diff --git a/.github/actions/setup-compose/action.yml b/.github/actions/setup-compose/action.yml
new file mode 100644
index 000000000..04439bc11
--- /dev/null
+++ b/.github/actions/setup-compose/action.yml
@@ -0,0 +1,110 @@
+name: Set up Compose with build input permissions
+description: Build Compose from source only when a probe reproduces the external-Dockerfile permission error.
+
+runs:
+  using: composite
+  steps:
+  - name: Probe installed Compose
+    id: check
+    shell: bash
+    env:
+      # https://github.com/docker/compose/pull/14325 fixes https://github.com/devcontainers/cli/issues/1320.
+      FIX_COMMIT: 1e1c577eab08ceb5ff0fcf4d8e3cbbc08a34ef35
+      FIX_VERSION: 5.6.0-dev.1e1c577
+    run: |
+      echo "ref=$FIX_COMMIT" >> "$GITHUB_OUTPUT"
+      echo "version=$FIX_VERSION" >> "$GITHUB_OUTPUT"
+      docker compose version
+      probe_dir=$(mktemp -d "$RUNNER_TEMP/compose-probe.XXXXXX")
+      echo "probe=$probe_dir" >> "$GITHUB_OUTPUT"
+      image="devcontainers-compose-probe:${probe_dir##*/}"
+      echo "image=$image" >> "$GITHUB_OUTPUT"
+      mkdir "$probe_dir/context"
+      printf 'FROM scratch\nLABEL devcontainers.compose-probe=true\n' > "$probe_dir/Dockerfile"
+      cat > "$probe_dir/compose.yaml" <<EOF
+      services:
+        probe:
+          image: $image
+          build:
+            context: ./context
+            dockerfile: ../Dockerfile
+      EOF
+
+      if docker compose --project-name compose-probe -f "$probe_dir/compose.yaml" build > "$probe_dir/build.log" 2>&1; then
+        cat "$probe_dir/build.log"
+        echo "image-created=true" >> "$GITHUB_OUTPUT"
+        echo "Compose can build with an external Dockerfile; keeping it."
+        echo "install=false" >> "$GITHUB_OUTPUT"
+      else
+        status=$?
+        cat "$probe_dir/build.log"
+        if grep -Fq "additional privileges requested: pass \"--allow=fs.read=$probe_dir/Dockerfile\"" "$probe_dir/build.log"; then
+          echo "Compose lacks the external-Dockerfile permission fix; building it from source."
+          echo "install=true" >> "$GITHUB_OUTPUT"
+        else
+          echo "::error::Compose probe failed for a reason other than the external-Dockerfile permission error."
+          exit "$status"
+        fi
+      fi
+
+  - name: Fetch fixed Compose source
+    if: steps.check.outputs.install == 'true'
+    id: source
+    shell: bash
+    env:
+      FIX_COMMIT: ${{ steps.check.outputs.ref }}
+    run: |
+      source_dir=$(mktemp -d "$RUNNER_TEMP/compose-source.XXXXXX")
+      git -C "$source_dir" init
+      git -C "$source_dir" fetch --depth=1 https://github.com/docker/compose.git "$FIX_COMMIT"
+      git -C "$source_dir" checkout --detach FETCH_HEAD
+      test "$(git -C "$source_dir" rev-parse HEAD)" = "$FIX_COMMIT"
+      echo "path=$source_dir" >> "$GITHUB_OUTPUT"
+
+  - uses: actions/setup-go@v6
+    if: steps.check.outputs.install == 'true'
+    with:
+      go-version-file: ${{ steps.source.outputs.path }}/go.mod
+      cache: false
+
+  - name: Build and install fixed Compose
+    if: steps.check.outputs.install == 'true'
+    id: install
+    shell: bash
+    env:
+      CGO_ENABLED: '0'
+      SOURCE_DIR: ${{ steps.source.outputs.path }}
+      FIX_VERSION: ${{ steps.check.outputs.version }}
+      PROBE_DIR: ${{ steps.check.outputs.probe }}
+    run: |
+      cd "$SOURCE_DIR"
+      # Preserve the CLI's Compose version gates for this unreleased source build.
+      go build -trimpath \
+        -ldflags "-s -w -X github.com/docker/compose/v5/internal.Version=v$FIX_VERSION" \
+        -o docker-compose ./cmd
+      install -D -m 755 docker-compose "${DOCKER_CONFIG:-$HOME/.docker}/cli-plugins/docker-compose"
+      version=$(docker compose version --short)
+      if [[ "${version#v}" != "$FIX_VERSION" ]]; then
+        echo "::error::Expected Compose $FIX_VERSION after installation, got $version"
+        exit 1
+      fi
+      docker compose version
+      docker compose --project-name compose-probe -f "$PROBE_DIR/compose.yaml" build
+      echo "image-created=true" >> "$GITHUB_OUTPUT"
+
+  - name: Clean up Compose probe
+    if: always() && steps.check.outputs.probe != ''
+    shell: bash
+    env:
+      PROBE_DIR: ${{ steps.check.outputs.probe }}
+      PROBE_IMAGE: ${{ steps.check.outputs.image }}
+      IMAGE_CREATED: ${{ steps.check.outputs.image-created == 'true' || steps.install.outputs.image-created == 'true' }}
+    run: |
+      rm -f -- "$PROBE_DIR/Dockerfile" "$PROBE_DIR/compose.yaml" "$PROBE_DIR/build.log"
+      if [[ -d "$PROBE_DIR/context" ]]; then
+        rmdir -- "$PROBE_DIR/context"
+      fi
+      rmdir -- "$PROBE_DIR"
+      if [[ "$IMAGE_CREATED" == 'true' ]]; then
+        docker image rm "$PROBE_IMAGE"
+      fi
diff --git a/.github/workflows/dev-containers.yml b/.github/workflows/dev-containers.yml
index 81ffb8226..a292819b8 100644
--- a/.github/workflows/dev-containers.yml
+++ b/.github/workflows/dev-containers.yml
@@ -90,6 +90,7 @@ jobs:
         fi
         cat "$DAEMON_JSON"
         sudo systemctl restart docker
+    - uses: ./.github/actions/setup-compose
     - name: Tools Info
       run: |
         docker info
diff --git a/.github/workflows/test-docker-v29.yml b/.github/workflows/test-docker-v29.yml
index de475f246..2b4ea9623 100644
--- a/.github/workflows/test-docker-v29.yml
+++ b/.github/workflows/test-docker-v29.yml
@@ -29,6 +29,8 @@ jobs:
         sudo VERSION=29.0.0 sh get-docker.sh
         sudo systemctl restart docker
     
+    - uses: ./.github/actions/setup-compose
+
     - name: Verify Docker version, Install and Test
       run: |
         # Verify