diff --git a/packages/dracut/sysext/build.yaml b/packages/dracut/sysext/build.yaml
index 5602136aa..380f3304d 100644
--- a/packages/dracut/sysext/build.yaml
+++ b/packages/dracut/sysext/build.yaml
@@ -1,6 +1,7 @@
 image: alpine
 package_dir: "/package"
 steps:
-- mkdir -p /package/etc/systemd/network
 - mkdir -p /package/etc/dracut.conf.d
-- cp -rfv conf/* /package/etc/dracut.conf.d
+- mkdir -p /package/usr/lib/dracut/modules.d
+- cp files/90-kairos-sysext.conf /package/etc/dracut.conf.d/90-kairos-sysext.conf
+- cp -r files/90kairos-sysext /package/usr/lib/dracut/modules.d/90kairos-sysext
diff --git a/packages/dracut/sysext/collection.yaml b/packages/dracut/sysext/collection.yaml
index 19f07577d..1acd2a14a 100644
--- a/packages/dracut/sysext/collection.yaml
+++ b/packages/dracut/sysext/collection.yaml
@@ -1,4 +1,4 @@
 packages:
-- name: "sysext"
+- name: "kairos-sysext"
   category: "dracut"
-  version: "0.9"
+  version: "1.0.0"
diff --git a/packages/dracut/sysext/conf/90-kairos-sysext.conf b/packages/dracut/sysext/conf/90-kairos-sysext.conf
deleted file mode 100644
index cf5a6ffae..000000000
--- a/packages/dracut/sysext/conf/90-kairos-sysext.conf
+++ /dev/null
@@ -1 +0,0 @@
-add_dracutmodules+=" systemd-sysext "
diff --git a/packages/dracut/sysext/files/90-kairos-sysext.conf b/packages/dracut/sysext/files/90-kairos-sysext.conf
new file mode 100644
index 000000000..0938eb06e
--- /dev/null
+++ b/packages/dracut/sysext/files/90-kairos-sysext.conf
@@ -0,0 +1 @@
+add_dracutmodules+=" kairos-sysext "
diff --git a/packages/dracut/sysext/files/90kairos-sysext/module-setup.sh b/packages/dracut/sysext/files/90kairos-sysext/module-setup.sh
new file mode 100644
index 000000000..99cd82642
--- /dev/null
+++ b/packages/dracut/sysext/files/90kairos-sysext/module-setup.sh
@@ -0,0 +1,35 @@
+#!/bin/bash
+# This module tries to add systemd-sysext module to the initramfs if its in the system, otherwise it does nothing
+
+# called by dracut
+check() {
+    return 0
+}
+
+# called by dracut
+depends() {
+    # If the binary(s) requirements are not fulfilled the module can't be installed.
+    require_binaries systemd-sysext || return 1
+    # Check if the module files exists
+    # This is not normal but on ubuntu-22 the binary for sysext exists but the dracut module doesnt, so we
+    # need to do further checks before including it otherwise it will fail to build the initrd
+    files=( "${dracutbasedir}"/modules.d/??systemd-sysext )
+    [ "${#files[@]}" -ge 2 ] && return 1
+    if [ -d "${files[0]}" ]; then
+        echo "systemd-sysext"
+        return 0
+    else
+        dinfo "module 'systemd-sysext' will not be installed, because module dir could not be found!"
+    fi
+    return 1
+}
+
+# called by dracut
+installkernel() {
+    return 0
+}
+
+# called by dracut
+install() {
+    return 0
+}