diff --git a/src/v/storage/storage_resources.cc b/src/v/storage/storage_resources.cc
index b7cef6b5eca45..83b177165986d 100644
--- a/src/v/storage/storage_resources.cc
+++ b/src/v/storage/storage_resources.cc
@@ -20,14 +20,17 @@ namespace storage {
 storage_resources::storage_resources(
   config::binding<size_t> falloc_step,
   config::binding<uint64_t> target_replay_bytes,
-  config::binding<uint64_t> max_concurrent_replay)
+  config::binding<uint64_t> max_concurrent_replay,
+  config::binding<uint64_t> compaction_index_memory)
   : _segment_fallocation_step(falloc_step)
   , _target_replay_bytes(target_replay_bytes)
   , _max_concurrent_replay(max_concurrent_replay)
+  , _compaction_index_mem_limit(compaction_index_memory)
   , _append_chunk_size(config::shard_local_cfg().append_chunk_size())
   , _offset_translator_dirty_bytes(_target_replay_bytes() / ss::smp::count)
   , _configuration_manager_dirty_bytes(_target_replay_bytes() / ss::smp::count)
   , _stm_dirty_bytes(_target_replay_bytes() / ss::smp::count)
+  , _compaction_index_bytes(_compaction_index_mem_limit())
   , _inflight_recovery(
       std::max(_max_concurrent_replay() / ss::smp::count, uint64_t{1}))
   , _inflight_close_flush(
@@ -51,6 +54,10 @@ storage_resources::storage_resources(
         _inflight_recovery.set_capacity(v);
         _inflight_close_flush.set_capacity(v);
     });
+
+    _compaction_index_mem_limit.watch([this] {
+        _compaction_index_bytes.set_capacity(_compaction_index_mem_limit());
+    });
 }
 
 // Unit test convenience for tests that want to control the falloc step
@@ -59,17 +66,15 @@ storage_resources::storage_resources(config::binding<size_t> falloc_step)
   : storage_resources(
     std::move(falloc_step),
     config::shard_local_cfg().storage_target_replay_bytes.bind(),
-    config::shard_local_cfg().storage_max_concurrent_replay.bind()
-
-  ) {}
+    config::shard_local_cfg().storage_max_concurrent_replay.bind(),
+    config::shard_local_cfg().storage_compaction_index_memory.bind()) {}
 
 storage_resources::storage_resources()
   : storage_resources(
     config::shard_local_cfg().segment_fallocation_step.bind(),
     config::shard_local_cfg().storage_target_replay_bytes.bind(),
-    config::shard_local_cfg().storage_max_concurrent_replay.bind()
-
-  ) {}
+    config::shard_local_cfg().storage_max_concurrent_replay.bind(),
+    config::shard_local_cfg().storage_compaction_index_memory.bind()) {}
 
 void storage_resources::update_allowance(uint64_t total, uint64_t free) {
     // TODO: also take as an input the disk consumption of the SI cache:
diff --git a/src/v/storage/storage_resources.h b/src/v/storage/storage_resources.h
index bd074d89acf2b..b9e87b61cca3f 100644
--- a/src/v/storage/storage_resources.h
+++ b/src/v/storage/storage_resources.h
@@ -112,6 +112,7 @@ class storage_resources {
     storage_resources(
       config::binding<size_t>,
       config::binding<uint64_t>,
+      config::binding<uint64_t>,
       config::binding<uint64_t>);
     storage_resources(const storage_resources&) = delete;
 
@@ -159,6 +160,7 @@ class storage_resources {
     config::binding<size_t> _segment_fallocation_step;
     config::binding<uint64_t> _target_replay_bytes;
     config::binding<uint64_t> _max_concurrent_replay;
+    config::binding<uint64_t> _compaction_index_mem_limit;
     size_t _append_chunk_size;
 
     size_t _falloc_step{0};
@@ -183,7 +185,7 @@ class storage_resources {
 
     // How much memory may all compacted partitions on this shard
     // use for their spill_key_index objects
-    adjustable_allowance _compaction_index_bytes{128_MiB};
+    adjustable_allowance _compaction_index_bytes{0};
 
     // How many logs may be recovered (via log_manager::manage)
     // concurrently?