diff --git a/pkg/devcontainer/setup.go b/pkg/devcontainer/setup.go
index d960eb44c..7d9a854c5 100644
--- a/pkg/devcontainer/setup.go
+++ b/pkg/devcontainer/setup.go
@@ -7,6 +7,7 @@ import (
 	"io"
 	"os"
 	"runtime"
+	"strings"
 
 	"github.com/loft-sh/devpod/pkg/agent"
 	"github.com/loft-sh/devpod/pkg/agent/tunnelserver"
@@ -14,8 +15,10 @@ import (
 	"github.com/loft-sh/devpod/pkg/devcontainer/config"
 	"github.com/loft-sh/devpod/pkg/driver"
 	provider2 "github.com/loft-sh/devpod/pkg/provider"
+	devssh "github.com/loft-sh/devpod/pkg/ssh"
 	"github.com/pkg/errors"
 	"github.com/sirupsen/logrus"
+	gosshagent "golang.org/x/crypto/ssh/agent"
 )
 
 func (r *runner) setupContainer(
@@ -66,17 +69,23 @@ func (r *runner) setupContainer(
 	// check if docker driver
 	_, isDockerDriver := r.Driver.(driver.DockerDriver)
 
+	// ssh tunnel
+	sshCmd := fmt.Sprintf("'%s' helper ssh-server --stdio", agent.ContainerDevPodHelperLocation)
+	if r.Log.GetLevel() == logrus.DebugLevel {
+		sshCmd += " --debug"
+	}
+
 	// setup container
 	r.Log.Infof("Setup container...")
-	command := fmt.Sprintf("'%s' agent container setup --setup-info '%s' --container-workspace-info '%s'", agent.ContainerDevPodHelperLocation, compressed, workspaceConfigCompressed)
+	setupCommand := fmt.Sprintf("'%s' agent container setup --setup-info '%s' --container-workspace-info '%s'", agent.ContainerDevPodHelperLocation, compressed, workspaceConfigCompressed)
 	if runtime.GOOS == "linux" || !isDockerDriver {
-		command += " --chown-workspace"
+		setupCommand += " --chown-workspace"
 	}
 	if !isDockerDriver {
-		command += " --stream-mounts"
+		setupCommand += " --stream-mounts"
 	}
 	if r.Log.GetLevel() == logrus.DebugLevel {
-		command += " --debug"
+		setupCommand += " --debug"
 	}
 
 	// create pipes
@@ -95,28 +104,90 @@ func (r *runner) setupContainer(
 	cancelCtx, cancel := context.WithCancel(ctx)
 	defer cancel()
 
-	errChan := make(chan error, 1)
+	errChan := make(chan error, 2)
 	go func() {
-		defer r.Log.Debugf("Done executing up command")
+		defer r.Log.Debugf("Done executing ssh server helper command")
 		defer cancel()
 
 		writer := r.Log.Writer(logrus.InfoLevel, false)
 		defer writer.Close()
 
-		r.Log.Debugf("Run command in container: %s", command)
-		err = r.Driver.CommandDevContainer(cancelCtx, r.ID, "root", command, stdinReader, stdoutWriter, writer)
-		if err != nil {
+		r.Log.Debugf("Run command in container: %s", sshCmd)
+		err = r.Driver.CommandDevContainer(cancelCtx, r.ID, "root", sshCmd, stdinReader, stdoutWriter, writer)
+		if err != nil && !errors.Is(err, context.Canceled) && !strings.Contains(err.Error(), "signal: ") {
 			errChan <- fmt.Errorf("executing container command: %w", err)
 		} else {
 			errChan <- nil
 		}
 	}()
 
+	// create pipes
+	stdoutReader2, stdoutWriter2, err := os.Pipe()
+	if err != nil {
+		return nil, err
+	}
+	stdinReader2, stdinWriter2, err := os.Pipe()
+	if err != nil {
+		return nil, err
+	}
+	defer stdoutWriter2.Close()
+	defer stdinWriter2.Close()
+
+	go func() {
+		defer cancel()
+
+		r.Log.Debugf("Attempting to create SSH client")
+		// start ssh client as root / default user
+		sshClient, err := devssh.StdioClient(stdoutReader, stdinWriter, false)
+		if err != nil {
+			errChan <- errors.Wrap(err, "create ssh client")
+			return
+		}
+		defer r.Log.Debugf("Connection to SSH Server closed")
+		defer sshClient.Close()
+
+		r.Log.Debugf("SSH client created")
+
+		sess, err := sshClient.NewSession()
+		if err != nil {
+			errChan <- errors.Wrap(err, "create ssh session")
+		}
+		defer sess.Close()
+
+		r.Log.Debugf("SSH session created")
+
+		var identityAgent string
+		if identityAgent == "" {
+			identityAgent = os.Getenv("SSH_AUTH_SOCK")
+		}
+
+		if identityAgent != "" {
+			err = gosshagent.ForwardToRemote(sshClient, identityAgent)
+			if err != nil {
+				errChan <- errors.Wrap(err, "forward agent")
+			}
+			err = gosshagent.RequestAgentForwarding(sess)
+			if err != nil {
+				errChan <- errors.Wrap(err, "request agent forwarding failed")
+			}
+		}
+
+		writer := r.Log.Writer(logrus.InfoLevel, false)
+		defer writer.Close()
+
+		err = devssh.Run(ctx, sshClient, setupCommand, stdinReader2, stdoutWriter2, writer)
+		if err != nil {
+			errChan <- errors.Wrap(err, "run agent command")
+		} else {
+			errChan <- nil
+		}
+	}()
+
 	// start server
 	result, err = tunnelserver.RunSetupServer(
 		cancelCtx,
-		stdoutReader,
-		stdinWriter,
+		stdoutReader2,
+		stdinWriter2,
 		r.WorkspaceConfig.Agent.InjectDockerCredentials != "false",
 		config.GetMounts(result),
 		r.Log,
@@ -125,5 +196,10 @@ func (r *runner) setupContainer(
 		return nil, errors.Wrap(err, "run tunnel machine")
 	}
 
+	// wait until command finished
+	if err := <-errChan; err != nil {
+		return result, err
+	}
+
 	return result, <-errChan
 }