diff --git a/internal/controllers/machine/machine_controller_phases.go b/internal/controllers/machine/machine_controller_phases.go
index f7e1c8916194..daf4d72d9279 100644
--- a/internal/controllers/machine/machine_controller_phases.go
+++ b/internal/controllers/machine/machine_controller_phases.go
@@ -156,6 +156,20 @@ func (r *Reconciler) ensureExternalOwnershipAndWatch(ctx context.Context, cluste
 	return obj, nil
 }
 
+// checkMachineBootstrapReady checks if the bootstrap data for a Machine is
+// available and marks it as ready if so.
+func checkMachineBootstrapReady(m *clusterv1.Machine) bool {
+	if m.Spec.Bootstrap.DataSecretName != nil {
+		if m.Status.Initialization == nil {
+			m.Status.Initialization = &clusterv1.MachineInitializationStatus{}
+		}
+		m.Status.Initialization.BootstrapDataSecretCreated = true
+		v1beta1conditions.MarkTrue(m, clusterv1.BootstrapReadyV1Beta1Condition)
+		return true
+	}
+	return false
+}
+
 // reconcileBootstrap reconciles the BootstrapConfig of a Machine.
 func (r *Reconciler) reconcileBootstrap(ctx context.Context, s *scope) (ctrl.Result, error) {
 	log := ctrl.LoggerFrom(ctx)
@@ -164,6 +178,8 @@ func (r *Reconciler) reconcileBootstrap(ctx context.Context, s *scope) (ctrl.Res
 
 	// If the Bootstrap ref is nil (and so the machine should use user generated data secret), return.
 	if m.Spec.Bootstrap.ConfigRef == nil {
+		// If the bootstrap data is populated, set ready.
+		_ = checkMachineBootstrapReady(m)
 		return ctrl.Result{}, nil
 	}
 
@@ -187,12 +203,7 @@ func (r *Reconciler) reconcileBootstrap(ctx context.Context, s *scope) (ctrl.Res
 	s.bootstrapConfig = obj
 
 	// If the bootstrap data is populated, set ready and return.
-	if m.Spec.Bootstrap.DataSecretName != nil {
-		if m.Status.Initialization == nil {
-			m.Status.Initialization = &clusterv1.MachineInitializationStatus{}
-		}
-		m.Status.Initialization.BootstrapDataSecretCreated = true
-		v1beta1conditions.MarkTrue(m, clusterv1.BootstrapReadyV1Beta1Condition)
+	if checkMachineBootstrapReady(m) {
 		return ctrl.Result{}, nil
 	}
 
diff --git a/internal/controllers/machine/machine_controller_phases_test.go b/internal/controllers/machine/machine_controller_phases_test.go
index e8c7f23ed330..be11e79808dd 100644
--- a/internal/controllers/machine/machine_controller_phases_test.go
+++ b/internal/controllers/machine/machine_controller_phases_test.go
@@ -112,6 +112,33 @@ func TestReconcileBootstrap(t *testing.T) {
 				g.Expect(m.Status.Initialization != nil && m.Status.Initialization.BootstrapDataSecretCreated).To(BeFalse())
 			},
 		},
+		{
+			name:     "bootstrap data ready with no bootstrap config",
+			contract: "v1beta1",
+			machine: &clusterv1.Machine{
+				ObjectMeta: metav1.ObjectMeta{
+					Name:      "bootstrap-test-external",
+					Namespace: metav1.NamespaceDefault,
+				},
+				Spec: clusterv1.MachineSpec{
+					Bootstrap: clusterv1.Bootstrap{
+						DataSecretName: ptr.To("secret-data"),
+					},
+				},
+				Status: clusterv1.MachineStatus{
+					Initialization: nil,
+				},
+			},
+			bootstrapConfig:         nil,
+			bootstrapConfigGetError: errors.New("this should not happen"),
+			expectResult:            ctrl.Result{},
+			expectError:             false,
+			expected: func(g *WithT, m *clusterv1.Machine) {
+				g.Expect(m.Status.Initialization != nil && m.Status.Initialization.BootstrapDataSecretCreated).To(BeTrue())
+				g.Expect(m.Spec.Bootstrap.DataSecretName).NotTo(BeNil())
+				g.Expect(*m.Spec.Bootstrap.DataSecretName).To(Equal("secret-data"))
+			},
+		},
 		{
 			name:     "bootstrap config not ready, it should reconcile but no data should surface on the machine",
 			contract: "v1beta1",