diff --git a/addons/controllers/cpi/vspherecpiconfig_controller.go b/addons/controllers/cpi/vspherecpiconfig_controller.go
index 46ba073f11..03c8bd3191 100644
--- a/addons/controllers/cpi/vspherecpiconfig_controller.go
+++ b/addons/controllers/cpi/vspherecpiconfig_controller.go
@@ -24,6 +24,8 @@ import (
 	"sigs.k8s.io/controller-runtime/pkg/client"
 	"sigs.k8s.io/controller-runtime/pkg/controller"
 	"sigs.k8s.io/controller-runtime/pkg/controller/controllerutil"
+	"sigs.k8s.io/controller-runtime/pkg/handler"
+	"sigs.k8s.io/controller-runtime/pkg/source"
 
 	addonconfig "github.com/vmware-tanzu/tanzu-framework/addons/pkg/config"
 	"github.com/vmware-tanzu/tanzu-framework/addons/pkg/constants"
@@ -79,18 +81,18 @@ var vsphereCPIProviderServiceAccountAggregatedClusterRole = &rbacv1.ClusterRole{
 
 // Reconcile the VSphereCPIConfig CRD
 func (r *VSphereCPIConfigReconciler) Reconcile(ctx context.Context, req ctrl.Request) (ctrl.Result, error) {
-	r.Log = r.Log.WithValues("VSphereCPIConfig", req.NamespacedName)
+	log := r.Log.WithValues("VSphereCPIConfig", req.NamespacedName)
 
-	r.Log.Info("Start reconciliation for VSphereCPIConfig")
+	log.Info("Start reconciliation for VSphereCPIConfig")
 
 	// fetch VSphereCPIConfig resource
 	cpiConfig := &cpiv1alpha1.VSphereCPIConfig{}
 	if err := r.Client.Get(ctx, req.NamespacedName, cpiConfig); err != nil {
 		if apierrors.IsNotFound(err) {
-			r.Log.Info("VSphereCPIConfig resource not found")
+			log.Info("VSphereCPIConfig resource not found")
 			return ctrl.Result{}, nil
 		}
-		r.Log.Error(err, "Unable to fetch VSphereCPIConfig resource")
+		log.Error(err, "Unable to fetch VSphereCPIConfig resource")
 		return ctrl.Result{}, err
 	}
 
@@ -102,11 +104,11 @@ func (r *VSphereCPIConfigReconciler) Reconcile(ctx context.Context, req ctrl.Req
 		return ctrl.Result{}, err // no need to requeue if cluster is not found
 	}
 	if cpiConfig.Spec.VSphereCPI.Mode == nil {
-		r.Log.Info("VSphere CPI mode is not provided.")
+		log.Info("VSphere CPI mode is not provided.")
 		return ctrl.Result{}, nil // no need to requeue if CPI mode is not provided
 	}
 	if res, err := r.reconcileVSphereCPIConfig(ctx, cpiConfig, cluster); err != nil {
-		r.Log.Error(err, "Failed to reconcile VSphereCPIConfig")
+		log.Error(err, "Failed to reconcile VSphereCPIConfig")
 		return res, err
 	}
 	return ctrl.Result{}, nil
@@ -244,5 +246,9 @@ func (r *VSphereCPIConfigReconciler) SetupWithManager(_ context.Context, mgr ctr
 		For(&cpiv1alpha1.VSphereCPIConfig{}).
 		WithOptions(options).
 		WithEventFilter(predicates.ConfigOfKindWithoutAnnotation(constants.TKGAnnotationTemplateConfig, constants.VSphereCPIConfigKind, r.Config.SystemNamespace, r.Log)).
+		Watches(
+			&source.Kind{Type: &capvvmwarev1beta1.VSphereCluster{}},
+			handler.EnqueueRequestsFromMapFunc(r.VSphereClusterToVSphereCPIConfig),
+		).
 		Complete(r)
 }
diff --git a/addons/controllers/cpi/vspherecpiconfig_utils.go b/addons/controllers/cpi/vspherecpiconfig_utils.go
index 0b0de093ae..7e1548ae00 100644
--- a/addons/controllers/cpi/vspherecpiconfig_utils.go
+++ b/addons/controllers/cpi/vspherecpiconfig_utils.go
@@ -20,6 +20,9 @@ import (
 	capvv1beta1 "sigs.k8s.io/cluster-api-provider-vsphere/apis/v1beta1"
 	capvvmwarev1beta1 "sigs.k8s.io/cluster-api-provider-vsphere/apis/vmware/v1beta1"
 	clusterapiv1beta1 "sigs.k8s.io/cluster-api/api/v1beta1"
+	clusterapiutil "sigs.k8s.io/cluster-api/util"
+	ctrl "sigs.k8s.io/controller-runtime"
+	"sigs.k8s.io/controller-runtime/pkg/client"
 
 	"github.com/vmware-tanzu/tanzu-framework/addons/pkg/constants"
 	pkgtypes "github.com/vmware-tanzu/tanzu-framework/addons/pkg/types"
@@ -27,6 +30,52 @@ import (
 	cpiv1alpha1 "github.com/vmware-tanzu/tanzu-framework/apis/addonconfigs/cpi/v1alpha1"
 )
 
+// VSphereClusterToVSphereCPIConfig returns a list of Requests with VSphereCPIConfig ObjectKey based on Cluster events
+func (r *VSphereCPIConfigReconciler) VSphereClusterToVSphereCPIConfig(o client.Object) []ctrl.Request {
+	cluster, ok := o.(*capvvmwarev1beta1.VSphereCluster)
+	if !ok {
+		r.Log.Error(errors.New("invalid type"),
+			"Expected to receive Cluster resource",
+			"actualType", fmt.Sprintf("%T", o))
+		return nil
+	}
+
+	r.Log.V(4).Info("Mapping VSphereCluster to VSphereCPIConfig")
+
+	cs := &cpiv1alpha1.VSphereCPIConfigList{}
+	_ = r.List(context.Background(), cs)
+
+	requests := []ctrl.Request{}
+	for i := 0; i < len(cs.Items); i++ {
+		config := &cs.Items[i]
+		if config.Namespace == cluster.Namespace {
+
+			// avoid enqueuing reconcile requests for template vSphereCPIConfig CRs in event handler of Cluster CR
+			if _, ok := config.Annotations[constants.TKGAnnotationTemplateConfig]; ok && config.Namespace == r.Config.SystemNamespace {
+				continue
+			}
+
+			// corresponding vsphereCPIConfig should have following ownerRef
+			ownerReference := metav1.OwnerReference{
+				APIVersion: clusterapiv1beta1.GroupVersion.String(),
+				Kind:       cluster.Kind,
+				Name:       cluster.Name,
+				UID:        cluster.UID,
+			}
+			if clusterapiutil.HasOwnerRef(config.OwnerReferences, ownerReference) || config.Name == fmt.Sprintf("%s-%s-package", cluster.Name, constants.CPIAddonName) {
+				r.Log.V(4).Info("Adding VSphereCPIConfig for reconciliation",
+					constants.NamespaceLogKey, config.Namespace, constants.NameLogKey, config.Name)
+
+				requests = append(requests, ctrl.Request{
+					NamespacedName: clusterapiutil.ObjectKey(config),
+				})
+			}
+		}
+	}
+
+	return requests
+}
+
 // mapCPIConfigToDataValuesNonParavirtual generates CPI data values for non-paravirtual modes
 func (r *VSphereCPIConfigReconciler) mapCPIConfigToDataValuesNonParavirtual( // nolint
 	ctx context.Context,
@@ -367,8 +416,8 @@ func (r *VSphereCPIConfigReconciler) getOwnerCluster(ctx context.Context, cpiCon
 	}
 	if err := r.Client.Get(ctx, types.NamespacedName{Namespace: cpiConfig.Namespace, Name: clusterName}, cluster); err != nil {
 		if apierrors.IsNotFound(err) {
-			r.Log.Info(fmt.Sprintf("Cluster resource '%s/%s' not found", cpiConfig.Namespace, clusterName))
-			return nil, nil
+			r.Log.Error(err, fmt.Sprintf("Cluster resource '%s/%s' not found", cpiConfig.Namespace, clusterName))
+			return nil, err
 		}
 		r.Log.Error(err, fmt.Sprintf("Unable to fetch cluster '%s/%s'", cpiConfig.Namespace, clusterName))
 		return nil, err