diff --git a/Makefile b/Makefile
index e5ee1b6907..615b2fe3c6 100644
--- a/Makefile
+++ b/Makefile
@@ -113,6 +113,13 @@ help:  # Display this help
 ## --------------------------------------
 ##@ tests:
 
+export KUBEBUILDER_ENVTEST_KUBERNETES_VERSION ?= 1.32.0
+KUBEBUILDER_ASSETS ?= $(shell $(SETUP_ENVTEST) use --use-env -p path $(KUBEBUILDER_ENVTEST_KUBERNETES_VERSION))
+
+.PHONY: setup-envtest
+setup-envtest: $(SETUP_ENVTEST) ## Set up envtest (download kubebuilder assets)
+	@echo KUBEBUILDER_ASSETS=$(KUBEBUILDER_ASSETS)
+
 .PHONY: unit
 unit: $(SETUP_ENVTEST) ## Run unit test
 	$(shell $(SETUP_ENVTEST) use -p env --os $(ENVTEST_OS) --arch $(ARCH) $(ENVTEST_K8S_VERSION)) && \
diff --git a/api/v1beta1/metal3cluster_types.go b/api/v1beta1/metal3cluster_types.go
index e91db43b8c..ab23d052bc 100644
--- a/api/v1beta1/metal3cluster_types.go
+++ b/api/v1beta1/metal3cluster_types.go
@@ -37,8 +37,19 @@ type Metal3ClusterSpec struct {
 	// Determines if the cluster is not to be deployed with an external cloud provider.
 	// If set to true, CAPM3 will use node labels to set providerID on the kubernetes nodes.
 	// If set to false, providerID is set on nodes by other entities and CAPM3 uses the value of the providerID on the m3m resource.
+	// TODO: Remove this field in release 1.11. Ref: https://github.com/metal3-io/cluster-api-provider-metal3/issues/2255
+	//
+	// Deprecated: This field is deprecated, use cloudProviderEnabled instead
+	//
 	// +optional
-	NoCloudProvider bool `json:"noCloudProvider,omitempty"`
+	NoCloudProvider *bool `json:"noCloudProvider,omitempty"`
+	// Determines if the cluster is to be deployed with an external cloud provider.
+	// If set to false, CAPM3 will use node labels to set providerID on the kubernetes nodes.
+	// If set to true, providerID is set on nodes by other entities and CAPM3 uses the value of the providerID on the m3m resource.
+	// TODO: Change the default value to false in release 1.12. Ref: https://github.com/metal3-io/cluster-api-provider-metal3/issues/2255
+	// +kubebuilder:default=true
+	// +optional
+	CloudProviderEnabled *bool `json:"cloudProviderEnabled,omitempty"`
 }
 
 // IsValid returns an error if the object is not valid, otherwise nil. The
diff --git a/api/v1beta1/metal3cluster_webhook.go b/api/v1beta1/metal3cluster_webhook.go
index c7aa82218f..8074b6a3bc 100644
--- a/api/v1beta1/metal3cluster_webhook.go
+++ b/api/v1beta1/metal3cluster_webhook.go
@@ -14,6 +14,7 @@ limitations under the License.
 package v1beta1
 
 import (
+	"github.com/pkg/errors"
 	apierrors "k8s.io/apimachinery/pkg/api/errors"
 	"k8s.io/apimachinery/pkg/runtime"
 	"k8s.io/apimachinery/pkg/util/validation/field"
@@ -42,12 +43,17 @@ func (c *Metal3Cluster) Default() {
 
 // ValidateCreate implements webhook.Validator so a webhook will be registered for the type.
 func (c *Metal3Cluster) ValidateCreate() (admission.Warnings, error) {
-	return nil, c.validate()
+	return nil, c.validate(nil)
 }
 
 // ValidateUpdate implements webhook.Validator so a webhook will be registered for the type.
-func (c *Metal3Cluster) ValidateUpdate(_ runtime.Object) (admission.Warnings, error) {
-	return nil, c.validate()
+func (c *Metal3Cluster) ValidateUpdate(old runtime.Object) (admission.Warnings, error) {
+	oldM3C, ok := old.(*Metal3Cluster)
+	if !ok || oldM3C == nil {
+		return nil, apierrors.NewInternalError(errors.New("unable to convert existing object"))
+	}
+
+	return nil, c.validate(oldM3C)
 }
 
 // ValidateDelete implements webhook.Validator so a webhook will be registered for the type.
@@ -55,7 +61,7 @@ func (c *Metal3Cluster) ValidateDelete() (admission.Warnings, error) {
 	return nil, nil
 }
 
-func (c *Metal3Cluster) validate() error {
+func (c *Metal3Cluster) validate(oldM3C *Metal3Cluster) error {
 	var allErrs field.ErrorList
 	if c.Spec.ControlPlaneEndpoint.Host == "" {
 		allErrs = append(
@@ -68,6 +74,49 @@ func (c *Metal3Cluster) validate() error {
 		)
 	}
 
+	if c.Spec.CloudProviderEnabled != nil && c.Spec.NoCloudProvider != nil {
+		if *c.Spec.CloudProviderEnabled == *c.Spec.NoCloudProvider {
+			allErrs = append(
+				allErrs,
+				field.Invalid(
+					field.NewPath("spec", "cloudProviderEnabled"),
+					c.Spec.CloudProviderEnabled,
+					"cloudProviderEnabled conflicts the value of noCloudProvider",
+				),
+			)
+		}
+	}
+
+	if oldM3C != nil {
+		// Validate cloudProviderEnabled
+		if c.Spec.CloudProviderEnabled != nil && oldM3C.Spec.NoCloudProvider != nil {
+			if *c.Spec.CloudProviderEnabled == *oldM3C.Spec.NoCloudProvider {
+				allErrs = append(
+					allErrs,
+					field.Invalid(
+						field.NewPath("spec", "cloudProviderEnabled"),
+						c.Spec.CloudProviderEnabled,
+						"cloudProviderEnabled conflicts the value of noCloudProvider",
+					),
+				)
+			}
+		}
+
+		// Validate noCloudProvider
+		if c.Spec.NoCloudProvider != nil && oldM3C.Spec.CloudProviderEnabled != nil {
+			if *c.Spec.NoCloudProvider == *oldM3C.Spec.CloudProviderEnabled {
+				allErrs = append(
+					allErrs,
+					field.Invalid(
+						field.NewPath("spec", "noCloudProvider"),
+						c.Spec.NoCloudProvider,
+						"noCloudProvider conflicts the value of cloudProviderEnabled",
+					),
+				)
+			}
+		}
+	}
+
 	if len(allErrs) == 0 {
 		return nil
 	}
diff --git a/api/v1beta1/metal3cluster_webhook_test.go b/api/v1beta1/metal3cluster_webhook_test.go
index eb335d2628..54e5cb3416 100644
--- a/api/v1beta1/metal3cluster_webhook_test.go
+++ b/api/v1beta1/metal3cluster_webhook_test.go
@@ -18,6 +18,7 @@ import (
 
 	. "github.com/onsi/gomega"
 	metav1 "k8s.io/apimachinery/pkg/apis/meta/v1"
+	"k8s.io/utils/ptr"
 )
 
 func TestMetal3ClusterDefault(t *testing.T) {
@@ -52,19 +53,126 @@ func TestMetal3ClusterValidation(t *testing.T) {
 	invalidHost.Spec.ControlPlaneEndpoint.Host = ""
 
 	tests := []struct {
-		name      string
-		expectErr bool
-		c         *Metal3Cluster
+		name              string
+		expectErrOnCreate bool
+		expectErrOnUpdate bool
+		newCluster        *Metal3Cluster
+		oldCluster        *Metal3Cluster
 	}{
 		{
-			name:      "should return error when endpoint empty",
-			expectErr: true,
-			c:         invalidHost,
+			name:              "should return error when endpoint empty",
+			expectErrOnCreate: true,
+			expectErrOnUpdate: true,
+			newCluster:        invalidHost,
+			oldCluster:        valid,
 		},
 		{
-			name:      "should succeed when endpoint correct",
-			expectErr: false,
-			c:         valid,
+			name:              "should succeed when endpoint correct",
+			expectErrOnCreate: false,
+			expectErrOnUpdate: false,
+			newCluster:        valid,
+			oldCluster:        valid,
+		},
+		{
+			name:              "should succeed when cloudProviderEnabled and noCloudProvider are not set",
+			expectErrOnCreate: false,
+			expectErrOnUpdate: false,
+			newCluster:        valid,
+			oldCluster:        valid,
+		},
+		{
+			name:              "should succeed when cloudProviderEnabled is set and noCloudProvider not set",
+			expectErrOnCreate: false,
+			expectErrOnUpdate: false,
+			newCluster: &Metal3Cluster{
+				ObjectMeta: metav1.ObjectMeta{
+					Namespace: "foo",
+				},
+				Spec: Metal3ClusterSpec{
+					ControlPlaneEndpoint: APIEndpoint{
+						Host: "abc.com",
+						Port: 443,
+					},
+					CloudProviderEnabled: ptr.To(true),
+				},
+			},
+			oldCluster: valid,
+		},
+		{
+			name:              "should succeed when noCloudProvider is set and cloudProviderEnabled not set",
+			expectErrOnCreate: false,
+			expectErrOnUpdate: false,
+			newCluster: &Metal3Cluster{
+				ObjectMeta: metav1.ObjectMeta{
+					Namespace: "foo",
+				},
+				Spec: Metal3ClusterSpec{
+					ControlPlaneEndpoint: APIEndpoint{
+						Host: "abc.com",
+						Port: 443,
+					},
+					NoCloudProvider: ptr.To(false),
+				},
+			},
+			oldCluster: valid,
+		},
+		{
+			name:              "should succeed when cloudProviderEnabled and noCloudProvider do not conflict",
+			expectErrOnCreate: false,
+			expectErrOnUpdate: false,
+			newCluster: &Metal3Cluster{
+				ObjectMeta: metav1.ObjectMeta{
+					Namespace: "foo",
+				},
+				Spec: Metal3ClusterSpec{
+					ControlPlaneEndpoint: APIEndpoint{
+						Host: "abc.com",
+						Port: 443,
+					},
+					CloudProviderEnabled: ptr.To(true),
+				},
+			},
+			oldCluster: &Metal3Cluster{
+				ObjectMeta: metav1.ObjectMeta{
+					Namespace: "foo",
+				},
+				Spec: Metal3ClusterSpec{
+					ControlPlaneEndpoint: APIEndpoint{
+						Host: "abc.com",
+						Port: 443,
+					},
+					NoCloudProvider: ptr.To(false),
+				},
+			},
+		},
+		{
+			name:              "should not succeed when cloudProviderEnabled and noCloudProvider do conflict on update",
+			expectErrOnCreate: false,
+			expectErrOnUpdate: true,
+			newCluster: &Metal3Cluster{
+				ObjectMeta: metav1.ObjectMeta{
+					Namespace: "foo",
+				},
+				Spec: Metal3ClusterSpec{
+					ControlPlaneEndpoint: APIEndpoint{
+						Host: "abc.com",
+						Port: 443,
+					},
+					CloudProviderEnabled: ptr.To(false),
+				},
+			},
+			oldCluster: &Metal3Cluster{
+				ObjectMeta: metav1.ObjectMeta{
+					Namespace: "foo",
+				},
+				Spec: Metal3ClusterSpec{
+					ControlPlaneEndpoint: APIEndpoint{
+						Host: "abc.com",
+						Port: 443,
+					},
+					NoCloudProvider: ptr.To(false),
+				},
+			},
 		},
 	}
 
@@ -72,15 +180,18 @@ func TestMetal3ClusterValidation(t *testing.T) {
 		t.Run(tt.name, func(t *testing.T) {
 			g := NewWithT(t)
 
-			if tt.expectErr {
-				_, err := tt.c.ValidateCreate()
-				g.Expect(err).To(HaveOccurred())
-				_, err = tt.c.ValidateUpdate(nil)
+			if tt.expectErrOnCreate {
+				_, err := tt.newCluster.ValidateCreate()
 				g.Expect(err).To(HaveOccurred())
 			} else {
-				_, err := tt.c.ValidateCreate()
+				_, err := tt.newCluster.ValidateCreate()
 				g.Expect(err).NotTo(HaveOccurred())
-				_, err = tt.c.ValidateUpdate(nil)
+			}
+			if tt.expectErrOnUpdate {
+				_, err := tt.newCluster.ValidateUpdate(tt.oldCluster)
+				g.Expect(err).To(HaveOccurred())
+			} else {
+				_, err := tt.newCluster.ValidateUpdate(tt.oldCluster)
 				g.Expect(err).NotTo(HaveOccurred())
 			}
 		})
diff --git a/api/v1beta1/zz_generated.deepcopy.go b/api/v1beta1/zz_generated.deepcopy.go
index caaa375c60..5b7f91cafd 100644
--- a/api/v1beta1/zz_generated.deepcopy.go
+++ b/api/v1beta1/zz_generated.deepcopy.go
@@ -358,7 +358,7 @@ func (in *Metal3Cluster) DeepCopyInto(out *Metal3Cluster) {
 	*out = *in
 	out.TypeMeta = in.TypeMeta
 	in.ObjectMeta.DeepCopyInto(&out.ObjectMeta)
-	out.Spec = in.Spec
+	in.Spec.DeepCopyInto(&out.Spec)
 	in.Status.DeepCopyInto(&out.Status)
 }
 
@@ -416,6 +416,16 @@ func (in *Metal3ClusterList) DeepCopyObject() runtime.Object {
 func (in *Metal3ClusterSpec) DeepCopyInto(out *Metal3ClusterSpec) {
 	*out = *in
 	out.ControlPlaneEndpoint = in.ControlPlaneEndpoint
+	if in.NoCloudProvider != nil {
+		in, out := &in.NoCloudProvider, &out.NoCloudProvider
+		*out = new(bool)
+		**out = **in
+	}
+	if in.CloudProviderEnabled != nil {
+		in, out := &in.CloudProviderEnabled, &out.CloudProviderEnabled
+		*out = new(bool)
+		**out = **in
+	}
 }
 
 // DeepCopy is an autogenerated deepcopy function, copying the receiver, creating a new Metal3ClusterSpec.
@@ -469,7 +479,7 @@ func (in *Metal3ClusterTemplate) DeepCopyInto(out *Metal3ClusterTemplate) {
 	*out = *in
 	out.TypeMeta = in.TypeMeta
 	in.ObjectMeta.DeepCopyInto(&out.ObjectMeta)
-	out.Spec = in.Spec
+	in.Spec.DeepCopyInto(&out.Spec)
 }
 
 // DeepCopy is an autogenerated deepcopy function, copying the receiver, creating a new Metal3ClusterTemplate.
@@ -525,7 +535,7 @@ func (in *Metal3ClusterTemplateList) DeepCopyObject() runtime.Object {
 // DeepCopyInto is an autogenerated deepcopy function, copying the receiver, writing into out. in must be non-nil.
 func (in *Metal3ClusterTemplateResource) DeepCopyInto(out *Metal3ClusterTemplateResource) {
 	*out = *in
-	out.Spec = in.Spec
+	in.Spec.DeepCopyInto(&out.Spec)
 }
 
 // DeepCopy is an autogenerated deepcopy function, copying the receiver, creating a new Metal3ClusterTemplateResource.
@@ -541,7 +551,7 @@ func (in *Metal3ClusterTemplateResource) DeepCopy() *Metal3ClusterTemplateResour
 // DeepCopyInto is an autogenerated deepcopy function, copying the receiver, writing into out. in must be non-nil.
 func (in *Metal3ClusterTemplateSpec) DeepCopyInto(out *Metal3ClusterTemplateSpec) {
 	*out = *in
-	out.Template = in.Template
+	in.Template.DeepCopyInto(&out.Template)
 }
 
 // DeepCopy is an autogenerated deepcopy function, copying the receiver, creating a new Metal3ClusterTemplateSpec.
diff --git a/baremetal/metal3machine_manager.go b/baremetal/metal3machine_manager.go
index 72cd44a9f4..f6a5f801a8 100644
--- a/baremetal/metal3machine_manager.go
+++ b/baremetal/metal3machine_manager.go
@@ -1295,13 +1295,26 @@ func (m *MachineManager) SetNodeProviderID(ctx context.Context, providerIDOnM3M
 		m.Log.Info(errMessage)
 		return WithTransientError(errors.New(errMessage), requeueAfter)
 	}
-	if !m.Metal3Cluster.Spec.NoCloudProvider && matchingNodesCount == 0 {
-		// The node could either be still running cloud-init or
-		// kubernetes has not set the node.spec.ProviderID field yet.
-		errMessage := "Some target nodes do not have spec.providerID field set yet, requeuing"
-		m.Log.Info(errMessage)
-		return WithTransientError(errors.New(errMessage), requeueAfter)
+
+	if m.Metal3Cluster.Spec.NoCloudProvider != nil {
+		if !*m.Metal3Cluster.Spec.NoCloudProvider && matchingNodesCount == 0 {
+			// The node could either be still running cloud-init or
+			// kubernetes has not set the node.spec.ProviderID field yet.
+			errMessage := "Some target nodes do not have spec.providerID field set yet, requeuing"
+			m.Log.Info(errMessage)
+			return WithTransientError(errors.New(errMessage), requeueAfter)
+		}
 	}
+	if m.Metal3Cluster.Spec.CloudProviderEnabled != nil {
+		if *m.Metal3Cluster.Spec.CloudProviderEnabled && matchingNodesCount == 0 {
+			// The node could either be still running cloud-init or
+			// kubernetes has not set the node.spec.ProviderID field yet.
+			errMessage := "Some target nodes do not have spec.providerID field set yet, requeuing"
+			m.Log.Info(errMessage)
+			return WithTransientError(errors.New(errMessage), requeueAfter)
+		}
+	}
+
 	if matchingNodesCount == 1 {
 		return nil
 	}
diff --git a/baremetal/metal3machine_manager_test.go b/baremetal/metal3machine_manager_test.go
index 9228b0ec46..5a62d64841 100644
--- a/baremetal/metal3machine_manager_test.go
+++ b/baremetal/metal3machine_manager_test.go
@@ -2627,14 +2627,14 @@ var _ = Describe("Metal3Machine manager", func() {
 
 				machineMgr, err := NewMachineManager(fakeClient, newCluster(clusterName),
 					newMetal3Cluster(metal3ClusterName, bmcOwnerRef,
-						&infrav1.Metal3ClusterSpec{NoCloudProvider: true}, nil,
+						&infrav1.Metal3ClusterSpec{NoCloudProvider: ptr.To(true), CloudProviderEnabled: ptr.To(false)}, nil,
 					),
 					&clusterv1.Machine{}, &infrav1.Metal3Machine{}, logr.Discard(),
 				)
 				if tc.M3MHasHostAnnotation {
 					machineMgr, err = NewMachineManager(fakeClient, newCluster(clusterName),
 						newMetal3Cluster(metal3ClusterName, bmcOwnerRef,
-							&infrav1.Metal3ClusterSpec{NoCloudProvider: true}, nil,
+							&infrav1.Metal3ClusterSpec{NoCloudProvider: ptr.To(true), CloudProviderEnabled: ptr.To(false)}, nil,
 						),
 						&clusterv1.Machine{}, &infrav1.Metal3Machine{
 							ObjectMeta: metav1.ObjectMeta{
@@ -2731,7 +2731,7 @@ var _ = Describe("Metal3Machine manager", func() {
 				M3MHasHostAnnotation: true,
 			}),
 		)
-		DescribeTable("Test SetNodeProviderID with noCloudProvider set to false",
+		DescribeTable("Test SetNodeProviderID with CloudProviderEnabled set to true",
 			func(tc testCaseSetNodePoviderID) {
 				BMHHost := newBareMetalHost(baremetalhostName, nil, bmov1alpha1.StateNone, nil, false, "metadata", false, tc.HostID)
 				fakeClient := fake.NewClientBuilder().WithScheme(s).WithObjects(BMHHost).Build()
@@ -2744,7 +2744,7 @@ var _ = Describe("Metal3Machine manager", func() {
 
 				machineMgr, err := NewMachineManager(fakeClient, newCluster(clusterName),
 					newMetal3Cluster(metal3ClusterName, bmcOwnerRef,
-						&infrav1.Metal3ClusterSpec{NoCloudProvider: false}, nil,
+						&infrav1.Metal3ClusterSpec{NoCloudProvider: ptr.To(false), CloudProviderEnabled: ptr.To(true)}, nil,
 					),
 					&clusterv1.Machine{}, &infrav1.Metal3Machine{
 						ObjectMeta: metav1.ObjectMeta{
diff --git a/config/crd/bases/infrastructure.cluster.x-k8s.io_metal3clusters.yaml b/config/crd/bases/infrastructure.cluster.x-k8s.io_metal3clusters.yaml
index 6f7d8e7f92..8b0eb50f9a 100644
--- a/config/crd/bases/infrastructure.cluster.x-k8s.io_metal3clusters.yaml
+++ b/config/crd/bases/infrastructure.cluster.x-k8s.io_metal3clusters.yaml
@@ -68,6 +68,13 @@ spec:
           spec:
             description: Metal3ClusterSpec defines the desired state of Metal3Cluster.
             properties:
+              cloudProviderEnabled:
+                default: true
+                description: |-
+                  Determines if the cluster is to be deployed with an external cloud provider.
+                  If set to false, CAPM3 will use node labels to set providerID on the kubernetes nodes.
+                  If set to true, providerID is set on nodes by other entities and CAPM3 uses the value of the providerID on the m3m resource.
+                type: boolean
               controlPlaneEndpoint:
                 description: ControlPlaneEndpoint represents the endpoint used to
                   communicate with the control plane.
@@ -87,6 +94,8 @@ spec:
                   Determines if the cluster is not to be deployed with an external cloud provider.
                   If set to true, CAPM3 will use node labels to set providerID on the kubernetes nodes.
                   If set to false, providerID is set on nodes by other entities and CAPM3 uses the value of the providerID on the m3m resource.
+
+                  Deprecated: This field is deprecated, use cloudProviderEnabled instead
                 type: boolean
             type: object
           status:
diff --git a/config/crd/bases/infrastructure.cluster.x-k8s.io_metal3clustertemplates.yaml b/config/crd/bases/infrastructure.cluster.x-k8s.io_metal3clustertemplates.yaml
index 405b81984e..017f9ef72d 100644
--- a/config/crd/bases/infrastructure.cluster.x-k8s.io_metal3clustertemplates.yaml
+++ b/config/crd/bases/infrastructure.cluster.x-k8s.io_metal3clustertemplates.yaml
@@ -51,6 +51,13 @@ spec:
                   spec:
                     description: Metal3ClusterSpec defines the desired state of Metal3Cluster.
                     properties:
+                      cloudProviderEnabled:
+                        default: true
+                        description: |-
+                          Determines if the cluster is to be deployed with an external cloud provider.
+                          If set to false, CAPM3 will use node labels to set providerID on the kubernetes nodes.
+                          If set to true, providerID is set on nodes by other entities and CAPM3 uses the value of the providerID on the m3m resource.
+                        type: boolean
                       controlPlaneEndpoint:
                         description: ControlPlaneEndpoint represents the endpoint
                           used to communicate with the control plane.
@@ -72,6 +79,8 @@ spec:
                           Determines if the cluster is not to be deployed with an external cloud provider.
                           If set to true, CAPM3 will use node labels to set providerID on the kubernetes nodes.
                           If set to false, providerID is set on nodes by other entities and CAPM3 uses the value of the providerID on the m3m resource.
+
+                          Deprecated: This field is deprecated, use cloudProviderEnabled instead
                         type: boolean
                     type: object
                 required:
diff --git a/controllers/metal3cluster_controller.go b/controllers/metal3cluster_controller.go
index 264ecb7223..b9b29dcc95 100644
--- a/controllers/metal3cluster_controller.go
+++ b/controllers/metal3cluster_controller.go
@@ -80,6 +80,21 @@ func (r *Metal3ClusterReconciler) Reconcile(ctx context.Context, req ctrl.Reques
 		return ctrl.Result{}, err
 	}
 
+	// This is checking if default values are changed or not if the default
+	// value of CloudProviderEnabled or NoCloudProvider is changed then update
+	// the other value too to avoid conflicts.
+	// TODO: Remove this code after v1.10 when NoCloudProvider is completely
+	// removed. Ref: https://github.com/metal3-io/cluster-api-provider-metal3/issues/2255
+	if metal3Cluster.Spec.CloudProviderEnabled != nil {
+		if !*metal3Cluster.Spec.CloudProviderEnabled {
+			metal3Cluster.Spec.NoCloudProvider = ptr.To(true)
+		}
+	} else if metal3Cluster.Spec.NoCloudProvider != nil {
+		if *metal3Cluster.Spec.NoCloudProvider {
+			metal3Cluster.Spec.CloudProviderEnabled = ptr.To(false)
+		}
+	}
+
 	patchHelper, err := patch.NewHelper(metal3Cluster, r.Client)
 	if err != nil {
 		return ctrl.Result{}, errors.Wrap(err, "failed to init patch helper")
diff --git a/controllers/suite_test.go b/controllers/suite_test.go
index df39b2e1a8..13b4f03e6d 100644
--- a/controllers/suite_test.go
+++ b/controllers/suite_test.go
@@ -33,6 +33,7 @@ import (
 	"k8s.io/client-go/kubernetes/scheme"
 	"k8s.io/client-go/rest"
 	"k8s.io/klog/v2"
+	"k8s.io/utils/ptr"
 	clusterv1 "sigs.k8s.io/cluster-api/api/v1beta1"
 	"sigs.k8s.io/controller-runtime/pkg/client"
 	"sigs.k8s.io/controller-runtime/pkg/envtest"
@@ -168,7 +169,8 @@ func bmcSpec() *infrav1.Metal3ClusterSpec {
 			Host: "192.168.111.249",
 			Port: 6443,
 		},
-		NoCloudProvider: true,
+		NoCloudProvider:      ptr.To(true),
+		CloudProviderEnabled: ptr.To(false),
 	}
 }
 
diff --git a/docs/api.md b/docs/api.md
index c6963c512e..a93c46624b 100644
--- a/docs/api.md
+++ b/docs/api.md
@@ -80,8 +80,13 @@ cluster on Baremetal. It currently has two specification fields :
 
 - **controlPlaneEndpoint**: contains the target cluster API server address and
   port
-- **noCloudProvider**: (true/false) Whether the cluster will not be deployed
-  with an external cloud provider. If set to true, CAPM3 will patch the target
+- **noCloudProvider(Deprecated use CloudProviderEnabled)**: (true/false) Whether
+  the cluster will not be deployed with an external cloud provider. If set to
+  true, CAPM3 will patch the target cluster node objects to add a providerID.
+  This will allow the CAPI process to continue even if the cluster is deployed
+  without cloud provider.
+- **CloudProviderEnabled**: (true/false) Whether the cluster will be deployed
+  with an external cloud provider. If set to false, CAPM3 will patch the target
   cluster node objects to add a providerID. This will allow the CAPI process to
   continue even if the cluster is deployed without cloud provider.
 
@@ -97,7 +102,7 @@ spec:
   controlPlaneEndpoint:
     host: 192.168.111.249
     port: 6443
-  noCloudProvider: true
+  cloudProviderEnabled: false
 ```
 
 ## KubeadmControlPlane
diff --git a/docs/architecture.md b/docs/architecture.md
index a0378b358d..fda090fc09 100644
--- a/docs/architecture.md
+++ b/docs/architecture.md
@@ -121,7 +121,7 @@ metadata:
   name: test1
 spec:
   apiEndpoint: https://192.168.111.249:6443
-  noCloudProvider: true
+  cloudProviderEnabled: false
 ```
 
 Metal3Cluster, after reconciliation
@@ -142,7 +142,7 @@ metadata:
   |----------------------------------------------------------------------------|
 spec:
   apiEndpoint: https://192.168.111.249:6443
-  noCloudProvider: true
+  cloudProviderEnabled: false
 status:
   apiEndpoints:
   - host: 192.168.111.249
diff --git a/examples/cluster/cluster.yaml b/examples/cluster/cluster.yaml
index fbd991681e..b1913e023b 100644
--- a/examples/cluster/cluster.yaml
+++ b/examples/cluster/cluster.yaml
@@ -33,4 +33,4 @@ spec:
   controlPlaneEndpoint:
     host: ${CLUSTER_APIENDPOINT_HOST}
     port: ${CLUSTER_APIENDPOINT_PORT}
-  noCloudProvider: true
\ No newline at end of file
+  cloudProviderEnabled: false
diff --git a/examples/clusterctl-templates/clusterctl-cluster.yaml b/examples/clusterctl-templates/clusterctl-cluster.yaml
index 8381c30def..59bb06ca28 100644
--- a/examples/clusterctl-templates/clusterctl-cluster.yaml
+++ b/examples/clusterctl-templates/clusterctl-cluster.yaml
@@ -30,7 +30,7 @@ spec:
   controlPlaneEndpoint:
     host: ${CLUSTER_APIENDPOINT_HOST}
     port: ${CLUSTER_APIENDPOINT_PORT}
-  noCloudProvider: true
+  cloudProviderEnabled: false
 ---
 kind: KubeadmControlPlane
 apiVersion: controlplane.cluster.x-k8s.io/v1beta1
diff --git a/examples/templates/clusterclass.yaml b/examples/templates/clusterclass.yaml
index 5c52be1eb9..72230d8447 100644
--- a/examples/templates/clusterclass.yaml
+++ b/examples/templates/clusterclass.yaml
@@ -9,7 +9,7 @@ spec:
       controlPlaneEndpoint:
         host: 127.0.0.1
         port: 6443
-      noCloudProvider: true
+        cloudProviderEnabled: false
 ---
 apiVersion: controlplane.cluster.x-k8s.io/v1beta1
 kind: KubeadmControlPlaneTemplate
diff --git a/test/e2e/data/infrastructure-metal3/bases/cluster/cluster-with-kcp.yaml b/test/e2e/data/infrastructure-metal3/bases/cluster/cluster-with-kcp.yaml
index 50fb65f226..d28bc0267e 100644
--- a/test/e2e/data/infrastructure-metal3/bases/cluster/cluster-with-kcp.yaml
+++ b/test/e2e/data/infrastructure-metal3/bases/cluster/cluster-with-kcp.yaml
@@ -29,7 +29,7 @@ spec:
   controlPlaneEndpoint:
     host: ${CLUSTER_APIENDPOINT_HOST}
     port: ${CLUSTER_APIENDPOINT_PORT}
-  noCloudProvider: true
+  cloudProviderEnabled: false
 ---
 apiVersion: controlplane.cluster.x-k8s.io/${CAPI_VERSION}
 kind: KubeadmControlPlane
diff --git a/test/e2e/data/infrastructure-metal3/bases/clusterclass-cluster/cluster-with-kcp.yaml b/test/e2e/data/infrastructure-metal3/bases/clusterclass-cluster/cluster-with-kcp.yaml
index 620ffef6a3..8994c2eaa8 100644
--- a/test/e2e/data/infrastructure-metal3/bases/clusterclass-cluster/cluster-with-kcp.yaml
+++ b/test/e2e/data/infrastructure-metal3/bases/clusterclass-cluster/cluster-with-kcp.yaml
@@ -15,7 +15,7 @@ spec:
       controlPlaneEndpoint:
         host: ${CLUSTER_APIENDPOINT_HOST}
         port: ${CLUSTER_APIENDPOINT_PORT}
-      noCloudProvider: true
+      cloudProviderEnabled: false
 ---
 apiVersion: infrastructure.cluster.x-k8s.io/${CAPM3_VERSION}
 kind: Metal3MachineTemplate
diff --git a/test/e2e/data/infrastructure-metal3/clusterclass-metal3/clusterclass-metal3.yaml b/test/e2e/data/infrastructure-metal3/clusterclass-metal3/clusterclass-metal3.yaml
index 0bb4bf238c..85d2199eaf 100644
--- a/test/e2e/data/infrastructure-metal3/clusterclass-metal3/clusterclass-metal3.yaml
+++ b/test/e2e/data/infrastructure-metal3/clusterclass-metal3/clusterclass-metal3.yaml
@@ -128,7 +128,7 @@ spec:
       controlPlaneEndpoint:
         host: ${CLUSTER_APIENDPOINT_HOST}
         port: ${CLUSTER_APIENDPOINT_PORT}
-      noCloudProvider: true
+      cloudProviderEnabled: false
 ---
 apiVersion: controlplane.cluster.x-k8s.io/${CAPI_VERSION}
 kind: KubeadmControlPlaneTemplate