diff --git a/pkg/agent/loadbalancer/servers.go b/pkg/agent/loadbalancer/servers.go
index 8dfb648bab..116cc246c4 100644
--- a/pkg/agent/loadbalancer/servers.go
+++ b/pkg/agent/loadbalancer/servers.go
@@ -2,17 +2,17 @@ package loadbalancer
 
 import (
 	"context"
-	"errors"
 	"fmt"
 	"math/rand"
 	"net"
-	"net/http"
 	"net/url"
 	"os"
 	"strconv"
 
 	"github.com/k3s-io/k3s/pkg/version"
 	http_dialer "github.com/mwitkow/go-http-dialer"
+	"github.com/pkg/errors"
+	"golang.org/x/net/http/httpproxy"
 	"golang.org/x/net/proxy"
 
 	"github.com/sirupsen/logrus"
@@ -21,28 +21,39 @@ import (
 
 var defaultDialer proxy.Dialer = &net.Dialer{}
 
-func init() {
+// SetHTTPProxy configures a proxy-enabled dialer to be used for all loadbalancer connections,
+// if the agent has been configured to allow use of a HTTP proxy, and the environment has been configured
+// to indicate use of a HTTP proxy for the server URL.
+func SetHTTPProxy(address string) error {
 	// Check if env variable for proxy is set
-	address := os.Getenv(version.ProgramUpper + "_URL")
-
-	if useProxy, _ := strconv.ParseBool(os.Getenv(version.ProgramUpper + "_AGENT_HTTP_PROXY_ALLOWED")); !useProxy {
-		return
+	if useProxy, _ := strconv.ParseBool(os.Getenv(version.ProgramUpper + "_AGENT_HTTP_PROXY_ALLOWED")); !useProxy || address == "" {
+		return nil
 	}
 
-	req, err := http.NewRequest("GET", "https://"+address, nil)
+	serverURL, err := url.Parse(address)
 	if err != nil {
-		logrus.Errorf("Error creating request for address %s: %v", address, err)
+		return errors.Wrapf(err, "failed to parse address %s", address)
 	}
-	proxyURL, err := http.ProxyFromEnvironment(req)
+
+	// Call this directly instead of using the cached environment used by http.ProxyFromEnvironment to allow for testing
+	proxyFromEnvironment := httpproxy.FromEnvironment().ProxyFunc()
+	proxyURL, err := proxyFromEnvironment(serverURL)
 	if err != nil {
-		logrus.Errorf("Error getting the proxy for address %s: %v", address, err)
+		return errors.Wrapf(err, "failed to get proxy for address %s", address)
+	}
+	if proxyURL == nil {
+		logrus.Debug(version.ProgramUpper + "_AGENT_HTTP_PROXY_ALLOWED is true but no proxy is configured for URL " + serverURL.String())
+		return nil
 	}
 
-	if dialer, err := proxyDialer(proxyURL); err != nil {
-		logrus.Errorf("Error creating the proxyDialer for  %s: %v", address, err)
-	} else {
-		defaultDialer = dialer
+	dialer, err := proxyDialer(proxyURL)
+	if err != nil {
+		return errors.Wrapf(err, "failed to create proxy dialer for %s", proxyURL)
 	}
+
+	defaultDialer = dialer
+	logrus.Debugf("Using proxy %s for agent connection to %s", proxyURL, serverURL)
+	return nil
 }
 
 func (lb *LoadBalancer) setServers(serverAddresses []string) bool {
diff --git a/pkg/agent/loadbalancer/servers_test.go b/pkg/agent/loadbalancer/servers_test.go
new file mode 100644
index 0000000000..c8b8b5b924
--- /dev/null
+++ b/pkg/agent/loadbalancer/servers_test.go
@@ -0,0 +1,156 @@
+package loadbalancer
+
+import (
+	"fmt"
+	"net"
+	"os"
+	"strings"
+	"testing"
+
+	"github.com/k3s-io/k3s/pkg/version"
+	"github.com/sirupsen/logrus"
+)
+
+var defaultEnv map[string]string
+var proxyEnvs = []string{version.ProgramUpper + "_AGENT_HTTP_PROXY_ALLOWED", "HTTP_PROXY", "HTTPS_PROXY", "NO_PROXY", "http_proxy", "https_proxy", "no_proxy"}
+
+func init() {
+	logrus.SetLevel(logrus.DebugLevel)
+}
+
+func prepareEnv(env ...string) {
+	defaultDialer = &net.Dialer{}
+	defaultEnv = map[string]string{}
+	for _, e := range proxyEnvs {
+		if v, ok := os.LookupEnv(e); ok {
+			defaultEnv[e] = v
+			os.Unsetenv(e)
+		}
+	}
+	for _, e := range env {
+		k, v, _ := strings.Cut(e, "=")
+		os.Setenv(k, v)
+	}
+}
+
+func restoreEnv() {
+	for _, e := range proxyEnvs {
+		if v, ok := defaultEnv[e]; ok {
+			os.Setenv(e, v)
+		} else {
+			os.Unsetenv(e)
+		}
+	}
+}
+
+func Test_UnitSetHTTPProxy(t *testing.T) {
+	type args struct {
+		address string
+	}
+	tests := []struct {
+		name       string
+		args       args
+		setup      func() error
+		teardown   func() error
+		wantErr    bool
+		wantDialer string
+	}{
+		{
+			name:       "Default Proxy",
+			args:       args{address: "https://1.2.3.4:6443"},
+			wantDialer: "*net.Dialer",
+			setup: func() error {
+				prepareEnv(version.ProgramUpper+"_AGENT_HTTP_PROXY_ALLOWED=", "HTTP_PROXY=", "HTTPS_PROXY=", "NO_PROXY=")
+				return nil
+			},
+			teardown: func() error {
+				restoreEnv()
+				return nil
+			},
+		},
+		{
+			name:       "Agent Proxy Enabled",
+			args:       args{address: "https://1.2.3.4:6443"},
+			wantDialer: "*http_dialer.HttpTunnel",
+			setup: func() error {
+				prepareEnv(version.ProgramUpper+"_AGENT_HTTP_PROXY_ALLOWED=true", "HTTP_PROXY=http://proxy:8080", "HTTPS_PROXY=http://proxy:8080", "NO_PROXY=")
+				return nil
+			},
+			teardown: func() error {
+				restoreEnv()
+				return nil
+			},
+		},
+		{
+			name:       "Agent Proxy Enabled with Bogus Proxy",
+			args:       args{address: "https://1.2.3.4:6443"},
+			wantDialer: "*net.Dialer",
+			wantErr:    true,
+			setup: func() error {
+				prepareEnv(version.ProgramUpper+"_AGENT_HTTP_PROXY_ALLOWED=true", "HTTP_PROXY=proxy proxy", "HTTPS_PROXY=proxy proxy", "NO_PROXY=")
+				return nil
+			},
+			teardown: func() error {
+				restoreEnv()
+				return nil
+			},
+		},
+		{
+			name:       "Agent Proxy Enabled with Bogus Server",
+			args:       args{address: "https://1.2.3.4:k3s"},
+			wantDialer: "*net.Dialer",
+			wantErr:    true,
+			setup: func() error {
+				prepareEnv(version.ProgramUpper+"_AGENT_HTTP_PROXY_ALLOWED=true", "HTTP_PROXY=http://proxy:8080", "HTTPS_PROXY=http://proxy:8080", "NO_PROXY=")
+				return nil
+			},
+			teardown: func() error {
+				restoreEnv()
+				return nil
+			},
+		},
+		{
+			name:       "Agent Proxy Enabled but IP Excluded",
+			args:       args{address: "https://1.2.3.4:6443"},
+			wantDialer: "*net.Dialer",
+			setup: func() error {
+				prepareEnv(version.ProgramUpper+"_AGENT_HTTP_PROXY_ALLOWED=true", "HTTP_PROXY=http://proxy:8080", "HTTPS_PROXY=http://proxy:8080", "NO_PROXY=1.2.0.0/16")
+				return nil
+			},
+			teardown: func() error {
+				restoreEnv()
+				return nil
+			},
+		},
+		{
+			name:       "Agent Proxy Enabled but Domain Excluded",
+			args:       args{address: "https://server.example.com:6443"},
+			wantDialer: "*net.Dialer",
+			setup: func() error {
+				prepareEnv(version.ProgramUpper+"_AGENT_HTTP_PROXY_ALLOWED=true", "HTTP_PROXY=http://proxy:8080", "HTTPS_PROXY=http://proxy:8080", "NO_PROXY=*.example.com")
+				return nil
+			},
+			teardown: func() error {
+				restoreEnv()
+				return nil
+			},
+		},
+	}
+	for _, tt := range tests {
+		t.Run(tt.name, func(t *testing.T) {
+			defer tt.teardown()
+			if err := tt.setup(); err != nil {
+				t.Errorf("Setup for SetHTTPProxy() failed = %v", err)
+				return
+			}
+			err := SetHTTPProxy(tt.args.address)
+			t.Logf("SetHTTPProxy() error = %v", err)
+			if (err != nil) != tt.wantErr {
+				t.Errorf("SetHTTPProxy() error = %v, wantErr %v", err, tt.wantErr)
+			}
+			if dialerType := fmt.Sprintf("%T", defaultDialer); dialerType != tt.wantDialer {
+				t.Errorf("Got wrong dialer type %s, wanted %s", dialerType, tt.wantDialer)
+			}
+		})
+	}
+}
diff --git a/pkg/agent/proxy/apiproxy.go b/pkg/agent/proxy/apiproxy.go
index eef4d0e634..0cdc583d26 100644
--- a/pkg/agent/proxy/apiproxy.go
+++ b/pkg/agent/proxy/apiproxy.go
@@ -41,6 +41,9 @@ func NewSupervisorProxy(ctx context.Context, lbEnabled bool, dataDir, supervisor
 	}
 
 	if lbEnabled {
+		if err := loadbalancer.SetHTTPProxy(supervisorURL); err != nil {
+			return nil, err
+		}
 		lb, err := loadbalancer.New(ctx, dataDir, loadbalancer.SupervisorServiceName, supervisorURL, p.lbServerPort, isIPv6)
 		if err != nil {
 			return nil, err