diff --git a/poky/meta/classes-recipe/overlayfs-etc.bbclass b/poky/meta/classes-recipe/overlayfs-etc.bbclass
new file mode 100644
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+++ b/poky/meta/classes-recipe/overlayfs-etc.bbclass
@@ -0,0 +1,85 @@
+#
+# Copyright OpenEmbedded Contributors
+#
+# SPDX-License-Identifier: MIT
+#
+
+# Class for setting up /etc in overlayfs
+#
+# In order to have /etc directory in overlayfs a special handling at early boot stage is required
+# The idea is to supply a custom init script that mounts /etc before launching actual init program,
+# because the latter already requires /etc to be mounted
+#
+# The configuration must be machine specific. You should at least set these three variables:
+#   OVERLAYFS_ETC_MOUNT_POINT ?= "/data"
+#   OVERLAYFS_ETC_FSTYPE ?= "ext4"
+#   OVERLAYFS_ETC_DEVICE ?= "/dev/mmcblk0p2"
+#
+# To control more mount options you should consider setting mount options:
+#   OVERLAYFS_ETC_MOUNT_OPTIONS ?= "defaults"
+#
+# The class provides two options for /sbin/init generation
+# 1. Default option is to rename original /sbin/init to /sbin/init.orig and place generated init under
+#    original name, i.e. /sbin/init. It has an advantage that you won't need to change any kernel
+#    parameters in order to make it work, but it poses a restriction that package-management can't
+#    be used, becaause updating init manager would remove generated script
+# 2. If you are would like to keep original init as is, you can set
+#    OVERLAYFS_ETC_USE_ORIG_INIT_NAME = "0"
+#    Then generated init will be named /sbin/preinit and you would need to extend you kernel parameters
+#    manually in your bootloader configuration.
+#
+# Regardless which mode you choose, update and migration strategy of configuration files under /etc
+# overlay is out of scope of this class
+
+ROOTFS_POSTPROCESS_COMMAND += '${@bb.utils.contains("IMAGE_FEATURES", "overlayfs-etc", "create_overlayfs_etc_preinit;", "", d)}'
+IMAGE_FEATURES_CONFLICTS_overlayfs-etc = "${@ 'package-management' if bb.utils.to_boolean(d.getVar('OVERLAYFS_ETC_USE_ORIG_INIT_NAME'), True) else ''}"
+
+OVERLAYFS_ETC_MOUNT_POINT ??= ""
+OVERLAYFS_ETC_FSTYPE ??= ""
+OVERLAYFS_ETC_DEVICE ??= ""
+OVERLAYFS_ETC_USE_ORIG_INIT_NAME ??= "1"
+OVERLAYFS_ETC_MOUNT_OPTIONS ??= "defaults"
+OVERLAYFS_ETC_INIT_TEMPLATE ??= "${COREBASE}/meta/files/overlayfs-etc-preinit.sh.in"
+OVERLAYFS_ETC_EXPOSE_LOWER ??= "0"
+
+python create_overlayfs_etc_preinit() {
+    overlayEtcMountPoint = d.getVar("OVERLAYFS_ETC_MOUNT_POINT")
+    overlayEtcFsType = d.getVar("OVERLAYFS_ETC_FSTYPE")
+    overlayEtcDevice = d.getVar("OVERLAYFS_ETC_DEVICE")
+
+    if not overlayEtcMountPoint:
+        bb.fatal("OVERLAYFS_ETC_MOUNT_POINT must be set in your MACHINE configuration")
+    if not overlayEtcDevice:
+        bb.fatal("OVERLAYFS_ETC_DEVICE must be set in your MACHINE configuration")
+    if not overlayEtcFsType:
+        bb.fatal("OVERLAYFS_ETC_FSTYPE should contain a valid file system type on {0}".format(overlayEtcDevice))
+
+    with open(d.getVar("OVERLAYFS_ETC_INIT_TEMPLATE"), "r") as f:
+        PreinitTemplate = f.read()
+
+    useOrigInit = oe.types.boolean(d.getVar('OVERLAYFS_ETC_USE_ORIG_INIT_NAME'))
+    preinitPath = oe.path.join(d.getVar("IMAGE_ROOTFS"), d.getVar("base_sbindir"), "preinit")
+    initBaseName = oe.path.join(d.getVar("base_sbindir"), "init")
+    origInitNameSuffix = ".orig"
+    exposeLower = oe.types.boolean(d.getVar('OVERLAYFS_ETC_EXPOSE_LOWER'))
+
+    args = {
+        'OVERLAYFS_ETC_MOUNT_POINT': overlayEtcMountPoint,
+        'OVERLAYFS_ETC_MOUNT_OPTIONS': d.getVar('OVERLAYFS_ETC_MOUNT_OPTIONS'),
+        'OVERLAYFS_ETC_FSTYPE': overlayEtcFsType,
+        'OVERLAYFS_ETC_DEVICE': overlayEtcDevice,
+        'SBIN_INIT_NAME': initBaseName + origInitNameSuffix if useOrigInit else initBaseName,
+        'OVERLAYFS_ETC_EXPOSE_LOWER': "true" if exposeLower else "false"
+    }
+
+    if useOrigInit:
+        # rename original /sbin/init
+        origInit = oe.path.join(d.getVar("IMAGE_ROOTFS"), initBaseName)
+        bb.debug(1, "rootfs path %s, init path %s, test %s" % (d.getVar('IMAGE_ROOTFS'), origInit, d.getVar("IMAGE_ROOTFS")))
+        bb.utils.rename(origInit, origInit + origInitNameSuffix)
+        preinitPath = origInit
+
+    with open(preinitPath, 'w') as f:
+        f.write(PreinitTemplate.format(**args))
+    os.chmod(preinitPath, 0o755)
+}