diff --git a/docs/dev/config_fsm.md b/docs/dev/config_fsm.md
index 24f03d0f..344bcb86 100644
--- a/docs/dev/config_fsm.md
+++ b/docs/dev/config_fsm.md
@@ -1,6 +1,6 @@
 # Configuration applied state machine
 The State diagram of the configuration state machine is generated below in dot format.
- A Link to the rendered diagram is at: [link](https://dreampuf.github.io/GraphvizOnline/?presentation#digraph%20%7B%0A%09compound=true%3B%0A%09node%20%5Bshape=Mrecord%5D%3B%0A%09rankdir=%22LR%22%3B%0A%0A%09ClusterNotReady%20%5Blabel=%22ClusterNotReady%7Centry%20%2F%20func2%22%5D%3B%0A%09Completed%20%5Blabel=%22Completed%7Centry%20%2F%20func5%22%5D%3B%0A%09InProgress%20%5Blabel=%22InProgress%7Centry%20%2F%20func3%22%5D%3B%0A%09Missing%20%5Blabel=%22Missing%7Centry%20%2F%20func1%22%5D%3B%0A%09OutOfDate%20%5Blabel=%22OutOfDate%7Centry%20%2F%20func4%22%5D%3B%0A%09Start%20%5Blabel=%22Start%22%5D%3B%0A%09TimedOut%20%5Blabel=%22TimedOut%7Centry%20%2F%20func6%22%5D%3B%0A%09ClusterNotReady%20-%3E%20ClusterNotReady%20%5Blabel=%22ClusterNotReady-&gt%3BClusterNotReady%22%5D%3B%0A%09ClusterNotReady%20-%3E%20InProgress%20%5Blabel=%22ClusterNotReady-&gt%3BInProgress%22%5D%3B%0A%09ClusterNotReady%20-%3E%20Missing%20%5Blabel=%22ClusterNotReady-&gt%3BMissing%22%5D%3B%0A%09ClusterNotReady%20-%3E%20TimedOut%20%5Blabel=%22ClusterNotReady-&gt%3BTimedOut%22%5D%3B%0A%09Completed%20-%3E%20Completed%20%5Blabel=%22Completed-&gt%3BCompleted%22%5D%3B%0A%09Completed%20-%3E%20InProgress%20%5Blabel=%22Completed-&gt%3BInProgress%22%5D%3B%0A%09InProgress%20-%3E%20ClusterNotReady%20%5Blabel=%22InProgress-&gt%3BClusterNotReady%22%5D%3B%0A%09InProgress%20-%3E%20Completed%20%5Blabel=%22InProgress-&gt%3BCompleted%22%5D%3B%0A%09InProgress%20-%3E%20InProgress%20%5Blabel=%22InProgress-&gt%3BInProgress%22%5D%3B%0A%09InProgress%20-%3E%20OutOfDate%20%5Blabel=%22InProgress-&gt%3BOutOfDate%22%5D%3B%0A%09InProgress%20-%3E%20TimedOut%20%5Blabel=%22InProgress-&gt%3BTimedOut%22%5D%3B%0A%09Missing%20-%3E%20ClusterNotReady%20%5Blabel=%22Missing-&gt%3BClusterNotReady%22%5D%3B%0A%09Missing%20-%3E%20Missing%20%5Blabel=%22Missing-&gt%3BMissing%22%5D%3B%0A%09OutOfDate%20-%3E%20InProgress%20%5Blabel=%22OutOfDate-&gt%3BInProgress%22%5D%3B%0A%09OutOfDate%20-%3E%20OutOfDate%20%5Blabel=%22OutOfDate-&gt%3BOutOfDate%22%5D%3B%0A%09Start%20-%3E%20Missing%20%5Blabel=%22Start-&gt%3BMissing%22%5D%3B%0A%09TimedOut%20-%3E%20InProgress%20%5Blabel=%22TimedOut-&gt%3BInProgress%22%5D%3B%0A%09TimedOut%20-%3E%20TimedOut%20%5Blabel=%22TimedOut-&gt%3BTimedOut%22%5D%3B%0A%09init%20%5Blabel=%22%22%2C%20shape=point%5D%3B%0A%09init%20-%3E%20Start%0A%7D%0A)
+ A Link to the rendered diagram is at: [link](https://dreampuf.github.io/GraphvizOnline/?presentation#digraph%20%7B%0A%09compound=true%3B%0A%09node%20%5Bshape=Mrecord%5D%3B%0A%09rankdir=%22LR%22%3B%0A%0A%09ClusterNotReady%20%5Blabel=%22ClusterNotReady%7Centry%20%2F%20func2%22%5D%3B%0A%09Completed%20%5Blabel=%22Completed%7Centry%20%2F%20func5%22%5D%3B%0A%09InProgress%20%5Blabel=%22InProgress%7Centry%20%2F%20func3%22%5D%3B%0A%09Missing%20%5Blabel=%22Missing%7Centry%20%2F%20func1%22%5D%3B%0A%09OutOfDate%20%5Blabel=%22OutOfDate%7Centry%20%2F%20func4%22%5D%3B%0A%09Start%20%5Blabel=%22Start%22%5D%3B%0A%09TimedOut%20%5Blabel=%22TimedOut%7Centry%20%2F%20func6%22%5D%3B%0A%09ClusterNotReady%20-%3E%20ClusterNotReady%20%5Blabel=%22ClusterNotReady-&gt%3BClusterNotReady%22%5D%3B%0A%09ClusterNotReady%20-%3E%20InProgress%20%5Blabel=%22ClusterNotReady-&gt%3BInProgress%22%5D%3B%0A%09ClusterNotReady%20-%3E%20Missing%20%5Blabel=%22ClusterNotReady-&gt%3BMissing%22%5D%3B%0A%09Completed%20-%3E%20Completed%20%5Blabel=%22Completed-&gt%3BCompleted%22%5D%3B%0A%09Completed%20-%3E%20InProgress%20%5Blabel=%22Completed-&gt%3BInProgress%22%5D%3B%0A%09InProgress%20-%3E%20ClusterNotReady%20%5Blabel=%22InProgress-&gt%3BClusterNotReady%22%5D%3B%0A%09InProgress%20-%3E%20Completed%20%5Blabel=%22InProgress-&gt%3BCompleted%22%5D%3B%0A%09InProgress%20-%3E%20InProgress%20%5Blabel=%22InProgress-&gt%3BInProgress%22%5D%3B%0A%09InProgress%20-%3E%20OutOfDate%20%5Blabel=%22InProgress-&gt%3BOutOfDate%22%5D%3B%0A%09InProgress%20-%3E%20TimedOut%20%5Blabel=%22InProgress-&gt%3BTimedOut%22%5D%3B%0A%09Missing%20-%3E%20ClusterNotReady%20%5Blabel=%22Missing-&gt%3BClusterNotReady%22%5D%3B%0A%09Missing%20-%3E%20Missing%20%5Blabel=%22Missing-&gt%3BMissing%22%5D%3B%0A%09OutOfDate%20-%3E%20InProgress%20%5Blabel=%22OutOfDate-&gt%3BInProgress%22%5D%3B%0A%09OutOfDate%20-%3E%20OutOfDate%20%5Blabel=%22OutOfDate-&gt%3BOutOfDate%22%5D%3B%0A%09Start%20-%3E%20Missing%20%5Blabel=%22Start-&gt%3BMissing%22%5D%3B%0A%09TimedOut%20-%3E%20InProgress%20%5Blabel=%22TimedOut-&gt%3BInProgress%22%5D%3B%0A%09TimedOut%20-%3E%20TimedOut%20%5Blabel=%22TimedOut-&gt%3BTimedOut%22%5D%3B%0A%09init%20%5Blabel=%22%22%2C%20shape=point%5D%3B%0A%09init%20-%3E%20Start%0A%7D%0A)
 ```
 digraph {
 	compound=true;
@@ -17,7 +17,6 @@ digraph {
 	ClusterNotReady -> ClusterNotReady [label="ClusterNotReady->ClusterNotReady"];
 	ClusterNotReady -> InProgress [label="ClusterNotReady->InProgress"];
 	ClusterNotReady -> Missing [label="ClusterNotReady->Missing"];
-	ClusterNotReady -> TimedOut [label="ClusterNotReady->TimedOut"];
 	Completed -> Completed [label="Completed->Completed"];
 	Completed -> InProgress [label="Completed->InProgress"];
 	InProgress -> ClusterNotReady [label="InProgress->ClusterNotReady"];
diff --git a/internal/configfsm/fsm.go b/internal/configfsm/fsm.go
index 8ea777a9..a3d85471 100644
--- a/internal/configfsm/fsm.go
+++ b/internal/configfsm/fsm.go
@@ -27,8 +27,7 @@ const (
 	TimedOutToInProgress        Trigger = Trigger(TimedOut + To + InProgress)
 
 	// Transitions to TimedOut state
-	ClusterNotReadyToTimedOut Trigger = Trigger(ClusterNotReady + To + TimedOut)
-	InProgressToTimedOut      Trigger = Trigger(InProgress + To + TimedOut)
+	InProgressToTimedOut Trigger = Trigger(InProgress + To + TimedOut)
 
 	// Transitions to Completed state
 	InProgressToCompleted Trigger = Trigger(InProgress + To + Completed)
@@ -129,17 +128,14 @@ func InitFSM(state string) (fsm *stateless.StateMachine, err error) {
 			if !fsmHelper.ArePoliciesMatched() {
 				return fsm.Fire(ClusterNotReadyToMissing, fsmHelper)
 			}
-			if fsmHelper.IsTimedOut() {
-				return fsm.Fire(ClusterNotReadyToTimedOut, fsmHelper)
-			}
-			if fsmHelper.IsClusterReady() {
+			if fsmHelper.IsClusterReady() ||
+				fsmHelper.IsTimedOut() {
 				return fsm.Fire(ClusterNotReadyToInProgress, fsmHelper)
 			}
 			return nil
 		}).
 		Permit(ClusterNotReadyToMissing, Missing).
 		Permit(ClusterNotReadyToInProgress, InProgress).
-		Permit(ClusterNotReadyToTimedOut, TimedOut).
 		PermitReentry(ClusterNotReadyToClusterNotReady)
 	fsm.Configure(InProgress).
 		OnEntry(func(_ context.Context, args ...any) error {
@@ -150,13 +146,15 @@ func InitFSM(state string) (fsm *stateless.StateMachine, err error) {
 				(!fsmHelper.IsNonCompliantPolicyInEnforce() && !fsmHelper.IsAllPoliciesCompliant()) {
 				fsmHelper.SetNonCompliantAtNow()
 			}
-			if !fsmHelper.ArePoliciesMatched() ||
-				!fsmHelper.IsClusterReady() {
+			if !fsmHelper.ArePoliciesMatched() {
 				return fsm.Fire(InProgressToClusterNotReady, fsmHelper)
 			}
 			if fsmHelper.IsTimedOut() {
 				return fsm.Fire(InProgressToTimedOut, fsmHelper)
 			}
+			if !fsmHelper.IsClusterReady() {
+				return fsm.Fire(InProgressToClusterNotReady, fsmHelper)
+			}
 			if !fsmHelper.IsNonCompliantPolicyInEnforce() && !fsmHelper.IsAllPoliciesCompliant() {
 				return fsm.Fire(InProgressToOutOfDate, fsmHelper)
 			}