diff --git a/app/server/appsmith-server/src/main/java/com/appsmith/server/domains/ce/OrganizationConfigurationCE.java b/app/server/appsmith-server/src/main/java/com/appsmith/server/domains/ce/OrganizationConfigurationCE.java
index 153447260a..415e5035dd 100644
--- a/app/server/appsmith-server/src/main/java/com/appsmith/server/domains/ce/OrganizationConfigurationCE.java
+++ b/app/server/appsmith-server/src/main/java/com/appsmith/server/domains/ce/OrganizationConfigurationCE.java
@@ -81,7 +81,7 @@ public class OrganizationConfigurationCE implements Serializable {
 
         googleMapsKey = ObjectUtils.defaultIfNull(organizationConfiguration.getGoogleMapsKey(), googleMapsKey);
         isFormLoginEnabled =
-                ObjectUtils.defaultIfNull(organizationConfiguration.getIsFormLoginEnabled(), isFormLoginEnabled);
+                getComputedValue(true, organizationConfiguration.getIsFormLoginEnabled(), isFormLoginEnabled);
         isSignupDisabled = ObjectUtils.defaultIfNull(organizationConfiguration.getIsSignupDisabled(), isSignupDisabled);
         instanceName = ObjectUtils.defaultIfNull(organizationConfiguration.getInstanceName(), instanceName);
         emailVerificationEnabled = ObjectUtils.defaultIfNull(
@@ -93,6 +93,13 @@ public class OrganizationConfigurationCE implements Serializable {
         isAtomicPushAllowed = organizationConfiguration.getIsAtomicPushAllowed();
     }
 
+    protected static <T> T getComputedValue(T defaultValue, T updatedValue, T currentValue) {
+        if (currentValue == null && updatedValue == null) {
+            return defaultValue;
+        }
+        return ObjectUtils.defaultIfNull(updatedValue, currentValue);
+    }
+
     public static class Fields {
         public Fields() {
             // Public constructor for Fields class
diff --git a/app/server/appsmith-server/src/test/java/com/appsmith/server/services/ce/OrganizationServiceCETest.java b/app/server/appsmith-server/src/test/java/com/appsmith/server/services/ce/OrganizationServiceCETest.java
index e6434a9b58..5df36a2270 100644
--- a/app/server/appsmith-server/src/test/java/com/appsmith/server/services/ce/OrganizationServiceCETest.java
+++ b/app/server/appsmith-server/src/test/java/com/appsmith/server/services/ce/OrganizationServiceCETest.java
@@ -172,6 +172,49 @@ class OrganizationServiceCETest {
                 .verify();
     }
 
+    @Test
+    @WithUserDetails("api_user")
+    void updateOrganizationConfiguration_updateFormLoginEnabled_success() {
+
+        // Ensure that default value for form login is enabled
+        Mono<Organization> organizationMono = organizationService.getOrganizationConfiguration();
+        StepVerifier.create(organizationMono)
+                .assertNext(organization -> {
+                    assertThat(organization.getOrganizationConfiguration().getIsFormLoginEnabled())
+                            .isTrue();
+                })
+                .verifyComplete();
+
+        // Ensure that the form login is disabled after the update
+        final OrganizationConfiguration changes = new OrganizationConfiguration();
+        changes.setIsFormLoginEnabled(FALSE);
+        Mono<OrganizationConfiguration> resultMono = organizationService
+                .updateOrganizationConfiguration(changes)
+                .then(organizationService.getOrganizationConfiguration())
+                .map(Organization::getOrganizationConfiguration);
+
+        StepVerifier.create(resultMono)
+                .assertNext(organizationConfiguration -> {
+                    assertThat(organizationConfiguration.getIsFormLoginEnabled())
+                            .isFalse();
+                })
+                .verifyComplete();
+
+        // Ensure that the form login is enabled after the update
+        changes.setIsFormLoginEnabled(TRUE);
+        resultMono = organizationService
+                .updateOrganizationConfiguration(changes)
+                .then(organizationService.getOrganizationConfiguration())
+                .map(Organization::getOrganizationConfiguration);
+
+        StepVerifier.create(resultMono)
+                .assertNext(organizationConfiguration -> {
+                    assertThat(organizationConfiguration.getIsFormLoginEnabled())
+                            .isTrue();
+                })
+                .verifyComplete();
+    }
+
     @Test
     @WithUserDetails("anonymousUser")
     void getOrganizationConfig_Valid_AnonymousUser() {