diff --git a/src/libs/kata-types/src/annotations/mod.rs b/src/libs/kata-types/src/annotations/mod.rs
index b3024dff47..80718dc50a 100644
--- a/src/libs/kata-types/src/annotations/mod.rs
+++ b/src/libs/kata-types/src/annotations/mod.rs
@@ -272,7 +272,8 @@ pub const KATA_ANNO_CFG_HYPERVISOR_VIRTIO_FS_EXTRA_ARGS: &str =
 /// A sandbox annotation to specify as the msize for 9p shares.
 pub const KATA_ANNO_CFG_HYPERVISOR_MSIZE_9P: &str = "io.katacontainers.config.hypervisor.msize_9p";
 /// The initdata annotation passed in when CVM launchs
-pub const KATA_ANNO_CFG_RUNTIME_INIT_DATA: &str = "io.katacontainers.config.runtime.cc_init_data";
+pub const KATA_ANNO_CFG_HYPERVISOR_INIT_DATA: &str =
+    "io.katacontainers.config.hypervisor.cc_init_data";
 
 /// GPU specific annotations for remote hypervisor to help with instance selection
 /// It's for minimum number of GPUs required for the VM.
@@ -893,7 +894,7 @@ impl Annotation {
                         hv.security_info.validate_path(value)?;
                         hv.security_info.guest_hook_path = value.to_string();
                     }
-                    KATA_ANNO_CFG_RUNTIME_INIT_DATA => {
+                    KATA_ANNO_CFG_HYPERVISOR_INIT_DATA => {
                         hv.security_info.initdata =
                             add_hypervisor_initdata_overrides(value).unwrap();
                     }
diff --git a/src/libs/kata-types/src/initdata.rs b/src/libs/kata-types/src/initdata.rs
index 43232c55ba..97e295bb5e 100644
--- a/src/libs/kata-types/src/initdata.rs
+++ b/src/libs/kata-types/src/initdata.rs
@@ -8,6 +8,7 @@ use flate2::read::GzDecoder;
 use serde::{Deserialize, Serialize};
 use sha2::{Digest, Sha256, Sha384, Sha512};
 use std::{collections::HashMap, io::Read};
+use crate::sl;
 
 /// Currently, initdata only supports version 0.1.0.
 const INITDATA_VERSION: &str = "0.1.0";
@@ -203,12 +204,18 @@ pub fn calculate_initdata_digest(
     Ok(b64encoded_digest)
 }
 
-/// The argument `initda_annotation` is a Standard base64 encoded string containing a TOML formatted content.
+/// The argument `initdata_annotation` is a Standard base64 encoded string containing a TOML formatted content.
 /// This function decodes the base64 string, parses the TOML content into an InitData structure.
-pub fn add_hypervisor_initdata_overrides(initda_annotation: &str) -> Result<String> {
+pub fn add_hypervisor_initdata_overrides(initdata_annotation: &str) -> Result<String> {
+    // If the initdata is empty, return an empty string
+    if initdata_annotation.is_empty() {
+        info!(sl!(), "initdata_annotation is empty");
+        return Ok("".to_string());
+    }
+
     // Base64 decode the annotation value
     let b64_decoded =
-        base64::decode_config(initda_annotation, base64::STANDARD).context("base64 decode")?;
+        base64::decode_config(initdata_annotation, base64::STANDARD).context("base64 decode")?;
 
     // Gzip decompress the decoded data
     let mut gz_decoder = GzDecoder::new(&b64_decoded[..]);
@@ -231,6 +238,139 @@ mod tests {
     use flate2::Compression;
     use std::io::Write;
 
+    // create gzipped and base64 encoded string
+    fn create_encoded_input(content: &str) -> String {
+        let mut encoder = GzEncoder::new(Vec::new(), Compression::default());
+        encoder.write_all(content.as_bytes()).unwrap();
+        let compressed = encoder.finish().unwrap();
+        base64::encode_config(&compressed, base64::STANDARD)
+    }
+
+    #[test]
+    fn test_empty_annotation() {
+        // Test with empty string input
+        let result = add_hypervisor_initdata_overrides("");
+        assert!(result.is_ok());
+        assert_eq!(result.unwrap(), "");
+    }
+
+    #[test]
+    fn test_empty_data_section() {
+        // Test with empty data section
+        let toml_content = r#"
+algorithm = "sha384"
+version = "0.1.0"
+
+[data]
+"#;
+        let encoded = create_encoded_input(toml_content);
+
+        let result = add_hypervisor_initdata_overrides(&encoded);
+        assert!(result.is_ok());
+    }
+
+    #[test]
+    fn test_valid_complete_initdata() {
+        // Test with complete InitData structure
+        let toml_content = r#"
+algorithm = "sha384"
+version = "0.1.0"
+
+[data]
+"aa.toml" = '''
+[token_configs]
+[token_configs.coco_as]
+url = 'http://kbs-service.xxx.cluster.local:8080'
+
+[token_configs.kbs]
+url = 'http://kbs-service.xxx.cluster.local:8080'
+'''
+
+"cdh.toml" = '''
+socket = 'unix:///run/guest-services/cdh.sock'
+credentials = []
+
+[kbc]
+name = 'cc_kbc'
+url = 'http://kbs-service.xxx.cluster.local:8080'
+'''
+"#;
+        let encoded = create_encoded_input(toml_content);
+
+        let result = add_hypervisor_initdata_overrides(&encoded);
+        assert!(result.is_ok());
+
+        let output = result.unwrap();
+        assert!(!output.is_empty());
+        assert!(output.contains("algorithm"));
+        assert!(output.contains("version"));
+    }
+
+    #[test]
+    fn test_invalid_base64() {
+        // Test with invalid base64 string
+        let invalid_base64 = "This is not valid base64!";
+
+        let result = add_hypervisor_initdata_overrides(invalid_base64);
+        assert!(result.is_err());
+
+        let error = result.unwrap_err();
+        assert!(error.to_string().contains("base64 decode"));
+    }
+
+    #[test]
+    fn test_valid_base64_invalid_gzip() {
+        // Test with valid base64 but invalid gzip content
+        let not_gzipped = "This is not gzipped content";
+        let encoded = base64::encode_config(not_gzipped.as_bytes(), base64::STANDARD);
+
+        let result = add_hypervisor_initdata_overrides(&encoded);
+        assert!(result.is_err());
+
+        let error = result.unwrap_err();
+        assert!(error.to_string().contains("gz decoder failed"));
+    }
+
+    #[test]
+    fn test_missing_algorithm() {
+        // Test with missing algorithm field
+        let toml_content = r#"
+version = "0.1.0"
+
+[data]
+"test.toml" = '''
+key = "value"
+'''
+"#;
+        let encoded = create_encoded_input(toml_content);
+
+        let result = add_hypervisor_initdata_overrides(&encoded);
+        // This might fail depending on whether algorithm is required
+        if result.is_err() {
+            assert!(result.unwrap_err().to_string().contains("parse initdata"));
+        }
+    }
+
+    #[test]
+    fn test_missing_version() {
+        // Test with missing version field
+        let toml_content = r#"
+algorithm = "sha384"
+
+[data]
+"test.toml" = '''
+key = "value"
+'''
+"#;
+        let encoded = create_encoded_input(toml_content);
+
+        let result = add_hypervisor_initdata_overrides(&encoded);
+        // This might fail depending on whether version is required
+        if result.is_err() {
+            assert!(result.unwrap_err().to_string().contains("parse initdata"));
+        }
+    }
+
     /// Test InitData creation and serialization
     #[test]
     fn test_init_data() {
diff --git a/src/runtime-rs/Makefile b/src/runtime-rs/Makefile
index 7cf88ac042..77cddf4b11 100644
--- a/src/runtime-rs/Makefile
+++ b/src/runtime-rs/Makefile
@@ -147,6 +147,7 @@ DEFMAXMEMSZ := 0
 ##VAR DEFBRIDGES=<number> Default number of bridges
 DEFBRIDGES := 0
 DEFENABLEANNOTATIONS := [\"kernel_params\"]
+DEFENABLEANNOTATIONS_COCO := [\"kernel_params\",\"cc_init_data\"]
 DEFDISABLEGUESTSECCOMP := true
 DEFDISABLEGUESTEMPTYDIR := false
 ##VAR DEFAULTEXPFEATURES=[features] Default experimental features enabled
@@ -482,6 +483,7 @@ USER_VARS += DEFVIRTIOFSCACHE
 USER_VARS += DEFVIRTIOFSQUEUESIZE
 USER_VARS += DEFVIRTIOFSEXTRAARGS
 USER_VARS += DEFENABLEANNOTATIONS
+USER_VARS += DEFENABLEANNOTATIONS_COCO
 USER_VARS += DEFENABLEIOTHREADS
 USER_VARS += DEFSECCOMPSANDBOXPARAM
 USER_VARS += DEFGUESTSELINUXLABEL
diff --git a/src/runtime-rs/config/configuration-qemu-se-runtime-rs.toml.in b/src/runtime-rs/config/configuration-qemu-se-runtime-rs.toml.in
index a2d6fbecb1..46d1d68647 100644
--- a/src/runtime-rs/config/configuration-qemu-se-runtime-rs.toml.in
+++ b/src/runtime-rs/config/configuration-qemu-se-runtime-rs.toml.in
@@ -45,7 +45,7 @@ confidential_guest = true
 # List of valid annotation names for the hypervisor
 # Each member of the list is a regular expression, which is the base name
 # of the annotation, e.g. "path" for io.katacontainers.config.hypervisor.path"
-enable_annotations = @DEFENABLEANNOTATIONS@
+enable_annotations = @DEFENABLEANNOTATIONS_COCO@
 
 # List of valid annotations values for the hypervisor
 # Each member of the list is a path pattern as described by glob(3).
diff --git a/src/runtime-rs/crates/hypervisor/src/remote/inner.rs b/src/runtime-rs/crates/hypervisor/src/remote/inner.rs
index 246c6f19b7..ab6413773d 100644
--- a/src/runtime-rs/crates/hypervisor/src/remote/inner.rs
+++ b/src/runtime-rs/crates/hypervisor/src/remote/inner.rs
@@ -14,8 +14,8 @@ use kata_types::{
         cri_containerd::{SANDBOX_NAMESPACE_LABEL_KEY, SANDBOX_NAME_LABEL_KEY},
         KATA_ANNO_CFG_HYPERVISOR_DEFAULT_GPUS, KATA_ANNO_CFG_HYPERVISOR_DEFAULT_GPU_MODEL,
         KATA_ANNO_CFG_HYPERVISOR_DEFAULT_MEMORY, KATA_ANNO_CFG_HYPERVISOR_DEFAULT_VCPUS,
-        KATA_ANNO_CFG_HYPERVISOR_IMAGE_PATH, KATA_ANNO_CFG_HYPERVISOR_MACHINE_TYPE,
-        KATA_ANNO_CFG_RUNTIME_INIT_DATA,
+        KATA_ANNO_CFG_HYPERVISOR_IMAGE_PATH, KATA_ANNO_CFG_HYPERVISOR_INIT_DATA,
+        KATA_ANNO_CFG_HYPERVISOR_MACHINE_TYPE,
     },
     capabilities::{Capabilities, CapabilityBits},
 };
@@ -127,7 +127,7 @@ impl RemoteInner {
             config.boot_info.image.to_string(),
         );
         annotations.insert(
-            KATA_ANNO_CFG_RUNTIME_INIT_DATA.to_string(),
+            KATA_ANNO_CFG_HYPERVISOR_INIT_DATA.to_string(),
             config.security_info.initdata.to_string(),
         );
         annotations.insert(
diff --git a/src/runtime/Makefile b/src/runtime/Makefile
index b10bd0f3f6..748a222c8e 100644
--- a/src/runtime/Makefile
+++ b/src/runtime/Makefile
@@ -217,7 +217,7 @@ DEFMAXMEMSZ := 0
 #Default number of bridges
 DEFBRIDGES := 1
 DEFENABLEANNOTATIONS := [\"enable_iommu\", \"virtio_fs_extra_args\", \"kernel_params\"]
-DEFENABLEANNOTATIONSTEE := [\"enable_iommu\", \"virtio_fs_extra_args\", \"kernel_params\", \"default_vcpus\", \"default_memory\"]
+DEFENABLEANNOTATIONS_COCO := [\"enable_iommu\", \"virtio_fs_extra_args\", \"kernel_params\", \"default_vcpus\", \"default_memory\", \"cc_init_data\"]
 DEFDISABLEGUESTSECCOMP := true
 DEFDISABLEGUESTEMPTYDIR := false
 #Default experimental features enabled
@@ -731,7 +731,7 @@ USER_VARS += DEFVIRTIOFSCACHE
 USER_VARS += DEFVIRTIOFSQUEUESIZE
 USER_VARS += DEFVIRTIOFSEXTRAARGS
 USER_VARS += DEFENABLEANNOTATIONS
-USER_VARS += DEFENABLEANNOTATIONSTEE
+USER_VARS += DEFENABLEANNOTATIONS_COCO
 USER_VARS += DEFENABLEIOTHREADS
 USER_VARS += DEFSECCOMPSANDBOXPARAM
 USER_VARS += DEFENABLEVHOSTUSERSTORE
diff --git a/src/runtime/config/configuration-qemu-coco-dev.toml.in b/src/runtime/config/configuration-qemu-coco-dev.toml.in
index 79de271708..05ef3b54bb 100644
--- a/src/runtime/config/configuration-qemu-coco-dev.toml.in
+++ b/src/runtime/config/configuration-qemu-coco-dev.toml.in
@@ -55,7 +55,7 @@ rootfs_type=@DEFROOTFSTYPE@
 # List of valid annotation names for the hypervisor
 # Each member of the list is a regular expression, which is the base name
 # of the annotation, e.g. "path" for io.katacontainers.config.hypervisor.path"
-enable_annotations = @DEFENABLEANNOTATIONSTEE@
+enable_annotations = @DEFENABLEANNOTATIONS_COCO@
 
 # List of valid annotations values for the hypervisor
 # Each member of the list is a path pattern as described by glob(3).
diff --git a/src/runtime/config/configuration-qemu-se.toml.in b/src/runtime/config/configuration-qemu-se.toml.in
index 9f3c258dc8..fba6f4c34d 100644
--- a/src/runtime/config/configuration-qemu-se.toml.in
+++ b/src/runtime/config/configuration-qemu-se.toml.in
@@ -40,7 +40,7 @@ confidential_guest = true
 # List of valid annotation names for the hypervisor
 # Each member of the list is a regular expression, which is the base name
 # of the annotation, e.g. "path" for io.katacontainers.config.hypervisor.path"
-enable_annotations = @DEFENABLEANNOTATIONS@
+enable_annotations = @DEFENABLEANNOTATIONS_COCO@
 
 # List of valid annotations values for the hypervisor
 # Each member of the list is a path pattern as described by glob(3).
diff --git a/src/runtime/config/configuration-qemu-tdx.toml.in b/src/runtime/config/configuration-qemu-tdx.toml.in
index 1c810e8cd6..de8b34c436 100644
--- a/src/runtime/config/configuration-qemu-tdx.toml.in
+++ b/src/runtime/config/configuration-qemu-tdx.toml.in
@@ -49,7 +49,7 @@ confidential_guest = true
 # List of valid annotation names for the hypervisor
 # Each member of the list is a regular expression, which is the base name
 # of the annotation, e.g. "path" for io.katacontainers.config.hypervisor.path"
-enable_annotations = @DEFENABLEANNOTATIONSTEE@
+enable_annotations = @DEFENABLEANNOTATIONS_COCO@
 
 # List of valid annotations values for the hypervisor
 # Each member of the list is a path pattern as described by glob(3).
diff --git a/src/runtime/pkg/oci/utils_test.go b/src/runtime/pkg/oci/utils_test.go
index 43b3f5fac6..e2e61f7581 100644
--- a/src/runtime/pkg/oci/utils_test.go
+++ b/src/runtime/pkg/oci/utils_test.go
@@ -885,6 +885,9 @@ func TestAddRuntimeAnnotations(t *testing.T) {
 
 	runtimeConfig := RuntimeConfig{
 		HypervisorType: vc.QemuHypervisor,
+		HypervisorConfig: vc.HypervisorConfig{
+			EnableAnnotations: []string{"cc_init_data"},
+		},
 	}
 
 	ocispec.Annotations[vcAnnotations.DisableGuestSeccomp] = "true"
diff --git a/src/runtime/virtcontainers/pkg/annotations/annotations.go b/src/runtime/virtcontainers/pkg/annotations/annotations.go
index 03b9e9b70c..3be8a4a086 100644
--- a/src/runtime/virtcontainers/pkg/annotations/annotations.go
+++ b/src/runtime/virtcontainers/pkg/annotations/annotations.go
@@ -245,7 +245,7 @@ const (
 	EnableRootlessHypervisor = kataAnnotHypervisorPrefix + "rootless"
 
 	// Initdata is the initdata passed in when CreateVM
-	Initdata = kataConfAnnotationsPrefix + "runtime.cc_init_data"
+	Initdata = kataConfAnnotationsPrefix + "hypervisor.cc_init_data"
 )
 
 // Runtime related annotations
diff --git a/tests/integration/kubernetes/confidential_common.sh b/tests/integration/kubernetes/confidential_common.sh
index 617deaf6a0..8df00fe749 100644
--- a/tests/integration/kubernetes/confidential_common.sh
+++ b/tests/integration/kubernetes/confidential_common.sh
@@ -174,7 +174,7 @@ function create_coco_pod_yaml() {
 # This function creates pod yaml. Parameters
 # - $1: image reference
 # - $2: annotation `io.katacontainers.config.hypervisor.kernel_params`
-# - $3: anootation `io.katacontainers.config.runtime.cc_init_data`
+# - $3: annotation `io.katacontainers.config.hypervisor.cc_init_data`
 # - $4: node
 function create_coco_pod_yaml_with_annotations() {
 	image=$1
@@ -183,7 +183,7 @@ function create_coco_pod_yaml_with_annotations() {
 	node=${4:-}
 
 	kernel_params_annotation_key="io.katacontainers.config.hypervisor.kernel_params"
-	cc_initdata_annotation_key="io.katacontainers.config.runtime.cc_init_data"
+	cc_initdata_annotation_key="io.katacontainers.config.hypervisor.cc_init_data"
 
 	# Note: this is not local as we use it in the caller test
 	kata_pod="$(new_pod_config "$image" "kata-${KATA_HYPERVISOR}")"
diff --git a/tests/integration/kubernetes/k8s-initdata.bats b/tests/integration/kubernetes/k8s-initdata.bats
index 15bcc4993c..1e98cf316a 100644
--- a/tests/integration/kubernetes/k8s-initdata.bats
+++ b/tests/integration/kubernetes/k8s-initdata.bats
@@ -182,7 +182,7 @@ EOF
         return 1
     fi
 
-    assert_logs_contain "${node}" kata "${node_start_time}" "\[CDH\] \[ERROR\]: Get Resource failed"
+    assert_logs_contain "${node}" kata "${node_start_time}" "\[CDH\] \[ERROR\]: Image Client error: Initialize resource provider failed: Get resource failed"
 }
 
 teardown() {