In one implementation, a method of resolving focal conflict in a computer-generated reality (CGR) environment is performed by a device including a processor, non-transitory memory, an image sensor, and a display. The method includes capturing, using the image sensor, an image of a scene including a real object in a particular direction at a first distance from the device. The method includes displaying, on the display, a CGR environment including a virtual object in the particular direction at a second distance from the device. In accordance with a determination that the second distance is less than the first distance, the CGR environment includes the virtual object overlaid on the scene. In accordance with a determination that the second distance is greater than the first distance, the CGR environment includes the virtual object with an obfuscation area that obfuscates at least a portion of the real object within the obfuscation area.