diff --git a/components/newlib/Kconfig b/components/newlib/Kconfig
index 221ef36a94..9cbfd8ec4b 100644
--- a/components/newlib/Kconfig
+++ b/components/newlib/Kconfig
@@ -11,6 +11,10 @@ menu "LibC"
             depends on !IDF_TOOLCHAIN_CLANG && IDF_EXPERIMENTAL_FEATURES
     endchoice
 
+    config LIBC_MISC_IN_IRAM
+        bool "Place misc libc functions (abort/assert/stdatomics) in IRAM" if SPI_FLASH_AUTO_SUSPEND
+        default y
+
     config LIBC_LOCKS_PLACE_IN_IRAM
         bool "Place lock API in IRAM"
         default y
diff --git a/components/newlib/src/newlib.lf b/components/newlib/src/newlib.lf
index 1e2782ac7d..7ca47a0b9b 100644
--- a/components/newlib/src/newlib.lf
+++ b/components/newlib/src/newlib.lf
@@ -1,10 +1,11 @@
 [mapping:newlib]
 archive: libnewlib.a
 entries:
-  if HEAP_PLACE_FUNCTION_INTO_FLASH = n:
-    heap (noflash)
-  abort (noflash)
-  assert (noflash)
-  stdatomic (noflash)
+  if LIBC_MISC_IN_IRAM = y:
+    if HEAP_PLACE_FUNCTION_INTO_FLASH = n:
+      heap (noflash)
+    abort (noflash)
+    assert (noflash)
+    stdatomic (noflash)
   if STDATOMIC_S32C1I_SPIRAM_WORKAROUND = y:
     stdatomic_s32c1i (noflash)
diff --git a/tools/test_apps/configs/sdkconfig.flash_auto_suspend_iram_reduction b/tools/test_apps/configs/sdkconfig.flash_auto_suspend_iram_reduction
new file mode 100644
index 0000000000..756b665313
--- /dev/null
+++ b/tools/test_apps/configs/sdkconfig.flash_auto_suspend_iram_reduction
@@ -0,0 +1,15 @@
+# Options that will enable common IRAM usage reduction option. These options should be safe to use with most setups
+CONFIG_FREERTOS_PLACE_FUNCTIONS_INTO_FLASH=y
+CONFIG_RINGBUF_PLACE_FUNCTIONS_INTO_FLASH=y
+CONFIG_HEAP_PLACE_FUNCTION_INTO_FLASH=y
+CONFIG_LIBC_LOCKS_PLACE_IN_IRAM=n
+CONFIG_HAL_ASSERTION_SILENT=y
+CONFIG_COMPILER_OPTIMIZATION_ASSERTIONS_SILENT=y
+CONFIG_COMPILER_OPTIMIZATION_SIZE=y
+
+#  Options that will enable IRAM reduction option that are not necessarily safe for all use-cases
+CONFIG_RINGBUF_PLACE_ISR_FUNCTIONS_INTO_FLASH=y
+
+# Options that will enable IRAM reduction option that are only usable together with flash auto-suspend
+CONFIG_SPI_FLASH_AUTO_SUSPEND=y
+CONFIG_LIBC_MISC_IN_IRAM=n
diff --git a/tools/test_apps/system/.build-test-rules.yml b/tools/test_apps/system/.build-test-rules.yml
index ea44516f09..a897171aa6 100644
--- a/tools/test_apps/system/.build-test-rules.yml
+++ b/tools/test_apps/system/.build-test-rules.yml
@@ -30,6 +30,15 @@ tools/test_apps/system/eh_frame:
 
 tools/test_apps/system/esp_intr_dump:
 
+tools/test_apps/system/flash_auto_suspend_iram_reduction:
+  disable:
+    - if: IDF_TARGET == "esp32" or IDF_TARGET == "esp32s2
+      reason: Targets do not support auto-suspend
+  disable_test:
+    - if: IDF_TARGET != "esp32c3"
+      temporary: true
+      reason: lack of runners
+
 tools/test_apps/system/g0_components:
   enable:
     - if: INCLUDE_DEFAULT == 1 or IDF_TARGET in ["esp32c5", "esp32c61", "esp32h21", "esp32h4"] # preview targets
diff --git a/tools/test_apps/system/flash_auto_suspend_iram_reduction/CMakeLists.txt b/tools/test_apps/system/flash_auto_suspend_iram_reduction/CMakeLists.txt
new file mode 100644
index 0000000000..352f87dbb8
--- /dev/null
+++ b/tools/test_apps/system/flash_auto_suspend_iram_reduction/CMakeLists.txt
@@ -0,0 +1,9 @@
+# The following five lines of boilerplate have to be in your project's
+# CMakeLists in this exact order for cmake to work correctly
+cmake_minimum_required(VERSION 3.16)
+
+include($ENV{IDF_PATH}/tools/cmake/project.cmake)
+
+list(PREPEND SDKCONFIG_DEFAULTS "$ENV{IDF_PATH}/tools/test_apps/configs/sdkconfig.flash_auto_suspend_iram_reduction")
+
+project(flash_auto_suspend_iram_reduction)
diff --git a/tools/test_apps/system/flash_auto_suspend_iram_reduction/README.md b/tools/test_apps/system/flash_auto_suspend_iram_reduction/README.md
new file mode 100644
index 0000000000..ffceaeb158
--- /dev/null
+++ b/tools/test_apps/system/flash_auto_suspend_iram_reduction/README.md
@@ -0,0 +1,2 @@
+| Supported Targets | ESP32-C2 | ESP32-C3 | ESP32-C5 | ESP32-C6 | ESP32-C61 | ESP32-H2 | ESP32-H21 | ESP32-P4 | ESP32-S2 | ESP32-S3 |
+| ----------------- | -------- | -------- | -------- | -------- | --------- | -------- | --------- | -------- | -------- | -------- |
diff --git a/tools/test_apps/system/flash_auto_suspend_iram_reduction/main/CMakeLists.txt b/tools/test_apps/system/flash_auto_suspend_iram_reduction/main/CMakeLists.txt
new file mode 100644
index 0000000000..b028b00e6f
--- /dev/null
+++ b/tools/test_apps/system/flash_auto_suspend_iram_reduction/main/CMakeLists.txt
@@ -0,0 +1,2 @@
+idf_component_register(SRCS "flash_auto_suspend_iram_reduction.c"
+                    INCLUDE_DIRS ".")
diff --git a/tools/test_apps/system/flash_auto_suspend_iram_reduction/main/flash_auto_suspend_iram_reduction.c b/tools/test_apps/system/flash_auto_suspend_iram_reduction/main/flash_auto_suspend_iram_reduction.c
new file mode 100644
index 0000000000..49cdea3292
--- /dev/null
+++ b/tools/test_apps/system/flash_auto_suspend_iram_reduction/main/flash_auto_suspend_iram_reduction.c
@@ -0,0 +1,11 @@
+/*
+ * SPDX-FileCopyrightText: 2025 Espressif Systems (Shanghai) CO LTD
+ *
+ * SPDX-License-Identifier: Unlicense OR CC0-1.0
+ */
+#include <stdio.h>
+
+void app_main(void)
+{
+    printf("Hello World!\n");
+}
diff --git a/tools/test_apps/system/flash_auto_suspend_iram_reduction/pytest_flash_auto_suspend_iram_reduction.py b/tools/test_apps/system/flash_auto_suspend_iram_reduction/pytest_flash_auto_suspend_iram_reduction.py
new file mode 100644
index 0000000000..232591f1cf
--- /dev/null
+++ b/tools/test_apps/system/flash_auto_suspend_iram_reduction/pytest_flash_auto_suspend_iram_reduction.py
@@ -0,0 +1,12 @@
+# SPDX-FileCopyrightText: 2025 Espressif Systems (Shanghai) CO LTD
+# SPDX-License-Identifier: CC0-1.0
+import pytest
+from pytest_embedded import Dut
+from pytest_embedded_idf.utils import idf_parametrize
+
+
+@pytest.mark.flash_suspend
+@idf_parametrize('config', ['defaults'], indirect=['config'])
+@idf_parametrize('target', ['esp32c3'], indirect=['target'])
+def test_flash_auto_suspend_minimize_iram_usage(dut: Dut) -> None:
+    dut.expect_exact('Hello World!', timeout=30)
diff --git a/tools/test_apps/system/flash_auto_suspend_iram_reduction/sdkconfig.ci.defaults b/tools/test_apps/system/flash_auto_suspend_iram_reduction/sdkconfig.ci.defaults
new file mode 100644
index 0000000000..90dbad8c42
--- /dev/null
+++ b/tools/test_apps/system/flash_auto_suspend_iram_reduction/sdkconfig.ci.defaults
@@ -0,0 +1,2 @@
+# Now the runners are massively using xmc-c chips, to be removed when xmc-d goes massive production.
+CONFIG_SPI_FLASH_FORCE_ENABLE_XMC_C_SUSPEND=y