diff --git a/pkg/machine/e2e/config_init_test.go b/pkg/machine/e2e/config_init_test.go
index 9d33e2d3d2..0423010477 100644
--- a/pkg/machine/e2e/config_init_test.go
+++ b/pkg/machine/e2e/config_init_test.go
@@ -90,6 +90,11 @@ func (i *initMachine) buildCmd(m *machineTestBuilder) []string {
 			if strings.Contains(session.errorToString(), "VM does not exist") {
 				return
 			}
+
+			// FIXME:#24344 work-around for custom ignition removal
+			if strings.Contains(session.errorToString(), "failed to remove machines files: unable to find connection named") {
+				return
+			}
 		}
 		Expect(session).To(Exit(0))
 	})
diff --git a/pkg/machine/e2e/init_test.go b/pkg/machine/e2e/init_test.go
index 58fa3f84ff..7b5e35e96a 100644
--- a/pkg/machine/e2e/init_test.go
+++ b/pkg/machine/e2e/init_test.go
@@ -224,6 +224,50 @@ var _ = Describe("podman machine init", func() {
 		Expect(sshSession.outputToString()).To(ContainSubstring("example"))
 	})
 
+	It("machine init with ignition path", func() {
+		skipIfWSL("Ignition is not compatible with WSL machines since they are not based on Fedora CoreOS")
+
+		tmpDir, err := os.MkdirTemp("", "")
+		defer func() { _ = utils.GuardedRemoveAll(tmpDir) }()
+		Expect(err).ToNot(HaveOccurred())
+
+		tmpFile, err := os.CreateTemp(tmpDir, "test-ignition-*.ign")
+		Expect(err).ToNot(HaveOccurred())
+
+		mockIgnitionContent := `{"ignition":{"version":"3.4.0"},"passwd":{"users":[{"name":"core"}]}}`
+
+		_, err = tmpFile.WriteString(mockIgnitionContent)
+		Expect(err).ToNot(HaveOccurred())
+
+		err = tmpFile.Close()
+		Expect(err).ToNot(HaveOccurred())
+
+		name := randomString()
+		i := new(initMachine)
+		session, err := mb.setName(name).setCmd(i.withImage(mb.imagePath).withIgnitionPath(tmpFile.Name())).run()
+		Expect(err).ToNot(HaveOccurred())
+		Expect(session).To(Exit(0))
+
+		configDir := filepath.Join(testDir, ".config", "containers", "podman", "machine", testProvider.VMType().String())
+
+		// test that all required machine files are created
+		fileExtensions := []string{".lock", ".json", ".ign"}
+		for _, ext := range fileExtensions {
+			filename := filepath.Join(configDir, fmt.Sprintf("%s%s", name, ext))
+
+			_, err := os.Stat(filename)
+			Expect(err).ToNot(HaveOccurred(), fmt.Sprintf("file %v does not exist", filename))
+		}
+
+		// enforce that the raw ignition is copied over verbatim
+		createdIgn := filepath.Join(configDir, fmt.Sprintf("%s%s", name, ".ign"))
+		contentWanted, err := os.ReadFile(tmpFile.Name())
+		Expect(err).ToNot(HaveOccurred())
+		contentGot, err := os.ReadFile(createdIgn)
+		Expect(err).ToNot(HaveOccurred())
+		Expect(contentWanted).To(Equal(contentGot), "The ignition file provided and the ignition file created do not match")
+	})
+
 	It("machine init rootless docker.sock check", func() {
 		i := initMachine{}
 		name := randomString()
diff --git a/pkg/machine/shim/host.go b/pkg/machine/shim/host.go
index 948ebe11ab..9456683ece 100644
--- a/pkg/machine/shim/host.go
+++ b/pkg/machine/shim/host.go
@@ -196,30 +196,38 @@ func Init(opts machineDefine.InitOptions, mp vmconfigs.VMProvider) error {
 	// copy it into the conf dir
 	if len(opts.IgnitionPath) > 0 {
 		err = ignBuilder.BuildWithIgnitionFile(opts.IgnitionPath)
-		return err
-	}
 
-	err = ignBuilder.GenerateIgnitionConfig()
-	if err != nil {
-		return err
-	}
+		if err != nil {
+			return err
+		}
+	} else {
+		err = ignBuilder.GenerateIgnitionConfig()
+		if err != nil {
+			return err
+		}
 
-	readyIgnOpts, err := mp.PrepareIgnition(mc, &ignBuilder)
-	if err != nil {
-		return err
-	}
+		readyIgnOpts, err := mp.PrepareIgnition(mc, &ignBuilder)
+		if err != nil {
+			return err
+		}
 
-	readyUnitFile, err := ignition.CreateReadyUnitFile(mp.VMType(), readyIgnOpts)
-	if err != nil {
-		return err
-	}
+		readyUnitFile, err := ignition.CreateReadyUnitFile(mp.VMType(), readyIgnOpts)
+		if err != nil {
+			return err
+		}
+
+		readyUnit := ignition.Unit{
+			Enabled:  ignition.BoolToPtr(true),
+			Name:     "ready.service",
+			Contents: ignition.StrToPtr(readyUnitFile),
+		}
+		ignBuilder.WithUnit(readyUnit)
 
-	readyUnit := ignition.Unit{
-		Enabled:  ignition.BoolToPtr(true),
-		Name:     "ready.service",
-		Contents: ignition.StrToPtr(readyUnitFile),
+		err = ignBuilder.Build()
+		if err != nil {
+			return err
+		}
 	}
-	ignBuilder.WithUnit(readyUnit)
 
 	// Mounts
 	if mp.VMType() != machineDefine.WSLVirt {
@@ -245,11 +253,6 @@ func Init(opts machineDefine.InitOptions, mp vmconfigs.VMProvider) error {
 		return err
 	}
 
-	err = ignBuilder.Build()
-	if err != nil {
-		return err
-	}
-
 	return mc.Write()
 }