,7 @@ object Build {
     settings(
       unmanagedSourceDirectories in Compile :=
         (unmanagedSourceDirectories in (`dotty-library-bootstrapped`, Compile)).value,
+      scalacOptions += "-Yerased-terms", // support declaration of scala.compiletime.erasedValue
     )
 
   lazy val tastyCoreSettings = Seq(
@@ -990,7 +993,7 @@ object Build {
         val dir = fetchScalaJSSource.value / "test-suite"
         (
           (dir / "shared/src/test/scala/org/scalajs/testsuite/compiler" ** (("*.scala":FileFilter) -- "RegressionTest.scala" -- "ReflectiveCallTest.scala")).get
-          ++ (dir / "shared/src/test/scala/org/scalajs/testsuite/javalib/lang" ** (("*.scala": FileFilter) -- "StringTest.scala")).get
+          ++ (dir / "shared/src/test/scala/org/scalajs/testsuite/javalib/lang" ** "*.scala").get
           ++ (dir / "shared/src/test/scala/org/scalajs/testsuite/javalib/io" ** (("*.scala": FileFilter) -- "ReadersTest.scala")).get
           ++ (dir / "shared/src/test/scala/org/scalajs/testsuite/javalib/math" ** "*.scala").get
           ++ (dir / "shared/src/test/scala/org/scalajs/testsuite/javalib/net" ** "*.scala").get
diff --git a/tests/pos/i7944.scala b/tests/pos/i7944.scala
new file mode 100644
index 000000000000..d18d1ee5fddc
--- /dev/null
+++ b/tests/pos/i7944.scala
@@ -0,0 +1,8 @@
+package hello
+
+object HelloWorld {
+  def main(args: Array[String]): Unit =
+    println(erased(5))
+
+  def erased(x: Int): Any = x
+}