diff --git a/drivers/net/ethernet/mellanox/mlx5/core/en_accel/ipsec.c b/drivers/net/ethernet/mellanox/mlx5/core/en_accel/ipsec.c
index b64281fd4142..0bda5a91bff6 100644
--- a/drivers/net/ethernet/mellanox/mlx5/core/en_accel/ipsec.c
+++ b/drivers/net/ethernet/mellanox/mlx5/core/en_accel/ipsec.c
@@ -668,6 +668,14 @@ static int mlx5e_xfrm_add_state(struct xfrm_state *x,
 	if (err)
 		goto err_hw_ctx;
 
+	if (x->props.mode == XFRM_MODE_TUNNEL &&
+	    x->xso.type == XFRM_DEV_OFFLOAD_PACKET &&
+	    !mlx5e_ipsec_fs_tunnel_enabled(sa_entry)) {
+		NL_SET_ERR_MSG_MOD(extack, "Packet offload tunnel mode is disabled due to encap settings");
+		err = -EINVAL;
+		goto err_add_rule;
+	}
+
 	/* We use *_bh() variant because xfrm_timer_handler(), which runs
 	 * in softirq context, can reach our state delete logic and we need
 	 * xa_erase_bh() there.
diff --git a/drivers/net/ethernet/mellanox/mlx5/core/en_accel/ipsec.h b/drivers/net/ethernet/mellanox/mlx5/core/en_accel/ipsec.h
index d06c896eadb6..f7f7c09d2b32 100644
--- a/drivers/net/ethernet/mellanox/mlx5/core/en_accel/ipsec.h
+++ b/drivers/net/ethernet/mellanox/mlx5/core/en_accel/ipsec.h
@@ -251,6 +251,7 @@ void mlx5e_accel_ipsec_fs_del_rule(struct mlx5e_ipsec_sa_entry *sa_entry);
 int mlx5e_accel_ipsec_fs_add_pol(struct mlx5e_ipsec_pol_entry *pol_entry);
 void mlx5e_accel_ipsec_fs_del_pol(struct mlx5e_ipsec_pol_entry *pol_entry);
 void mlx5e_accel_ipsec_fs_modify(struct mlx5e_ipsec_sa_entry *sa_entry);
+bool mlx5e_ipsec_fs_tunnel_enabled(struct mlx5e_ipsec_sa_entry *sa_entry);
 
 int mlx5_ipsec_create_sa_ctx(struct mlx5e_ipsec_sa_entry *sa_entry);
 void mlx5_ipsec_free_sa_ctx(struct mlx5e_ipsec_sa_entry *sa_entry);
diff --git a/drivers/net/ethernet/mellanox/mlx5/core/en_accel/ipsec_fs.c b/drivers/net/ethernet/mellanox/mlx5/core/en_accel/ipsec_fs.c
index 4c800b54d8b6..5a8fcd30fcb1 100644
--- a/drivers/net/ethernet/mellanox/mlx5/core/en_accel/ipsec_fs.c
+++ b/drivers/net/ethernet/mellanox/mlx5/core/en_accel/ipsec_fs.c
@@ -4,6 +4,7 @@
 #include <linux/netdevice.h>
 #include "en.h"
 #include "en/fs.h"
+#include "eswitch.h"
 #include "ipsec.h"
 #include "fs_core.h"
 #include "lib/ipsec_fs_roce.h"
@@ -38,6 +39,7 @@ struct mlx5e_ipsec_rx {
 	struct mlx5e_ipsec_rule status;
 	struct mlx5e_ipsec_fc *fc;
 	struct mlx5_fs_chains *chains;
+	u8 allow_tunnel_mode : 1;
 };
 
 struct mlx5e_ipsec_tx {
@@ -47,6 +49,7 @@ struct mlx5e_ipsec_tx {
 	struct mlx5_flow_namespace *ns;
 	struct mlx5e_ipsec_fc *fc;
 	struct mlx5_fs_chains *chains;
+	u8 allow_tunnel_mode : 1;
 };
 
 /* IPsec RX flow steering */
@@ -254,7 +257,8 @@ static void rx_destroy(struct mlx5_core_dev *mdev, struct mlx5e_ipsec *ipsec,
 	mlx5_del_flow_rules(rx->sa.rule);
 	mlx5_destroy_flow_group(rx->sa.group);
 	mlx5_destroy_flow_table(rx->ft.sa);
-
+	if (rx->allow_tunnel_mode)
+		mlx5_eswitch_unblock_encap(mdev);
 	mlx5_del_flow_rules(rx->status.rule);
 	mlx5_modify_header_dealloc(mdev, rx->status.modify_hdr);
 	mlx5_destroy_flow_table(rx->ft.status);
@@ -305,6 +309,8 @@ static int rx_create(struct mlx5_core_dev *mdev, struct mlx5e_ipsec *ipsec,
 
 	/* Create FT */
 	if (mlx5_ipsec_device_caps(mdev) & MLX5_IPSEC_CAP_TUNNEL)
+		rx->allow_tunnel_mode = mlx5_eswitch_block_encap(mdev);
+	if (rx->allow_tunnel_mode)
 		flags = MLX5_FLOW_TABLE_TUNNEL_EN_REFORMAT;
 	ft = ipsec_ft_create(ns, MLX5E_ACCEL_FS_ESP_FT_LEVEL, MLX5E_NIC_PRIO, 2,
 			     flags);
@@ -362,6 +368,8 @@ err_pol_ft:
 err_fs:
 	mlx5_destroy_flow_table(rx->ft.sa);
 err_fs_ft:
+	if (rx->allow_tunnel_mode)
+		mlx5_eswitch_unblock_encap(mdev);
 	mlx5_del_flow_rules(rx->status.rule);
 	mlx5_modify_header_dealloc(mdev, rx->status.modify_hdr);
 err_add:
@@ -496,7 +504,8 @@ err_rule:
 }
 
 /* IPsec TX flow steering */
-static void tx_destroy(struct mlx5e_ipsec_tx *tx, struct mlx5_ipsec_fs *roce)
+static void tx_destroy(struct mlx5_core_dev *mdev, struct mlx5e_ipsec_tx *tx,
+		       struct mlx5_ipsec_fs *roce)
 {
 	mlx5_ipsec_fs_roce_tx_destroy(roce);
 	if (tx->chains) {
@@ -508,6 +517,8 @@ static void tx_destroy(struct mlx5e_ipsec_tx *tx, struct mlx5_ipsec_fs *roce)
 	}
 
 	mlx5_destroy_flow_table(tx->ft.sa);
+	if (tx->allow_tunnel_mode)
+		mlx5_eswitch_unblock_encap(mdev);
 	mlx5_del_flow_rules(tx->status.rule);
 	mlx5_destroy_flow_table(tx->ft.status);
 }
@@ -530,6 +541,8 @@ static int tx_create(struct mlx5_core_dev *mdev, struct mlx5e_ipsec_tx *tx,
 		goto err_status_rule;
 
 	if (mlx5_ipsec_device_caps(mdev) & MLX5_IPSEC_CAP_TUNNEL)
+		tx->allow_tunnel_mode = mlx5_eswitch_block_encap(mdev);
+	if (tx->allow_tunnel_mode)
 		flags = MLX5_FLOW_TABLE_TUNNEL_EN_REFORMAT;
 	ft = ipsec_ft_create(tx->ns, 1, 0, 4, flags);
 	if (IS_ERR(ft)) {
@@ -581,6 +594,8 @@ err_roce:
 err_pol_ft:
 	mlx5_destroy_flow_table(tx->ft.sa);
 err_sa_ft:
+	if (tx->allow_tunnel_mode)
+		mlx5_eswitch_unblock_encap(mdev);
 	mlx5_del_flow_rules(tx->status.rule);
 err_status_rule:
 	mlx5_destroy_flow_table(tx->ft.status);
@@ -609,7 +624,7 @@ static void tx_put(struct mlx5e_ipsec *ipsec, struct mlx5e_ipsec_tx *tx)
 	if (--tx->ft.refcnt)
 		return;
 
-	tx_destroy(tx, ipsec->roce);
+	tx_destroy(ipsec->mdev, tx, ipsec->roce);
 }
 
 static struct mlx5_flow_table *tx_ft_get_policy(struct mlx5_core_dev *mdev,
@@ -1603,3 +1618,15 @@ void mlx5e_accel_ipsec_fs_modify(struct mlx5e_ipsec_sa_entry *sa_entry)
 	mlx5e_accel_ipsec_fs_del_rule(sa_entry);
 	memcpy(sa_entry, &sa_entry_shadow, sizeof(*sa_entry));
 }
+
+bool mlx5e_ipsec_fs_tunnel_enabled(struct mlx5e_ipsec_sa_entry *sa_entry)
+{
+	struct mlx5e_ipsec_rx *rx =
+		ipsec_rx(sa_entry->ipsec, sa_entry->attrs.family);
+	struct mlx5e_ipsec_tx *tx = sa_entry->ipsec->tx;
+
+	if (sa_entry->attrs.dir == XFRM_DEV_OFFLOAD_OUT)
+		return tx->allow_tunnel_mode;
+
+	return rx->allow_tunnel_mode;
+}