diff --git a/pkg/config/provider.go b/pkg/config/provider.go
index a37b7487..558c3ba0 100644
--- a/pkg/config/provider.go
+++ b/pkg/config/provider.go
@@ -136,7 +136,7 @@ type Provider struct {
 	// TerraformProvider is the Terraform schema of the provider.
 	TerraformProvider *schema.Provider
 
-	TerraformPluginFrameworkProvider *fwprovider.Provider
+	TerraformPluginFrameworkProvider fwprovider.Provider
 
 	// refInjectors is an ordered list of `ReferenceInjector`s for
 	// injecting references across this Provider's resources.
@@ -197,7 +197,7 @@ func WithTerraformProvider(tp *schema.Provider) ProviderOption {
 	}
 }
 
-func WithTerraformPluginFrameworkProvider(tp *fwprovider.Provider) ProviderOption {
+func WithTerraformPluginFrameworkProvider(tp fwprovider.Provider) ProviderOption {
 	return func(p *Provider) {
 		p.TerraformPluginFrameworkProvider = tp
 	}
@@ -325,7 +325,7 @@ func NewProvider(ctx context.Context, schema []byte, prefix string, modulePath s
 
 			// TODO(cem): Consider creating a new context here, rather than getting one as input to this function.
 			// TODO(cem): Currently, terraformPluginFrameworkResourceFunctions is calculated for each plugin framework resource. Doing so is wasteful, because the result is independent of the resource. It should be called once, outside the loop.
-			terraformPluginFrameworkResourceFunctions := (*p.TerraformPluginFrameworkProvider).Resources(ctx)
+			terraformPluginFrameworkResourceFunctions := p.TerraformPluginFrameworkProvider.Resources(ctx)
 			for _, resourceFunc := range terraformPluginFrameworkResourceFunctions {
 				resource := resourceFunc()
 
diff --git a/pkg/controller/external_async_terraform_plugin_framework.go b/pkg/controller/external_async_terraform_plugin_framework.go
index b61f97ba..e638230b 100644
--- a/pkg/controller/external_async_terraform_plugin_framework.go
+++ b/pkg/controller/external_async_terraform_plugin_framework.go
@@ -35,7 +35,7 @@ func NewTerraformPluginFrameworkAsyncConnector(kube client.Client,
 	ots *OperationTrackerStore,
 	sf terraform.SetupFn,
 	cfg *config.Resource,
-	provider *provider.Provider,
+	provider provider.Provider,
 	opts ...TerraformPluginFrameworkAsyncOption) *TerraformPluginFrameworkAsyncConnector {
 	nfac := &TerraformPluginFrameworkAsyncConnector{
 		TerraformPluginFrameworkConnector: NewTerraformPluginFrameworkConnector(kube, sf, cfg, ots, provider),
diff --git a/pkg/controller/external_terraform_plugin_framework.go b/pkg/controller/external_terraform_plugin_framework.go
index fbc51f41..575acbdf 100644
--- a/pkg/controller/external_terraform_plugin_framework.go
+++ b/pkg/controller/external_terraform_plugin_framework.go
@@ -43,7 +43,7 @@ type TerraformPluginFrameworkConnector struct {
 	metricRecorder                   *metrics.MetricRecorder
 	operationTrackerStore            *OperationTrackerStore
 	isManagementPoliciesEnabled      bool
-	terraformPluginFrameworkProvider *fwprovider.Provider
+	terraformPluginFrameworkProvider fwprovider.Provider
 }
 
 // TerraformPluginFrameworkConnectorOption allows you to configure TerraformPluginFrameworkConnector.
@@ -72,7 +72,7 @@ func WithTerraformPluginFrameworkManagementPolicies(isManagementPoliciesEnabled
 	}
 }
 
-func NewTerraformPluginFrameworkConnector(kube client.Client, sf terraform.SetupFn, cfg *config.Resource, ots *OperationTrackerStore, terraformPluginFrameworkProvider *fwprovider.Provider, opts ...TerraformPluginFrameworkConnectorOption) *TerraformPluginFrameworkConnector {
+func NewTerraformPluginFrameworkConnector(kube client.Client, sf terraform.SetupFn, cfg *config.Resource, ots *OperationTrackerStore, terraformPluginFrameworkProvider fwprovider.Provider, opts ...TerraformPluginFrameworkConnectorOption) *TerraformPluginFrameworkConnector {
 	connector := &TerraformPluginFrameworkConnector{
 		getTerraformSetup:                sf,
 		kube:                             kube,
@@ -118,7 +118,17 @@ func (c *TerraformPluginFrameworkConnector) Connect(ctx context.Context, mg xpre
 		return nil, errors.Wrapf(err, "failed to get the extended parameters for resource %q", mg.GetName())
 	}
 
-	if !opTracker.HasFrameworkTFState() {
+	resourceSchema, err := c.getResourceSchema(ctx)
+	if err != nil {
+		return nil, errors.Wrap(err, "could not retrieve resource schema")
+	}
+	hasState := false
+	if opTracker.HasFrameworkTFState() {
+		tfStateValue, err := opTracker.GetFrameworkTFState().Unmarshal(resourceSchema.Type().TerraformType(ctx))
+		hasState = err == nil && !tfStateValue.IsNull()
+	}
+
+	if !hasState {
 		logger.Debug("Instance state not found in cache, reconstructing...")
 		tfState, err := tr.GetObservation()
 		if err != nil {
@@ -150,11 +160,6 @@ func (c *TerraformPluginFrameworkConnector) Connect(ctx context.Context, mg xpre
 		return nil, errors.Wrap(err, "could not configure provider server")
 	}
 
-	resourceSchema, err := c.getResourceSchema(ctx)
-	if err != nil {
-		return nil, errors.Wrap(err, "could not retrieve resource schema")
-	}
-
 	return &terraformPluginFrameworkExternalClient{
 		ts:             ts,
 		config:         c.config,
@@ -180,7 +185,7 @@ func (c *TerraformPluginFrameworkConnector) getResourceSchema(ctx context.Contex
 }
 
 func (c *TerraformPluginFrameworkConnector) configureProvider(ctx context.Context, ts terraform.Setup) (tfprotov5.ProviderServer, error) {
-	providerServer := providerserver.NewProtocol5(*c.terraformPluginFrameworkProvider)()
+	providerServer := providerserver.NewProtocol5(ts.FrameworkProvider)()
 	tsBytes, err := json.Marshal(ts.Configuration)
 	if err != nil {
 		return nil, errors.Wrap(err, "cannot marshal ts config")
@@ -245,6 +250,7 @@ func (n *terraformPluginFrameworkExternalClient) getDiffPlan(ctx context.Context
 
 	prcReq := &tfprotov5.PlanResourceChangeRequest{
 		TypeName:         n.config.Name,
+		PriorState:       n.opTracker.GetFrameworkTFState(),
 		Config:           &tfConfig,
 		ProposedNewState: &tfPlannedState,
 	}
diff --git a/pkg/terraform/store.go b/pkg/terraform/store.go
index 862dab7c..09ffae94 100644
--- a/pkg/terraform/store.go
+++ b/pkg/terraform/store.go
@@ -19,6 +19,7 @@ import (
 	"github.com/crossplane/crossplane-runtime/pkg/logging"
 	"github.com/crossplane/crossplane-runtime/pkg/meta"
 	xpresource "github.com/crossplane/crossplane-runtime/pkg/resource"
+	fwprovider "github.com/hashicorp/terraform-plugin-framework/provider"
 	"github.com/mitchellh/go-ps"
 	"github.com/pkg/errors"
 	"github.com/spf13/afero"
@@ -122,6 +123,8 @@ type Setup struct {
 	Scheduler ProviderScheduler
 
 	Meta any
+
+	FrameworkProvider fwprovider.Provider
 }
 
 // Map returns the Setup object in map form. The initial reason was so that