diff --git a/test/e2e/policies.test-suite/topology-aware/s8c4k/test01-sparse-4kcpus/code.var.sh b/test/e2e/policies.test-suite/topology-aware/s8c4k/test01-sparse-4kcpus/code.var.sh
new file mode 100644
index 000000000..a070d0d0a
--- /dev/null
+++ b/test/e2e/policies.test-suite/topology-aware/s8c4k/test01-sparse-4kcpus/code.var.sh
@@ -0,0 +1,92 @@
+# Prepare virtual machine before installing balloons.
+min_kernel_version=6.14
+vm-command "uname -r"
+if [ "$( ( echo $min_kernel_version; echo $COMMAND_OUTPUT ) | sort --version-sort | tail -n 1 )" == "$min_kernel_version" ]; then
+    error "quest OS runs too old kernel, hot-plugged CPU node topology may not work. Required: $min_kernel_version"
+fi
+
+# Hot-plug CPUs.
+vm-command 'grep 511,1535,4095 /sys/devices/system/cpu/enabled' || {
+    vm-cpu-hotplug 0 511 0
+    vm-cpu-hotplug 2 511 0
+    vm-cpu-hotplug 7 511 0
+
+    # Wait for the kernel to expose all hot-plugged CPUs in sysfs.
+    vm-run-until '[ -d /sys/devices/system/cpu/cpu511 ] && [ -d /sys/devices/system/cpu/cpu1535 ] && [ -d /sys/devices/system/cpu/cpu4095 ]'
+
+    # Online all CPUs.
+    vm-command 'for cpuX in /sys/devices/system/cpu/cpu[1-9]*; do
+            echo onlining $cpuX
+            ( echo 1 > $cpuX/online && echo Successful: write 1 to $cpuX/online ) || echo Failed: write 1 to $cpuX/online
+        done
+       grep . /sys/devices/system/cpu/cpu[1-9]*/online'
+
+    # Restart kubelet to let it detect new enabled CPUs.
+    vm-command "systemctl restart kubelet"
+}
+
+# Wait until kubelet has reported all enabled CPUs in node capacity.
+vm-run-until 'kubectl get node -o jsonpath="{.items[0].status.capacity.cpu}" | grep 6' ||
+    command-error "Unexpected node CPU capacity"
+
+# Make sure that k8s root cpuset.cpus contains hot-plugged CPUs.
+# containerd:  kubepods/cpuset.cpus
+# cri-o: kubepods.slice/cpuset.cpus
+vm-command "grep . /sys/fs/cgroup/kubepods*/cpuset.cpus"
+if ! ( grep -q 511 <<< $COMMAND_OUTPUT &&
+           grep -q 1535 <<< $COMMAND_OUTPUT &&
+           grep -q 4095 <<< $COMMAND_OUTPUT ); then
+    command-error "kubepods cpuset.cpus does not include expected CPUs"
+fi
+
+# Install topology-aware
+helm-terminate
+helm_config=$(COLOCATE_PODS=true instantiate helm-config.yaml) helm-launch topology-aware
+
+# socket #0 CPUs: 0,1,2,511
+# socket #2 CPUs: 1535, cpuallocator takes this for reserved as it is a complete idle package
+# socket #7 CPUs: 4095
+
+# 5-CPU allocation must include at least one CPU id>1024.
+CPU=5000m create guaranteed || {
+    error "failed to create pod, possible cause: topology-aware not consuming all CPUs"
+}
+
+report allowed
+if pp 'cpus["pod0c0"]' | grep 4095; then
+    verify 'len(cpus["pod0c0"]) == 5'
+else
+    vm-command 'grep . /sys/fs/cgroup/$(grep . /proc/$(pgrep -f "echo pod0c0")/cgroup | awk -F::/ "{print \$2}")/cpuset.cpus.effective'
+    if grep 4095 <<< "$COMMAND_OUTPUT"; then
+        echo "RUNC BUG: pod0c0 cannot run on CPU 4095 yet the CPU is in cgroup cpuset.cpus.effective. See: https://github.com/opencontainers/runc/issues/5023"
+        echo "Test verdict: SKIP (buggy runc)"
+        exit 0
+    else
+        error "expected: pod0c0 is allowed to run on CPU 4095"
+    fi
+fi
+
+# Release all 5 CPUs.
+vm-command 'kubectl delete pod pod0 --now'
+vm-run-until '! kubectl get pod pod0'
+
+# Only socket #0 has enough CPUs for pod1.
+CONTCOUNT=1 CPUREQ=3100m CPULIM=4000m create burstable
+report allowed
+verify 'len(packages["pod1c0"]) == 1 and len(cpus["pod1c0"]) == 4'
+
+CONTCOUNT=1 CPUREQ=900m CPULIM=1 create burstable
+report allowed
+verify 'cpus["pod2c0"] == {"cpu4095"}'
+
+CONTCOUNT=1 create besteffort
+report allowed
+
+vm-command 'kubectl delete pods pod1 pod2 pod3 --now'
+
+# Verify no CPU leaks, allocate all again.
+CPU=5000m create guaranteed
+report allowed
+verify 'len(cpus["pod4c0"]) == 5'
+
+vm-command 'kubectl delete pods --all --now'
diff --git a/test/e2e/policies.test-suite/topology-aware/s8c4k/topology.var.json b/test/e2e/policies.test-suite/topology-aware/s8c4k/topology.var.json
new file mode 100644
index 000000000..99a4d45a7
--- /dev/null
+++ b/test/e2e/policies.test-suite/topology-aware/s8c4k/topology.var.json
@@ -0,0 +1,3 @@
+[
+    {"mem": "2G", "threads": 1, "cores": 512, "packages": 8, "cpus-present":3}
+]