diff --git a/flow-model-generator/modules/flow-model-generator-core/src/main/java/io/ballerina/flowmodelgenerator/core/model/FormBuilder.java b/flow-model-generator/modules/flow-model-generator-core/src/main/java/io/ballerina/flowmodelgenerator/core/model/FormBuilder.java
index cfcd4dd6f6..a2f92ccf56 100644
--- a/flow-model-generator/modules/flow-model-generator-core/src/main/java/io/ballerina/flowmodelgenerator/core/model/FormBuilder.java
+++ b/flow-model-generator/modules/flow-model-generator-core/src/main/java/io/ballerina/flowmodelgenerator/core/model/FormBuilder.java
@@ -317,9 +317,16 @@ public FormBuilder<T> dataVariable(TypedBindingPatternNode node, String variable
         data(node == null ? null : node.bindingPattern(), variableLabel, variableDoc,
                 NameUtil.generateTypeName("var", names), false);
 
-        String typeName = node == null ? "" : CommonUtils.getTypeSymbol(semanticModel, node)
-                .map(typeSymbol -> CommonUtils.getTypeSignature(semanticModel, typeSymbol, true, moduleInfo))
-                .orElse(CommonUtils.getVariableName(node));
+        String typeName;
+        if (node == null) {
+            typeName = "";
+        } else if (node.typeDescriptor().kind() == SyntaxKind.VAR_TYPE_DESC) {
+            typeName = "var";
+        } else {
+            typeName = CommonUtils.getTypeSymbol(semanticModel, node)
+                    .map(typeSymbol -> CommonUtils.getTypeSignature(semanticModel, typeSymbol, true, moduleInfo))
+                    .orElse(CommonUtils.getVariableName(node));
+        }
         return type(typeName, typeDoc, editable, null, node == null ? null : node.typeDescriptor().lineRange(), hidden);
     }
 
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/binary_data.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/binary_data.json
index 3c24347624..d96addcc5a 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/binary_data.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/binary_data.json
@@ -461,7 +461,7 @@
                 "selected": true
               }
             ],
-            "value": "byte[3]",
+            "value": "var",
             "placeholder": "var",
             "optional": false,
             "editable": true,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/comment10.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/comment10.json
index 103d0cee0d..a5c2e95682 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/comment10.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/comment10.json
@@ -369,7 +369,7 @@
                 "selected": true
               }
             ],
-            "value": "int",
+            "value": "var",
             "placeholder": "var",
             "optional": false,
             "editable": true,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/comment9.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/comment9.json
index 0c52b8c2ef..c7b814b3d2 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/comment9.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/comment9.json
@@ -191,7 +191,7 @@
                         "selected": true
                       }
                     ],
-                    "value": "()",
+                    "value": "var",
                     "placeholder": "var",
                     "optional": false,
                     "editable": true,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/flags1.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/flags1.json
index 25e3522eb1..264793cd29 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/flags1.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/flags1.json
@@ -552,7 +552,7 @@
                 "selected": true
               }
             ],
-            "value": "boolean",
+            "value": "var",
             "placeholder": "var",
             "optional": false,
             "editable": false,
@@ -676,7 +676,7 @@
                 "selected": true
               }
             ],
-            "value": "boolean",
+            "value": "var",
             "placeholder": "var",
             "optional": false,
             "editable": false,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/foreach1.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/foreach1.json
index 31c529c125..bbe4ed5198 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/foreach1.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/foreach1.json
@@ -280,7 +280,7 @@
                 "selected": true
               }
             ],
-            "value": "int",
+            "value": "var",
             "placeholder": "var",
             "optional": false,
             "editable": true,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/foreach2.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/foreach2.json
index 31c529c125..bbe4ed5198 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/foreach2.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/foreach2.json
@@ -280,7 +280,7 @@
                 "selected": true
               }
             ],
-            "value": "int",
+            "value": "var",
             "placeholder": "var",
             "optional": false,
             "editable": true,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/match8.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/match8.json
index 91ff9daba4..9cf438c142 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/match8.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/match8.json
@@ -190,7 +190,7 @@
                         "selected": true
                       }
                     ],
-                    "value": "int",
+                    "value": "var",
                     "placeholder": "var",
                     "optional": false,
                     "editable": true,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/remote_action_call-http-get2.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/remote_action_call-http-get2.json
index c350ade24e..dbd7c05e23 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/remote_action_call-http-get2.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/remote_action_call-http-get2.json
@@ -223,7 +223,7 @@
                 "selected": true
               }
             ],
-            "value": "json",
+            "value": "var",
             "placeholder": "var",
             "optional": false,
             "editable": false,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/remote_action_call-http-post2.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/remote_action_call-http-post2.json
index 914c86d0ad..fd31513a15 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/remote_action_call-http-post2.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/remote_action_call-http-post2.json
@@ -274,7 +274,7 @@
                 "selected": true
               }
             ],
-            "value": "json",
+            "value": "var",
             "placeholder": "var",
             "optional": false,
             "editable": false,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/resource_action_call-http-get1.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/resource_action_call-http-get1.json
index e5a0745635..2c29229bc7 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/resource_action_call-http-get1.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/resource_action_call-http-get1.json
@@ -870,7 +870,7 @@
                 "selected": true
               }
             ],
-            "value": "json",
+            "value": "var",
             "placeholder": "var",
             "optional": false,
             "editable": false,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/resource_action_call-http-post1.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/resource_action_call-http-post1.json
index c8cbe7fd3e..5a3fd3f080 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/resource_action_call-http-post1.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/resource_action_call-http-post1.json
@@ -1068,7 +1068,7 @@
                 "selected": true
               }
             ],
-            "value": "json",
+            "value": "var",
             "placeholder": "var",
             "optional": false,
             "editable": false,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction1.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction1.json
index 341a334a70..e17a7b17e0 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction1.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction1.json
@@ -119,7 +119,7 @@
                         "selected": true
                       }
                     ],
-                    "value": "()",
+                    "value": "var",
                     "placeholder": "var",
                     "optional": false,
                     "editable": true,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction2.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction2.json
index 3decb1f0e4..09607315d5 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction2.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction2.json
@@ -243,7 +243,7 @@
                         "selected": true
                       }
                     ],
-                    "value": "()",
+                    "value": "var",
                     "placeholder": "var",
                     "optional": false,
                     "editable": true,
@@ -366,7 +366,7 @@
                         "selected": true
                       }
                     ],
-                    "value": "()",
+                    "value": "var",
                     "placeholder": "var",
                     "optional": false,
                     "editable": true,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction3.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction3.json
index bcaf81c664..7a002907d4 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction3.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction3.json
@@ -191,7 +191,7 @@
                                 "selected": true
                               }
                             ],
-                            "value": "()",
+                            "value": "var",
                             "placeholder": "var",
                             "optional": false,
                             "editable": true,
@@ -271,7 +271,7 @@
                         "selected": true
                       }
                     ],
-                    "value": "()",
+                    "value": "var",
                     "placeholder": "var",
                     "optional": false,
                     "editable": true,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction4.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction4.json
index 4ec9d640dd..b388bafd3c 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction4.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction4.json
@@ -148,7 +148,7 @@
                         "selected": true
                       }
                     ],
-                    "value": "()",
+                    "value": "var",
                     "placeholder": "var",
                     "optional": false,
                     "editable": true,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction5.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction5.json
index ff851f836a..8eeeee2b9c 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction5.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction5.json
@@ -148,7 +148,7 @@
                         "selected": true
                       }
                     ],
-                    "value": "()",
+                    "value": "var",
                     "placeholder": "var",
                     "optional": false,
                     "editable": true,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction6.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction6.json
index 476693b1b1..e3dec9aeda 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction6.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/transaction6.json
@@ -191,7 +191,7 @@
                                 "selected": true
                               }
                             ],
-                            "value": "()",
+                            "value": "var",
                             "placeholder": "var",
                             "optional": false,
                             "editable": true,
@@ -271,7 +271,7 @@
                         "selected": true
                       }
                     ],
-                    "value": "()",
+                    "value": "var",
                     "placeholder": "var",
                     "optional": false,
                     "editable": true,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/variable1.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/variable1.json
index f30ce4e335..457795e862 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/variable1.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/variable1.json
@@ -645,7 +645,7 @@
                 "selected": true
               }
             ],
-            "value": "int",
+            "value": "var",
             "placeholder": "var",
             "optional": false,
             "editable": true,
@@ -737,7 +737,7 @@
                 "selected": true
               }
             ],
-            "value": "int",
+            "value": "var",
             "placeholder": "var",
             "optional": false,
             "editable": true,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/variable9.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/variable9.json
new file mode 100644
index 0000000000..3d3a649a01
--- /dev/null
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/variable9.json
@@ -0,0 +1,186 @@
+{
+  "start": {
+    "line": 0,
+    "offset": 0
+  },
+  "end": {
+    "line": 3,
+    "offset": 1
+  },
+  "source": "variable.bal",
+  "description": "Tests a simple diagram flow",
+  "diagram": {
+    "fileName": "variable.bal",
+    "nodes": [
+      {
+        "id": "33233",
+        "metadata": {
+          "label": "Start",
+          "data": {
+            "kind": "Function",
+            "label": "function1",
+            "isServiceFunction": false,
+            "parameters": [
+              "int a",
+              "int b"
+            ],
+            "return": "int"
+          }
+        },
+        "codedata": {
+          "node": "EVENT_START",
+          "lineRange": {
+            "fileName": "variable.bal",
+            "startLine": {
+              "line": 0,
+              "offset": 45
+            },
+            "endLine": {
+              "line": 3,
+              "offset": 1
+            }
+          },
+          "sourceCode": "function function1(int a, int b) returns int {\n    var x = \"test\";\n    return a + b;\n}"
+        },
+        "returning": false,
+        "flags": 0
+      },
+      {
+        "id": "32879",
+        "metadata": {
+          "label": "Declare Variable",
+          "description": "Create a new variable"
+        },
+        "codedata": {
+          "node": "VARIABLE",
+          "lineRange": {
+            "fileName": "variable.bal",
+            "startLine": {
+              "line": 1,
+              "offset": 4
+            },
+            "endLine": {
+              "line": 1,
+              "offset": 19
+            }
+          },
+          "sourceCode": "var x = \"test\";"
+        },
+        "returning": false,
+        "properties": {
+          "expression": {
+            "metadata": {
+              "label": "Expression",
+              "description": "Initialize with value"
+            },
+            "types": [
+              {
+                "fieldType": "ACTION_OR_EXPRESSION",
+                "selected": true
+              }
+            ],
+            "value": "\"test\"",
+            "optional": true,
+            "editable": true,
+            "advanced": false,
+            "hidden": false
+          },
+          "variable": {
+            "metadata": {
+              "label": "Name",
+              "description": "Name of the variable"
+            },
+            "types": [
+              {
+                "fieldType": "IDENTIFIER",
+                "selected": true
+              }
+            ],
+            "value": "x",
+            "optional": false,
+            "editable": false,
+            "advanced": false,
+            "hidden": false,
+            "codedata": {
+              "lineRange": {
+                "fileName": "variable.bal",
+                "startLine": {
+                  "line": 1,
+                  "offset": 8
+                },
+                "endLine": {
+                  "line": 1,
+                  "offset": 9
+                }
+              }
+            }
+          },
+          "type": {
+            "metadata": {
+              "label": "Type",
+              "description": "Type of the variable"
+            },
+            "types": [
+              {
+                "fieldType": "TYPE",
+                "selected": true
+              }
+            ],
+            "value": "var",
+            "placeholder": "var",
+            "optional": false,
+            "editable": true,
+            "advanced": false,
+            "hidden": false,
+            "codedata": {}
+          }
+        },
+        "flags": 0
+      },
+      {
+        "id": "33869",
+        "metadata": {
+          "label": "Return",
+          "description": "Value of 'a + b'"
+        },
+        "codedata": {
+          "node": "RETURN",
+          "lineRange": {
+            "fileName": "variable.bal",
+            "startLine": {
+              "line": 2,
+              "offset": 4
+            },
+            "endLine": {
+              "line": 2,
+              "offset": 17
+            }
+          },
+          "sourceCode": "return a + b;"
+        },
+        "returning": true,
+        "properties": {
+          "expression": {
+            "metadata": {
+              "label": "Expression",
+              "description": "Return value"
+            },
+            "types": [
+              {
+                "fieldType": "ACTION_OR_EXPRESSION",
+                "selected": true
+              }
+            ],
+            "value": "a + b",
+            "optional": true,
+            "editable": true,
+            "advanced": false,
+            "hidden": false
+          }
+        },
+        "flags": 0
+      }
+    ],
+    "connections": []
+  }
+}
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/xml_payload.json b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/xml_payload.json
index a8d630648d..7d1bb6fd30 100644
--- a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/xml_payload.json
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/config/xml_payload.json
@@ -461,7 +461,7 @@
                 "selected": true
               }
             ],
-            "value": "xml:Element",
+            "value": "var",
             "placeholder": "var",
             "optional": false,
             "editable": true,
diff --git a/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/source/variable.bal b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/source/variable.bal
new file mode 100644
index 0000000000..359c8b7c49
--- /dev/null
+++ b/flow-model-generator/modules/flow-model-generator-ls-extension/src/test/resources/diagram_generator/source/variable.bal
@@ -0,0 +1,4 @@
+function function1(int a, int b) returns int {
+    var x = "test";
+    return a + b;
+}