diff --git a/vhdbuilder/packer/generate-windows-vhd-configuration.ps1 b/vhdbuilder/packer/generate-windows-vhd-configuration.ps1
index dc471fbcd4d..ffe19bd6fb2 100644
--- a/vhdbuilder/packer/generate-windows-vhd-configuration.ps1
+++ b/vhdbuilder/packer/generate-windows-vhd-configuration.ps1
@@ -16,6 +16,9 @@ $global:aksToolsDir = "c:\aks-tools"
 
 # We need to guarantee that the node provisioning will not fail because the vhd is full before resize-osdisk is called in AKS Windows CSE script.
 $global:lowestFreeSpace = 2*1024*1024*1024 # 2GB
+if ($windowsSKU -Like "23H2*") {
+    $global:lowestFreeSpace = 1*1024*1024*1024 # 1GB
+}
 
 $global:excludeHashComparisionListInAzureChinaCloud = @(
     "calico-windows",