diff --git a/strategy/linear.py b/strategy/linear.py
index 0454c62b..e27612f4 100644
--- a/strategy/linear.py
+++ b/strategy/linear.py
@@ -126,7 +126,7 @@ class StrategyModule(LINEAR.StrategyModule):
         _play_context = copy.deepcopy(play_context)
 
         pha = task_vars['physical_host_addrs'] = dict()
-        physical_host_item = host.vars.get('physical_host')
+        physical_host_item = task_vars.get('physical_host')
         if physical_host_item:
             LINEAR.display.verbose(
                 u'The "physical_host" variable was found.',
diff --git a/tests/host_vars/container3.yml b/tests/host_vars/container3.yml
index 038607c7..789931d8 100644
--- a/tests/host_vars/container3.yml
+++ b/tests/host_vars/container3.yml
@@ -16,3 +16,7 @@
 ansible_host: 10.100.100.4
 ansible_become: True
 ansible_user: root
+
+# Test case to validate I3798529cf2bf73afbff2d2ef0f3fe17d91123fbc
+# Ensure physical_host can be defined in group/host vars
+physical_host: localhost_alt
diff --git a/tests/inventory b/tests/inventory
index f82c6dc4..5f58281f 100644
--- a/tests/inventory
+++ b/tests/inventory
@@ -9,7 +9,7 @@ container2
 [hosts]
 localhost_alt
 [all_containers]
-container3 physical_host=localhost_alt
+container3
 
 # This is meant to test If594914df53efacc6d5bba148f4f46280f5a117d
 [fake_hosts]