diff --git a/src/desktop-lite/devcontainer-feature.json b/src/desktop-lite/devcontainer-feature.json
index 7c2549a0d..135c812b7 100644
--- a/src/desktop-lite/devcontainer-feature.json
+++ b/src/desktop-lite/devcontainer-feature.json
@@ -1,6 +1,6 @@
 {
     "id": "desktop-lite",
-    "version": "1.2.4",
+    "version": "1.2.5",
     "name": "Light-weight Desktop",
     "documentationURL": "https://github.com/devcontainers/features/tree/main/src/desktop-lite",
     "description": "Adds a lightweight Fluxbox based desktop to the container that can be accessed using a VNC viewer or the web. GUI-based commands executed from the built-in VS code terminal will open on the desktop automatically.",
diff --git a/src/desktop-lite/install.sh b/src/desktop-lite/install.sh
index 5060f9210..6e6fff265 100755
--- a/src/desktop-lite/install.sh
+++ b/src/desktop-lite/install.sh
@@ -300,11 +300,11 @@ user_name="${USERNAME}"
 group_name="$(id -gn ${USERNAME})"
 LOG=/tmp/container-init.log
 
-export DBUS_SESSION_BUS_ADDRESS="${DBUS_SESSION_BUS_ADDRESS:-"autolaunch:"}"
-export DISPLAY="${DISPLAY:-:1}"
-export VNC_RESOLUTION="${VNC_RESOLUTION:-1440x768x16}" 
-export LANG="${LANG:-"en_US.UTF-8"}"
-export LANGUAGE="${LANGUAGE:-"en_US.UTF-8"}"
+export DBUS_SESSION_BUS_ADDRESS="\${DBUS_SESSION_BUS_ADDRESS:-"autolaunch:"}"
+export DISPLAY="\${DISPLAY:-:1}"
+export VNC_RESOLUTION="\${VNC_RESOLUTION:-1440x768x16}" 
+export LANG="\${LANG:-"en_US.UTF-8"}"
+export LANGUAGE="\${LANGUAGE:-"en_US.UTF-8"}"
 
 # Execute the command it not already running
 startInBackgroundIfNotRunning()
diff --git a/test/desktop-lite/scenarios.json b/test/desktop-lite/scenarios.json
index d86b321fd..ab920ddb9 100644
--- a/test/desktop-lite/scenarios.json
+++ b/test/desktop-lite/scenarios.json
@@ -4,5 +4,32 @@
         "features": {
             "desktop-lite": {}
         }
+    },
+    "test_vnc_resolution_as_container_env_var": {
+        "image": "ubuntu:noble",
+        "features": {
+            "desktop-lite": {}
+        }
+        ,
+        "containerEnv": {
+            "VNC_RESOLUTION": "1920x1080x32"
+        },
+        "forwardPorts": [
+            5901,
+            6080
+        ]
+    },
+    "test_vnc_resolution_as_remote_env_var": {
+        "image": "ubuntu:noble",
+        "features": {
+            "desktop-lite": {}
+        },
+        "remoteEnv": {
+            "VNC_RESOLUTION": "1920x1080x32"
+        },
+        "forwardPorts": [
+            5901,
+            6080
+        ]
     }
 }
\ No newline at end of file
diff --git a/test/desktop-lite/test_vnc_resolution_as_container_env_var.sh b/test/desktop-lite/test_vnc_resolution_as_container_env_var.sh
new file mode 100644
index 000000000..cc3dd3261
--- /dev/null
+++ b/test/desktop-lite/test_vnc_resolution_as_container_env_var.sh
@@ -0,0 +1,47 @@
+#!/bin/bash
+
+set -e
+
+# Optional: Import test library
+source dev-container-features-test-lib
+
+GREEN='\033[0;32m'; NC='\033[0m'; RED='\033[0;31m'; YELLOW='\033[0;33m';
+
+# Check if xtigervnc & noVnc processes are running after successful installation and initialization
+check_process_running() {
+    port=$1
+    # Get process id of process running on specific port
+    PID=$(lsof -i :$port | awk 'NR==2 {print $2}')
+    if [ -n "$PID" ]; then
+        CMD=$(ps -p $PID -o cmd --no-headers)
+        echo -e "${GREEN}Command running on port $port: ${YELLOW}$CMD${NC}"
+    else
+        echo -e "${RED}No process found listening on port $port.${NC}"
+        exit 1
+    fi
+}
+
+check_w_config_resolution() {
+    configResolution=$1
+    actualResolution=$2
+
+    if echo "$1" | grep -q "$2"; then 
+        echo -e "\n👍👍 ${GREEN}Configured resolution i.e. ${YELLOW}$configResolution${GREEN} has been set as vnc resolution i.e. ${YELLOW}$actualResolution${GREEN} in container.${NC}"
+    else 
+        echo -e "\n❌❌ ${GREEN}Configured resolution i.e. ${YELLOW}$configResolution${GREEN} couldn't be set as vnc resolution i.e. ${YELLOW}$actualResolution${GREEN} in container.${NC}"
+    fi
+}
+
+check "Whether xtigervnc is Running" check_process_running 5901
+resolution=$(ps -x -ww | grep Xtigervnc | awk "{for(i=1;i<=NF;i++) if (\$i ~ /-geometry/) {print \$(i+1); exit}}")
+check "xtigervnc resolution" bash -c '$resolution'
+check_w_config_resolution $VNC_RESOLUTION $resolution 
+sleep 2
+check "Whether no_vnc is Running" check_process_running 6080
+
+check "desktop-init-exists" bash -c "ls /usr/local/share/desktop-init.sh"
+check "log-exists" bash -c "ls /tmp/container-init.log"
+check "log file contents" bash -c "cat /tmp/container-init.log"
+
+# Report result
+reportResults
\ No newline at end of file
diff --git a/test/desktop-lite/test_vnc_resolution_as_remote_env_var.sh b/test/desktop-lite/test_vnc_resolution_as_remote_env_var.sh
new file mode 100644
index 000000000..18409505c
--- /dev/null
+++ b/test/desktop-lite/test_vnc_resolution_as_remote_env_var.sh
@@ -0,0 +1,33 @@
+#!/bin/bash
+
+set -e
+
+# Optional: Import test library
+source dev-container-features-test-lib
+
+# Check if xtigervnc & noVnc processes are running after successful installation and initialization
+check_process_running() {
+    port=$1
+    # Get process id of process running on specific port
+    PID=$(lsof -i :$port | awk 'NR==2 {print $2}')
+    GREEN='\033[0;32m'; NC='\033[0m'; RED='\033[0;31m'; YELLOW='\033[0;33m';
+    if [ -n "$PID" ]; then
+        CMD=$(ps -p $PID -o cmd --no-headers)
+        echo -e "${GREEN}Command running on port $port: ${YELLOW}$CMD${NC}"
+    else
+        echo -e "${RED}No process found listening on port $port.${NC}"
+        exit 1
+    fi
+}
+
+check "Whether xtigervnc is Running" check_process_running 5901
+check "xtigervnc resolution" bash -c 'ps -x -ww | grep Xtigervnc | awk "{for(i=1;i<=NF;i++) if (\$i ~ /-geometry/) {print \$(i+1); exit}}"' 
+sleep 2
+check "Whether no_vnc is Running" check_process_running 6080
+
+check "desktop-init-exists" bash -c "ls /usr/local/share/desktop-init.sh"
+check "log-exists" bash -c "ls /tmp/container-init.log"
+check "log file contents" bash -c "cat /tmp/container-init.log"
+
+# Report result
+reportResults
\ No newline at end of file