diff --git a/README.md b/README.md
index 31b7eef9b..27b3f1d2b 100644
--- a/README.md
+++ b/README.md
@@ -140,7 +140,10 @@ The Ubuntu cloud images do not ship with a default password so it necessary to
 use a `cloud-init` disk image to customise the image on the first boot. A basic
 `cloud-init` image is generated by this [script](scripts/create-cloud-init.sh).
 This seeds the image with a default username/password of `cloud/cloud123`. It
-is only necessary to add this disk image on the first boot.
+is only necessary to add this disk image on the first boot. Script also assigns
+default IP address using `test_data/cloud-init/ubuntu/local/network-config` details
+with `--net "mac=12:34:56:78:90:ab,tap="` option. Then the matching mac address
+interface will be enabled as per `network-config` details.
 
 ```shell
 $ sudo setcap cap_net_admin+ep ./cloud-hypervisor
diff --git a/scripts/create-cloud-init.sh b/scripts/create-cloud-init.sh
index 9045afde8..2022c0cb2 100755
--- a/scripts/create-cloud-init.sh
+++ b/scripts/create-cloud-init.sh
@@ -3,7 +3,7 @@ set -x
 
 rm -f /tmp/ubuntu-cloudinit.img
 mkdosfs -n CIDATA -C /tmp/ubuntu-cloudinit.img 8192
-mcopy -oi /tmp/ubuntu-cloudinit.img -s test_data/cloud-init/ubuntu/user-data ::
-mcopy -oi /tmp/ubuntu-cloudinit.img -s test_data/cloud-init/ubuntu/meta-data ::
-mcopy -oi /tmp/ubuntu-cloudinit.img -s test_data/cloud-init/ubuntu/network-config ::
+mcopy -oi /tmp/ubuntu-cloudinit.img -s test_data/cloud-init/ubuntu/local/user-data ::
+mcopy -oi /tmp/ubuntu-cloudinit.img -s test_data/cloud-init/ubuntu/local/meta-data ::
+mcopy -oi /tmp/ubuntu-cloudinit.img -s test_data/cloud-init/ubuntu/local/network-config ::
 
diff --git a/test_data/cloud-init/ubuntu/local/meta-data b/test_data/cloud-init/ubuntu/local/meta-data
new file mode 100644
index 000000000..bf8691957
--- /dev/null
+++ b/test_data/cloud-init/ubuntu/local/meta-data
@@ -0,0 +1,2 @@
+instance-id: cloud
+local-hostname: cloud
diff --git a/test_data/cloud-init/ubuntu/local/network-config b/test_data/cloud-init/ubuntu/local/network-config
new file mode 100644
index 000000000..99df95a77
--- /dev/null
+++ b/test_data/cloud-init/ubuntu/local/network-config
@@ -0,0 +1,7 @@
+version: 2
+ethernets:
+  ens4:
+    match:
+       macaddress: 12:34:56:78:90:ab
+    addresses: [192.168.249.2/24]
+    gateway4: 192.168.249.1
diff --git a/test_data/cloud-init/ubuntu/local/user-data b/test_data/cloud-init/ubuntu/local/user-data
new file mode 100644
index 000000000..b064234bc
--- /dev/null
+++ b/test_data/cloud-init/ubuntu/local/user-data
@@ -0,0 +1,10 @@
+#cloud-config
+users:
+  - name: cloud
+    passwd: $6$7125787751a8d18a$sHwGySomUA1PawiNFWVCKYQN.Ec.Wzz0JtPPL1MvzFrkwmop2dq7.4CYf03A5oemPQ4pOFCCrtCelvFBEle/K.
+    sudo: ALL=(ALL) NOPASSWD:ALL
+    lock_passwd: False
+    inactive: False
+    shell: /bin/bash
+
+ssh_pwauth: True