diff --git a/DEPENDENCIES.md b/DEPENDENCIES.md
index 21cf7feab..4091fcd58 100644
--- a/DEPENDENCIES.md
+++ b/DEPENDENCIES.md
@@ -448,7 +448,7 @@
 | [golang.org/x/mobile@d3739f865fa66d07c1f506505c18aac71a8ead6e](https://cs.opensource.google/go)                                                                                                  | BSD-3-Clause | N/A |
 | [github.com/devfile/api/v2@0d163445376d4d28898f3fbac4f2ff62863b944b](https://github.com/devfile/api.git)                                                                                         | Apache-2.0 | [clearlydefined](https://clearlydefined.io/definitions/git/github/devfile/api/0d163445376d4d28898f3fbac4f2ff62863b944b) |
 | [github.com/che-incubator/kubernetes-image-puller-operator@0128446f5af78587c0427a35d693bbb8d24036bc](https://github.com/che-incubator/kubernetes-image-puller-operator.git)                      | EPL-2.0 | todo |
-| [github.com/devfile/devworkspace-operator@v0.21.0](https://github.com/devfile/devworkspace-operator.git)                                                                                         | Apache-2.0 | [clearlydefined](https://clearlydefined.io/definitions/git/github/devfile/devworkspace-operator/21edf4373322c228ed54a5d4747b0451435a8f08) |
+| [github.com/devfile/devworkspace-operator@v0.23.0](https://github.com/devfile/devworkspace-operator.git)                                                                                         | Apache-2.0 | [clearlydefined](https://clearlydefined.io/definitions/git/github/devfile/devworkspace-operator/2d9aa0fa7ba6296c51dd44269bf5c872f5dd41b7) |
 | [github.com/gophercloud/gophercloud@v0.1.0](https://github.com/gophercloud/gophercloud)                                                                                                          | Apache-2.0 | [clearlydefined](https://clearlydefined.io/definitions/go/golang/github.com%2Fgophercloud/gophercloud/v0.1.0) |
 | [gopkg.in/imdario/mergo.v0@v0.3.7](https://github.com/imdario/mergo/)                                                                                                                            | BSD-3-Clause | [clearlydefined](https://clearlydefined.io/definitions/go/golang/github.com%2Fimdario/mergo/v0.3.7) |
 | [github.com/mikefarah/yq/v2@v2.4.1](https://github.com/mikefarah/yq)                                                                                                                             | MIT | [clearlydefined](https://clearlydefined.io/definitions/git/github/mikefarah/yq/b8b2c9de6189471c0cdbd459b5b0b49a57844bd4) |
diff --git a/bundle/next/eclipse-che/manifests/che-operator.clusterserviceversion.yaml b/bundle/next/eclipse-che/manifests/che-operator.clusterserviceversion.yaml
index 786b73e7b..3eef1bc49 100644
--- a/bundle/next/eclipse-che/manifests/che-operator.clusterserviceversion.yaml
+++ b/bundle/next/eclipse-che/manifests/che-operator.clusterserviceversion.yaml
@@ -77,7 +77,7 @@ metadata:
     operators.operatorframework.io/project_layout: go.kubebuilder.io/v3
     repository: https://github.com/eclipse-che/che-operator
     support: Eclipse Foundation
-  name: eclipse-che.v7.76.0-811.next
+  name: eclipse-che.v7.76.0-812.next
   namespace: placeholder
 spec:
   apiservicedefinitions: {}
@@ -1234,7 +1234,7 @@ spec:
   minKubeVersion: 1.19.0
   provider:
     name: Eclipse Foundation
-  version: 7.76.0-811.next
+  version: 7.76.0-812.next
   webhookdefinitions:
     - admissionReviewVersions:
         - v1
diff --git a/controllers/usernamespace/controller.go b/controllers/usernamespace/controller.go
index 1af7c158a..e032e9040 100644
--- a/controllers/usernamespace/controller.go
+++ b/controllers/usernamespace/controller.go
@@ -405,12 +405,15 @@ func (r *CheUserNamespaceReconciler) reconcileProxySettings(ctx context.Context,
 	proxySettings := map[string]string{}
 	if proxyConfig.HttpProxy != "" {
 		proxySettings["HTTP_PROXY"] = proxyConfig.HttpProxy
+		proxySettings["http_proxy"] = proxyConfig.HttpProxy
 	}
 	if proxyConfig.HttpsProxy != "" {
 		proxySettings["HTTPS_PROXY"] = proxyConfig.HttpsProxy
+		proxySettings["https_proxy"] = proxyConfig.HttpsProxy
 	}
 	if proxyConfig.NoProxy != "" {
 		proxySettings["NO_PROXY"] = proxyConfig.NoProxy
+		proxySettings["no_proxy"] = proxyConfig.NoProxy
 	}
 
 	key := client.ObjectKey{Name: prefixedName("proxy-settings"), Namespace: targetNs}
diff --git a/controllers/usernamespace/controller_test.go b/controllers/usernamespace/controller_test.go
index 0d1f3d532..a9bac86f3 100644
--- a/controllers/usernamespace/controller_test.go
+++ b/controllers/usernamespace/controller_test.go
@@ -341,7 +341,7 @@ func TestCreatesDataInNamespace(t *testing.T) {
 		assert.Equal(t, "true", proxySettings.GetLabels()[dwconstants.DevWorkspaceMountLabel],
 			"proxy settings should be labeled as mounted")
 
-		assert.Equal(t, 1, len(proxySettings.Data), "Expecting just 1 element in the default proxy settings")
+		assert.Equal(t, 2, len(proxySettings.Data), "Expecting 2 elements in the default proxy settings")
 
 		assert.Equal(t, ".svc", proxySettings.Data["NO_PROXY"], "Unexpected proxy settings")
 
diff --git a/go.mod b/go.mod
index 942e35398..a60cde3db 100644
--- a/go.mod
+++ b/go.mod
@@ -5,7 +5,7 @@ go 1.18
 require (
 	github.com/che-incubator/kubernetes-image-puller-operator v0.0.0-20210929175054-0128446f5af7
 	github.com/devfile/api/v2 v2.2.1-alpha.0.20230413012049-a6c32fca0dbd
-	github.com/devfile/devworkspace-operator v0.22.0
+	github.com/devfile/devworkspace-operator v0.23.0
 	github.com/go-logr/logr v1.2.3
 	github.com/golang/mock v1.5.0
 	github.com/google/go-cmp v0.5.9
diff --git a/go.sum b/go.sum
index 18b632f3b..29d03ace5 100644
--- a/go.sum
+++ b/go.sum
@@ -102,8 +102,8 @@ github.com/deislabs/oras v0.8.1/go.mod h1:Mx0rMSbBNaNfY9hjpccEnxkOqJL6KGjtxNHPLC
 github.com/denisenkom/go-mssqldb v0.0.0-20190204142019-df6d76eb9289/go.mod h1:xN/JuLBIz4bjkxNmByTiV1IbhfnYb6oo99phBn4Eqhc=
 github.com/devfile/api/v2 v2.2.1-alpha.0.20230413012049-a6c32fca0dbd h1:HpGR728CfB6BB9ZuFtQb0UeTIYNFgpuGsuoMOJNMUTM=
 github.com/devfile/api/v2 v2.2.1-alpha.0.20230413012049-a6c32fca0dbd/go.mod h1:qp8jcw12y1JdCsxjK/7LJ7uWaJOxcY1s2LUk5PhbkbM=
-github.com/devfile/devworkspace-operator v0.22.0 h1:Q2w419Y4E5yOYxIY6LI4u4fHi5YewKQsRIN1J4Jlh3Q=
-github.com/devfile/devworkspace-operator v0.22.0/go.mod h1:42cQKSbE+Zdqez8X5IqlEfdeeA0a/LkOTe2kkekJX6c=
+github.com/devfile/devworkspace-operator v0.23.0 h1:QUJXt6OtKILTuQUbSE2r6zyIysxhqx9sgZeMo1l7yJs=
+github.com/devfile/devworkspace-operator v0.23.0/go.mod h1:42cQKSbE+Zdqez8X5IqlEfdeeA0a/LkOTe2kkekJX6c=
 github.com/dgrijalva/jwt-go v3.2.0+incompatible/go.mod h1:E3ru+11k8xSBh+hMPgOLZmtrrCbhqsmaPHjLKYnJCaQ=
 github.com/dhui/dktest v0.3.2/go.mod h1:l1/ib23a/CmxAe7yixtrYPc8Iy90Zy2udyaHINM5p58=
 github.com/docker/cli v0.0.0-20200130152716-5d0cf8839492 h1:FwssHbCDJD025h+BchanCwE1Q8fyMgqDr2mOQAWOLGw=
diff --git a/pkg/deploy/dev-workspace-config/dev_workspace_config.go b/pkg/deploy/dev-workspace-config/dev_workspace_config.go
index 3a5c27ebb..b55688f84 100644
--- a/pkg/deploy/dev-workspace-config/dev_workspace_config.go
+++ b/pkg/deploy/dev-workspace-config/dev_workspace_config.go
@@ -63,7 +63,7 @@ func (d *DevWorkspaceConfigReconciler) Reconcile(ctx *chetypes.DeployContext) (r
 		dwoc.Config = &controllerv1alpha1.OperatorConfiguration{}
 	}
 
-	if err := updateWorkspaceConfig(ctx.CheCluster, dwoc.Config); err != nil {
+	if err := updateWorkspaceConfig(ctx, dwoc.Config); err != nil {
 		return reconcile.Result{}, false, err
 	}
 
@@ -78,7 +78,8 @@ func (d *DevWorkspaceConfigReconciler) Finalize(ctx *chetypes.DeployContext) boo
 	return true
 }
 
-func updateWorkspaceConfig(cheCluster *chev2.CheCluster, operatorConfig *controllerv1alpha1.OperatorConfiguration) error {
+func updateWorkspaceConfig(ctx *chetypes.DeployContext, operatorConfig *controllerv1alpha1.OperatorConfiguration) error {
+	cheCluster := ctx.CheCluster
 	devEnvironments := &cheCluster.Spec.DevEnvironments
 	if operatorConfig.Workspace == nil {
 		operatorConfig.Workspace = &controllerv1alpha1.WorkspaceConfig{}
@@ -104,6 +105,17 @@ func updateWorkspaceConfig(cheCluster *chev2.CheCluster, operatorConfig *control
 
 	updateWorkspaceImagePullPolicy(devEnvironments.ImagePullPolicy, operatorConfig.Workspace)
 
+	// If the CheCluster has a configured proxy, or if the Che Operator has detected a proxy configuration,
+	// we need to disable automatic proxy handling in the DevWorkspace Operator as its implementation collides
+	// with ours -- they set environment variables the deployment spec explicitly, which overrides the proxy-settings
+	// automount configmap.
+	if ctx.Proxy.HttpProxy != "" || ctx.Proxy.HttpsProxy != "" {
+		if operatorConfig.Routing == nil {
+			operatorConfig.Routing = &controllerv1alpha1.RoutingConfig{}
+		}
+		disableDWOProxy(operatorConfig.Routing)
+	}
+
 	operatorConfig.Workspace.DeploymentStrategy = v1.DeploymentStrategyType(utils.GetValue(string(devEnvironments.DeploymentStrategy), constants.DefaultDeploymentStrategy))
 	return nil
 }
@@ -213,6 +225,16 @@ func updateProjectCloneConfig(devEnvironments *chev2.CheClusterDevEnvironments,
 	workspaceConfig.ProjectCloneConfig.Resources = cheResourcesToCoreV1Resources(container.Resources)
 }
 
+func disableDWOProxy(routingConfig *controllerv1alpha1.RoutingConfig) {
+	// Since we create proxy configmaps to mount proxy settings, we want to disable
+	// proxy handling in DWO; otherwise the env vars added by DWO will override the env
+	// vars we intend to mount via configmap.
+	routingConfig.ProxyConfig = &controllerv1alpha1.Proxy{}
+	routingConfig.ProxyConfig.HttpProxy = pointer.String("")
+	routingConfig.ProxyConfig.HttpsProxy = pointer.String("")
+	routingConfig.ProxyConfig.NoProxy = pointer.String("")
+}
+
 // Returns the default container security context required for container builds.
 // Returns an error if the default container security context could not be retrieved.
 func getDefaultContainerSecurityContext() (*corev1.SecurityContext, error) {
diff --git a/vendor/github.com/devfile/devworkspace-operator/apis/controller/v1alpha1/devworkspaceoperatorconfig_types.go b/vendor/github.com/devfile/devworkspace-operator/apis/controller/v1alpha1/devworkspaceoperatorconfig_types.go
index e8ee5a15f..e1bd62eee 100644
--- a/vendor/github.com/devfile/devworkspace-operator/apis/controller/v1alpha1/devworkspaceoperatorconfig_types.go
+++ b/vendor/github.com/devfile/devworkspace-operator/apis/controller/v1alpha1/devworkspaceoperatorconfig_types.go
@@ -54,7 +54,8 @@ type RoutingConfig struct {
 	// On OpenShift, the operator automatically reads values from the "cluster" proxies.config.openshift.io
 	// object and this value only needs to be set to override those defaults. Values for httpProxy
 	// and httpsProxy override the cluster configuration directly. Entries for noProxy are merged
-	// with the noProxy values in the cluster configuration.
+	// with the noProxy values in the cluster configuration. To ignore automatically read values from the cluster,
+	// set values in fields to the empty string ("")
 	//
 	// Changes to the proxy configuration are detected by the DevWorkspace Operator and propagated to
 	// DevWorkspaces. However, changing the proxy configuration for the DevWorkspace Operator itself
@@ -154,13 +155,16 @@ type PersistentHomeConfig struct {
 }
 
 type Proxy struct {
-	// HttpProxy is the URL of the proxy for HTTP requests, in the format http://USERNAME:PASSWORD@SERVER:PORT/
-	HttpProxy string `json:"httpProxy,omitempty"`
-	// HttpsProxy is the URL of the proxy for HTTPS requests, in the format http://USERNAME:PASSWORD@SERVER:PORT/
-	HttpsProxy string `json:"httpsProxy,omitempty"`
+	// HttpProxy is the URL of the proxy for HTTP requests, in the format http://USERNAME:PASSWORD@SERVER:PORT/. To ignore
+	// automatically detected proxy settings for the cluster, set this field to an empty string ("")
+	HttpProxy *string `json:"httpProxy,omitempty"`
+	// HttpsProxy is the URL of the proxy for HTTPS requests, in the format http://USERNAME:PASSWORD@SERVER:PORT/. To ignore
+	// automatically detected proxy settings for the cluster, set this field to an empty string ("")
+	HttpsProxy *string `json:"httpsProxy,omitempty"`
 	// NoProxy is a comma-separated list of hostnames and/or CIDRs for which the proxy should not be used. Ignored
-	// when HttpProxy and HttpsProxy are unset
-	NoProxy string `json:"noProxy,omitempty"`
+	// when HttpProxy and HttpsProxy are unset. To ignore automatically detected proxy settings for the cluster, set this
+	// field to an empty string ("")
+	NoProxy *string `json:"noProxy,omitempty"`
 }
 
 type StorageSizes struct {
diff --git a/vendor/github.com/devfile/devworkspace-operator/apis/controller/v1alpha1/devworkspacerouting_types.go b/vendor/github.com/devfile/devworkspace-operator/apis/controller/v1alpha1/devworkspacerouting_types.go
index 80aa98806..f400ca8b3 100644
--- a/vendor/github.com/devfile/devworkspace-operator/apis/controller/v1alpha1/devworkspacerouting_types.go
+++ b/vendor/github.com/devfile/devworkspace-operator/apis/controller/v1alpha1/devworkspacerouting_types.go
@@ -62,6 +62,7 @@ const (
 	RoutingReady     DevWorkspaceRoutingPhase = "Ready"
 	RoutingPreparing DevWorkspaceRoutingPhase = "Preparing"
 	RoutingFailed    DevWorkspaceRoutingPhase = "Failed"
+	RoutingStopped   DevWorkspaceRoutingPhase = "Stopped"
 )
 
 type ExposedEndpoint struct {
diff --git a/vendor/github.com/devfile/devworkspace-operator/apis/controller/v1alpha1/zz_generated.deepcopy.go b/vendor/github.com/devfile/devworkspace-operator/apis/controller/v1alpha1/zz_generated.deepcopy.go
index b5e4489f9..7f94e19c6 100644
--- a/vendor/github.com/devfile/devworkspace-operator/apis/controller/v1alpha1/zz_generated.deepcopy.go
+++ b/vendor/github.com/devfile/devworkspace-operator/apis/controller/v1alpha1/zz_generated.deepcopy.go
@@ -494,6 +494,21 @@ func (in *ProjectCloneConfig) DeepCopy() *ProjectCloneConfig {
 // DeepCopyInto is an autogenerated deepcopy function, copying the receiver, writing into out. in must be non-nil.
 func (in *Proxy) DeepCopyInto(out *Proxy) {
 	*out = *in
+	if in.HttpProxy != nil {
+		in, out := &in.HttpProxy, &out.HttpProxy
+		*out = new(string)
+		**out = **in
+	}
+	if in.HttpsProxy != nil {
+		in, out := &in.HttpsProxy, &out.HttpsProxy
+		*out = new(string)
+		**out = **in
+	}
+	if in.NoProxy != nil {
+		in, out := &in.NoProxy, &out.NoProxy
+		*out = new(string)
+		**out = **in
+	}
 }
 
 // DeepCopy is an autogenerated deepcopy function, copying the receiver, creating a new Proxy.
@@ -512,7 +527,7 @@ func (in *RoutingConfig) DeepCopyInto(out *RoutingConfig) {
 	if in.ProxyConfig != nil {
 		in, out := &in.ProxyConfig, &out.ProxyConfig
 		*out = new(Proxy)
-		**out = **in
+		(*in).DeepCopyInto(*out)
 	}
 }
 
diff --git a/vendor/github.com/devfile/devworkspace-operator/controllers/controller/devworkspacerouting/devworkspacerouting_controller.go b/vendor/github.com/devfile/devworkspace-operator/controllers/controller/devworkspacerouting/devworkspacerouting_controller.go
index 9d2c9cab3..6e93eb17e 100644
--- a/vendor/github.com/devfile/devworkspace-operator/controllers/controller/devworkspacerouting/devworkspacerouting_controller.go
+++ b/vendor/github.com/devfile/devworkspace-operator/controllers/controller/devworkspacerouting/devworkspacerouting_controller.go
@@ -108,6 +108,9 @@ func (r *DevWorkspaceRoutingReconciler) Reconcile(ctx context.Context, req ctrl.
 	}
 
 	if instance.Annotations != nil && instance.Annotations[constants.DevWorkspaceStartedStatusAnnotation] == "false" {
+		if err := r.setStatusStopped(instance); err != nil {
+			return reconcile.Result{}, err
+		}
 		return reconcile.Result{}, nil
 	}
 
@@ -291,6 +294,14 @@ func (r *DevWorkspaceRoutingReconciler) reconcileStatus(
 	return r.Status().Update(context.TODO(), instance)
 }
 
+func (r *DevWorkspaceRoutingReconciler) setStatusStopped(instance *controllerv1alpha1.DevWorkspaceRouting) error {
+	instance.Status.Phase = controllerv1alpha1.RoutingStopped
+	instance.Status.Message = "DevWorkspace is not started"
+	instance.Status.PodAdditions = nil
+	instance.Status.ExposedEndpoints = nil
+	return r.Status().Update(context.TODO(), instance)
+}
+
 func contains(list []string, s string) bool {
 	for _, v := range list {
 		if v == s {
diff --git a/vendor/github.com/devfile/devworkspace-operator/pkg/config/proxy/openshift.go b/vendor/github.com/devfile/devworkspace-operator/pkg/config/proxy/openshift.go
index 434ec069b..4c4d720ae 100644
--- a/vendor/github.com/devfile/devworkspace-operator/pkg/config/proxy/openshift.go
+++ b/vendor/github.com/devfile/devworkspace-operator/pkg/config/proxy/openshift.go
@@ -51,9 +51,9 @@ func GetClusterProxyConfig(nonCachedClient crclient.Client) (*controller.Proxy,
 	}
 
 	proxyConfig := &controller.Proxy{
-		HttpProxy:  proxy.Status.HTTPProxy,
-		HttpsProxy: proxy.Status.HTTPSProxy,
-		NoProxy:    proxy.Status.NoProxy,
+		HttpProxy:  &proxy.Status.HTTPProxy,
+		HttpsProxy: &proxy.Status.HTTPSProxy,
+		NoProxy:    &proxy.Status.NoProxy,
 	}
 
 	return proxyConfig, nil
@@ -63,31 +63,53 @@ func GetClusterProxyConfig(nonCachedClient crclient.Client) (*controller.Proxy,
 // operator configuration taking precedence. Accepts nil arguments. If both arguments are nil, returns nil.
 func MergeProxyConfigs(operatorConfig, clusterConfig *controller.Proxy) *controller.Proxy {
 	if clusterConfig == nil {
-		return operatorConfig
+		return removeEmptyStrings(operatorConfig)
 	}
 	if operatorConfig == nil {
-		return clusterConfig
+		return removeEmptyStrings(clusterConfig)
 	}
+
 	mergedProxy := &controller.Proxy{
 		HttpProxy:  operatorConfig.HttpProxy,
 		HttpsProxy: operatorConfig.HttpsProxy,
 		NoProxy:    operatorConfig.NoProxy,
 	}
 
-	if mergedProxy.HttpProxy == "" {
+	if mergedProxy.HttpProxy == nil {
 		mergedProxy.HttpProxy = clusterConfig.HttpProxy
 	}
-	if mergedProxy.HttpsProxy == "" {
+	if mergedProxy.HttpsProxy == nil {
 		mergedProxy.HttpsProxy = clusterConfig.HttpsProxy
 	}
-	if mergedProxy.NoProxy == "" {
+	if mergedProxy.NoProxy == nil {
 		mergedProxy.NoProxy = clusterConfig.NoProxy
-	} else {
+	} else if *mergedProxy.NoProxy != "" {
 		// Merge noProxy fields, joining with a comma
-		if clusterConfig.NoProxy != "" {
-			mergedProxy.NoProxy = fmt.Sprintf("%s,%s", clusterConfig.NoProxy, operatorConfig.NoProxy)
+		if clusterConfig.NoProxy != nil {
+			noProxy := fmt.Sprintf("%s,%s", *clusterConfig.NoProxy, *operatorConfig.NoProxy)
+			mergedProxy.NoProxy = &noProxy
 		}
 	}
 
-	return mergedProxy
+	return removeEmptyStrings(mergedProxy)
+}
+
+// removeEmptyStrings is a utility function for removing empty fields from a proxy configuration. This is required
+// to allow overriding
+func removeEmptyStrings(proxyConfig *controller.Proxy) *controller.Proxy {
+	if proxyConfig == nil {
+		return nil
+	}
+
+	updated := &controller.Proxy{}
+	if proxyConfig.HttpProxy != nil && *proxyConfig.HttpProxy != "" {
+		updated.HttpProxy = proxyConfig.HttpProxy
+	}
+	if proxyConfig.HttpsProxy != nil && *proxyConfig.HttpsProxy != "" {
+		updated.HttpsProxy = proxyConfig.HttpsProxy
+	}
+	if proxyConfig.NoProxy != nil && *proxyConfig.NoProxy != "" {
+		updated.NoProxy = proxyConfig.NoProxy
+	}
+	return updated
 }
diff --git a/vendor/modules.txt b/vendor/modules.txt
index 450cf248b..7ee262749 100644
--- a/vendor/modules.txt
+++ b/vendor/modules.txt
@@ -32,7 +32,7 @@ github.com/davecgh/go-spew/spew
 github.com/devfile/api/v2/pkg/apis/workspaces/v1alpha2
 github.com/devfile/api/v2/pkg/attributes
 github.com/devfile/api/v2/pkg/devfile
-# github.com/devfile/devworkspace-operator v0.22.0
+# github.com/devfile/devworkspace-operator v0.23.0
 ## explicit; go 1.18
 github.com/devfile/devworkspace-operator/apis/controller/v1alpha1
 github.com/devfile/devworkspace-operator/controllers/controller/devworkspacerouting