diff --git a/crates/fm/src/lib.rs b/crates/fm/src/lib.rs
index cc87129fc0d..b79a2b2c700 100644
--- a/crates/fm/src/lib.rs
+++ b/crates/fm/src/lib.rs
@@ -38,12 +38,21 @@ pub struct FileManager {
 impl FileManager {
     // XXX: Maybe use a AsRef<Path> here, for API ergonomics
     pub fn add_file(&mut self, path_to_file: &Path, file_type: FileType) -> Option<FileId> {
-        let source = file_reader::read_file_to_string(path_to_file).ok()?;
+        // Handle both relative file paths and std/lib virtual paths.
+        let base = Path::new(".").canonicalize().expect("Base path canonicalize failed");
+        let res = path_to_file.canonicalize().unwrap_or_else(|_| path_to_file.to_path_buf());
+        let resolved_path = res.strip_prefix(base).unwrap_or(&res);
+
+        // Check that the resolved path already exists in the file map, if it is, we return it.
+        let path_to_file = virtualize_path(resolved_path, file_type);
+        if let Some(file_id) = self.path_to_id.get(&path_to_file) {
+            return Some(*file_id);
+        }
 
-        let file_id = self.file_map.add_file(path_to_file.to_path_buf().into(), source);
-        let path_to_file = virtualize_path(path_to_file, file_type);
+        // Otherwise we add the file
+        let source = file_reader::read_file_to_string(resolved_path).ok()?;
+        let file_id = self.file_map.add_file(resolved_path.to_path_buf().into(), source);
         self.register_path(file_id, path_to_file);
-
         Some(file_id)
     }
 
@@ -177,4 +186,28 @@ mod tests {
         // Now check for files in it's subdirectory
         fm.resolve_path(sub_dir_file_id, "foo").unwrap();
     }
+
+    /// Tests that two identical files that have different paths are treated as the same file
+    /// e.g. if we start in the dir ./src and have a file ../../foo.nr
+    /// that should be treated as the same file as ../ starting in ./
+    /// they should both resolve to ../foo.nr
+    #[test]
+    fn path_resolve_modules_with_different_paths_as_same_file() {
+        let mut fm = FileManager::default();
+
+        // Create a lib.nr file at the root.
+        let dir = tempdir().unwrap();
+        let sub_dir = TempDir::new_in(&dir).unwrap();
+        let sub_sub_dir = TempDir::new_in(&sub_dir).unwrap();
+        let file_path = dummy_file_path(&dir, "lib.nr");
+
+        // Create another file in a subdirectory with a convoluted path
+        let second_file_path = dummy_file_path(&sub_sub_dir, "./../../lib.nr");
+
+        // Add both files to the file manager
+        let file_id = fm.add_file(&file_path, FileType::Root).unwrap();
+        let second_file_id = fm.add_file(&second_file_path, FileType::Root).unwrap();
+
+        assert_eq!(file_id, second_file_id);
+    }
 }
diff --git a/crates/nargo_cli/tests/test_data/diamond_deps_0/Nargo.toml b/crates/nargo_cli/tests/test_data/diamond_deps_0/Nargo.toml
new file mode 100644
index 00000000000..d5094940130
--- /dev/null
+++ b/crates/nargo_cli/tests/test_data/diamond_deps_0/Nargo.toml
@@ -0,0 +1,7 @@
+[package]
+authors = [""]
+compiler_version = "0.7.1"
+
+[dependencies]
+dep1 = { path = "../../test_libraries/diamond_deps_1" }
+dep2 = { path = "../../test_libraries/diamond_deps_2" }
\ No newline at end of file
diff --git a/crates/nargo_cli/tests/test_data/diamond_deps_0/Prover.toml b/crates/nargo_cli/tests/test_data/diamond_deps_0/Prover.toml
new file mode 100644
index 00000000000..a713241e7dd
--- /dev/null
+++ b/crates/nargo_cli/tests/test_data/diamond_deps_0/Prover.toml
@@ -0,0 +1,3 @@
+x = 1
+y = 1
+return = 5
\ No newline at end of file
diff --git a/crates/nargo_cli/tests/test_data/diamond_deps_0/src/main.nr b/crates/nargo_cli/tests/test_data/diamond_deps_0/src/main.nr
new file mode 100644
index 00000000000..f01491171bb
--- /dev/null
+++ b/crates/nargo_cli/tests/test_data/diamond_deps_0/src/main.nr
@@ -0,0 +1,7 @@
+use dep::dep1::call_dep1_then_dep2;
+use dep::dep2::call_dep2;
+use dep::dep2::RESOLVE_THIS;
+
+fn main(x : Field, y : pub Field) -> pub Field {
+    call_dep1_then_dep2(x, y) + call_dep2(x, y) + RESOLVE_THIS
+}
\ No newline at end of file
diff --git a/crates/nargo_cli/tests/test_libraries/diamond_deps_1/Nargo.toml b/crates/nargo_cli/tests/test_libraries/diamond_deps_1/Nargo.toml
new file mode 100644
index 00000000000..1241b147d83
--- /dev/null
+++ b/crates/nargo_cli/tests/test_libraries/diamond_deps_1/Nargo.toml
@@ -0,0 +1,6 @@
+[package]
+authors = [""]
+compiler_version = "0.7.1"
+
+[dependencies]
+dep2 = { path = "../diamond_deps_2" }
\ No newline at end of file
diff --git a/crates/nargo_cli/tests/test_libraries/diamond_deps_1/src/lib.nr b/crates/nargo_cli/tests/test_libraries/diamond_deps_1/src/lib.nr
new file mode 100644
index 00000000000..cecb2715104
--- /dev/null
+++ b/crates/nargo_cli/tests/test_libraries/diamond_deps_1/src/lib.nr
@@ -0,0 +1,5 @@
+use dep::dep2::call_dep2;
+
+fn call_dep1_then_dep2(x : Field, y : Field) -> Field {
+    call_dep2(x, y)
+}
diff --git a/crates/nargo_cli/tests/test_libraries/diamond_deps_2/Nargo.toml b/crates/nargo_cli/tests/test_libraries/diamond_deps_2/Nargo.toml
new file mode 100644
index 00000000000..7cae77988e3
--- /dev/null
+++ b/crates/nargo_cli/tests/test_libraries/diamond_deps_2/Nargo.toml
@@ -0,0 +1,5 @@
+[package]
+authors = [""]
+compiler_version = "0.7.1"
+
+[dependencies]
\ No newline at end of file
diff --git a/crates/nargo_cli/tests/test_libraries/diamond_deps_2/src/lib.nr b/crates/nargo_cli/tests/test_libraries/diamond_deps_2/src/lib.nr
new file mode 100644
index 00000000000..f7745efd679
--- /dev/null
+++ b/crates/nargo_cli/tests/test_libraries/diamond_deps_2/src/lib.nr
@@ -0,0 +1,6 @@
+global RESOLVE_THIS = 3;
+
+
+fn call_dep2(x : Field, y : Field) -> Field {
+    x + y
+}
diff --git a/crates/noirc_frontend/src/graph/mod.rs b/crates/noirc_frontend/src/graph/mod.rs
index 47426606da1..0e4a4c63518 100644
--- a/crates/noirc_frontend/src/graph/mod.rs
+++ b/crates/noirc_frontend/src/graph/mod.rs
@@ -83,7 +83,11 @@ impl CrateGraph {
     pub fn add_crate_root(&mut self, crate_type: CrateType, file_id: FileId) -> CrateId {
         let mut roots_with_file_id =
             self.arena.iter().filter(|(_, crate_data)| crate_data.root_file_id == file_id);
-        assert!(roots_with_file_id.next().is_none(), "you cannot add the same file id twice");
+
+        let next_file_id = roots_with_file_id.next();
+        if let Some(file_id) = next_file_id {
+            return *file_id.0;
+        }
 
         let data = CrateData { root_file_id: file_id, crate_type, dependencies: Vec::new() };
         let crate_id = CrateId(self.arena.len());
@@ -232,7 +236,6 @@ mod tests {
         assert!(graph.add_dep(crate2, CrateName::new("crate3").unwrap(), crate3).is_ok());
     }
     #[test]
-    #[should_panic]
     fn it_works2() {
         let file_ids = dummy_file_ids(3);
         let file_id_0 = file_ids[0];
@@ -241,7 +244,10 @@ mod tests {
         let mut graph = CrateGraph::default();
         let _crate1 = graph.add_crate_root(CrateType::Library, file_id_0);
         let _crate2 = graph.add_crate_root(CrateType::Library, file_id_1);
-        let _crate3 = graph.add_crate_root(CrateType::Library, file_id_2);
-        let _crate3 = graph.add_crate_root(CrateType::Library, file_id_2);
+
+        // Adding the same file, so the crate should be the same.
+        let crate3 = graph.add_crate_root(CrateType::Library, file_id_2);
+        let crate3_2 = graph.add_crate_root(CrateType::Library, file_id_2);
+        assert_eq!(crate3, crate3_2);
     }
 }