diff --git a/app/client/packages/design-system/ads/src/List/List.stories.tsx b/app/client/packages/design-system/ads/src/List/List.stories.tsx
index b706996413..d7cacdcf00 100644
--- a/app/client/packages/design-system/ads/src/List/List.stories.tsx
+++ b/app/client/packages/design-system/ads/src/List/List.stories.tsx
@@ -211,20 +211,36 @@ export const ListItemInlineDescStory = ListItemTemplate.bind({}) as StoryObj;
 ListItemInlineDescStory.storyName = "List item inline description";
 ListItemInlineDescStory.argTypes = ListItemArgTypes;
 ListItemInlineDescStory.args = {
-  title: "Action item 1",
+  title:
+    "Action_item_1_with_a_very_long_name_that_should_show_ellipsis_in_the_same_line",
   description: "inline",
 };
 
-export const ListItemBlockDescStory = ListItemTemplate.bind({}) as StoryObj;
-ListItemBlockDescStory.storyName = "List item block description";
-ListItemBlockDescStory.argTypes = ListItemArgTypes;
-ListItemBlockDescStory.args = {
+export const ListItemBlockDescWithIconStory = ListItemTemplate.bind(
+  {},
+) as StoryObj;
+ListItemBlockDescWithIconStory.storyName =
+  "List item block description with icon";
+ListItemBlockDescWithIconStory.argTypes = ListItemArgTypes;
+ListItemBlockDescWithIconStory.args = {
   startIcon: <Icon name="file-list-2-line" size={"md"} />,
   title: "Action item 1",
   description: "block",
   descriptionType: "block",
 };
 
+export const ListItemBlockDescWithoutIconStory = ListItemTemplate.bind(
+  {},
+) as StoryObj;
+ListItemBlockDescWithoutIconStory.storyName =
+  "List item block description without icon";
+ListItemBlockDescWithoutIconStory.argTypes = ListItemArgTypes;
+ListItemBlockDescWithoutIconStory.args = {
+  title: "Action item 1",
+  description: "Action item 1 block description",
+  descriptionType: "block",
+};
+
 export const ListItemOverflowStory = ListItemTemplate.bind({}) as StoryObj;
 ListItemOverflowStory.storyName = "List item title overflow";
 ListItemOverflowStory.argTypes = ListItemArgTypes;
diff --git a/app/client/packages/design-system/ads/src/List/List.styles.tsx b/app/client/packages/design-system/ads/src/List/List.styles.tsx
index f27e179b4c..27d4567e12 100644
--- a/app/client/packages/design-system/ads/src/List/List.styles.tsx
+++ b/app/client/packages/design-system/ads/src/List/List.styles.tsx
@@ -31,6 +31,10 @@ const Sizes = {
 export const TooltipTextWrapper = styled.div`
   display: flex;
   min-width: 0;
+
+  &.${ListItemIDescClassName}-wrapper {
+    min-width: unset;
+  }
 `;
 
 export const RightControlWrapper = styled.div`
@@ -54,8 +58,11 @@ export const TopContentWrapper = styled.div`
 `;
 
 export const BottomContentWrapper = styled.div`
-  padding-left: var(--ads-v2-spaces-7);
   padding-bottom: var(--ads-v2-spaces-2);
+
+  &[data-isiconpresent="true"] {
+    padding-left: var(--ads-v2-spaces-7);
+  }
 `;
 
 export const InlineDescriptionWrapper = styled.div`
@@ -91,8 +98,14 @@ export const StyledListItem = styled.div<{
   gap: var(--ads-v2-spaces-1);
   flex-shrink: 0;
   flex-direction: column;
+  max-height: 32px;
 
   ${({ size }) => Sizes[size]}
+
+  &[data-isblockdescription="true"] {
+    max-height: 54px;
+  }
+
   &[data-rightcontrolvisibility="hover"] {
     ${RightControlWrapper} {
       display: none;
@@ -128,6 +141,7 @@ export const StyledListItem = styled.div<{
     white-space: nowrap;
     text-overflow: ellipsis;
     flex: 1;
+    padding-right: var(--ads-v2-spaces-2);
   }
 
   & .${ListItemTitleClassName} {
diff --git a/app/client/packages/design-system/ads/src/List/List.tsx b/app/client/packages/design-system/ads/src/List/List.tsx
index 18240c8a78..eb3c76d2ea 100644
--- a/app/client/packages/design-system/ads/src/List/List.tsx
+++ b/app/client/packages/design-system/ads/src/List/List.tsx
@@ -64,7 +64,10 @@ function TextWithTooltip(props: TextProps & { isMultiline?: boolean }) {
 
   return (
     <Tooltip content={props.children} isDisabled={disableTooltip}>
-      <TooltipTextWrapper onMouseOver={handleShowFullText}>
+      <TooltipTextWrapper
+        className={`${props.className}-wrapper`}
+        onMouseOver={handleShowFullText}
+      >
         <Text
           {...props}
           className={clsx(ListItemTextOverflowClassName, props.className)}
@@ -87,8 +90,12 @@ function ListItem(props: ListItemProps) {
     startIcon,
     title,
   } = props;
-  const isBlockDescription = descriptionType === "block" && description;
-  const isInlineDescription = descriptionType === "inline" && description;
+  const isBlockDescription = Boolean(
+    descriptionType === "block" && description,
+  );
+  const isInlineDescription = Boolean(
+    descriptionType === "inline" && description,
+  );
 
   const handleOnClick = useEventCallback((e: React.MouseEvent) => {
     e.stopPropagation();
@@ -114,6 +121,7 @@ function ListItem(props: ListItemProps) {
     <StyledListItem
       className={clsx(ListItemClassName, props.className)}
       data-disabled={props.isDisabled || false}
+      data-isblockdescription={isBlockDescription}
       data-rightcontrolvisibility={rightControlVisibility}
       data-selected={props.isSelected}
       id={props.id}
@@ -152,7 +160,7 @@ function ListItem(props: ListItemProps) {
         )}
       </TopContentWrapper>
       {isBlockDescription && (
-        <BottomContentWrapper>
+        <BottomContentWrapper data-isiconpresent={Boolean(startIcon)}>
           <TextWithTooltip
             className={ListItemBDescClassName}
             color="var(--ads-v2-color-fg-muted)"
diff --git a/app/client/packages/design-system/ads/src/Templates/EntityExplorer/EntityGroupsList/EntityGroupsList.stories.tsx b/app/client/packages/design-system/ads/src/Templates/EntityExplorer/EntityGroupsList/EntityGroupsList.stories.tsx
index 0f0f6ad5ba..6b1e0d4412 100644
--- a/app/client/packages/design-system/ads/src/Templates/EntityExplorer/EntityGroupsList/EntityGroupsList.stories.tsx
+++ b/app/client/packages/design-system/ads/src/Templates/EntityExplorer/EntityGroupsList/EntityGroupsList.stories.tsx
@@ -19,7 +19,12 @@ export default meta;
 const EntityGroupTemplate = <T,>(props: EntityGroupProps<T>) => {
   const { addConfig, className, groupTitle, items } = props;
 
-  return <EntityGroup group={{ addConfig, className, groupTitle, items }} />;
+  return (
+    <EntityGroup
+      group={{ addConfig, className, groupTitle, items }}
+      visibleItems={5}
+    />
+  );
 };
 
 export const SingleGroupWithAddNLazyLoad = EntityGroupTemplate.bind(
@@ -83,7 +88,7 @@ SingleGroupWithAddNLazyLoad.args = {
 const EntityGroupsListTemplate = <T,>(props: EntityGroupsListProps<T>) => {
   const { groups } = props;
 
-  return <EntityGroupsList groups={groups} showDivider />;
+  return <EntityGroupsList groups={groups} showDivider visibleItems={5} />;
 };
 
 export const MultipleGroupsWithAddNLazyLoad = EntityGroupsListTemplate.bind(
diff --git a/app/client/packages/design-system/ads/src/Templates/EntityExplorer/EntityGroupsList/EntityGroupsList.tsx b/app/client/packages/design-system/ads/src/Templates/EntityExplorer/EntityGroupsList/EntityGroupsList.tsx
index 9493867fa5..05ad78b69a 100644
--- a/app/client/packages/design-system/ads/src/Templates/EntityExplorer/EntityGroupsList/EntityGroupsList.tsx
+++ b/app/client/packages/design-system/ads/src/Templates/EntityExplorer/EntityGroupsList/EntityGroupsList.tsx
@@ -1,4 +1,4 @@
-import React, { useMemo } from "react";
+import React, { useEffect, useMemo } from "react";
 import { LoadMore } from "./EntityGroupsList.styles";
 import type {
   EntityGroupProps,
@@ -9,13 +9,13 @@ import { List, ListItem, type ListItemProps } from "../../../List";
 import { Divider } from "../../../Divider";
 
 const EntityGroupsList = <T,>(props: EntityGroupsListProps<T>) => {
-  const { flexProps, groups, showDivider } = props;
+  const { flexProps, groups, showDivider, visibleItems } = props;
 
   return (
     <Flex flexDirection="column" gap="spaces-4" overflowY="auto" {...flexProps}>
       {groups.map((group, index) => (
         <Flex flexDirection="column" gap="spaces-3" key={group.groupTitle}>
-          <EntityGroup group={group} />
+          <EntityGroup group={group} visibleItems={visibleItems} />
           {showDivider && index < groups.length - 1 && (
             <Divider
               style={{ borderColor: "var(--ads-v2-color-border-muted)" }}
@@ -27,8 +27,20 @@ const EntityGroupsList = <T,>(props: EntityGroupsListProps<T>) => {
   );
 };
 
-const EntityGroup = <T,>({ group }: { group: EntityGroupProps<T> }) => {
-  const [visibleItemsCount, setVisibleItemsCount] = React.useState(5);
+const EntityGroup = <T,>({
+  group,
+  visibleItems,
+}: {
+  group: EntityGroupProps<T>;
+  visibleItems?: number;
+}) => {
+  const [visibleItemsCount, setVisibleItemsCount] = React.useState(
+    visibleItems || group.items.length,
+  );
+
+  useEffect(() => {
+    setVisibleItemsCount(visibleItems || group.items.length);
+  }, [group.items.length, visibleItems]);
 
   const lazyLoading = useMemo(() => {
     return {
diff --git a/app/client/packages/design-system/ads/src/Templates/EntityExplorer/EntityGroupsList/EntityGroupsList.types.ts b/app/client/packages/design-system/ads/src/Templates/EntityExplorer/EntityGroupsList/EntityGroupsList.types.ts
index 84fdad7103..b086483823 100644
--- a/app/client/packages/design-system/ads/src/Templates/EntityExplorer/EntityGroupsList/EntityGroupsList.types.ts
+++ b/app/client/packages/design-system/ads/src/Templates/EntityExplorer/EntityGroupsList/EntityGroupsList.types.ts
@@ -16,4 +16,5 @@ export interface EntityGroupsListProps<T> {
   groups: EntityGroupProps<T>[];
   flexProps?: FlexProps;
   showDivider?: boolean;
+  visibleItems?: number;
 }
diff --git a/app/client/src/ce/selectors/entitiesSelector.ts b/app/client/src/ce/selectors/entitiesSelector.ts
index a512b77ed0..df1c6d0a85 100644
--- a/app/client/src/ce/selectors/entitiesSelector.ts
+++ b/app/client/src/ce/selectors/entitiesSelector.ts
@@ -1670,7 +1670,7 @@ export const getQuerySegmentItems = createSelector(
       }
 
       return {
-        icon: ActionUrlIcon(iconUrl),
+        icon: ActionUrlIcon(iconUrl, "16", "16"),
         title: action.config.name,
         key: action.config.baseId,
         type: action.config.pluginType,
diff --git a/app/client/src/components/editorComponents/Debugger/StateInspector/StateInspector.tsx b/app/client/src/components/editorComponents/Debugger/StateInspector/StateInspector.tsx
index 6ef98d4043..831de87e2a 100644
--- a/app/client/src/components/editorComponents/Debugger/StateInspector/StateInspector.tsx
+++ b/app/client/src/components/editorComponents/Debugger/StateInspector/StateInspector.tsx
@@ -1,9 +1,8 @@
 import React, { useState } from "react";
 import ReactJson from "react-json-view";
 import {
+  EntityGroupsList,
   Flex,
-  List,
-  ListItem,
   type ListItemProps,
   SearchInput,
   Text,
@@ -51,33 +50,19 @@ export const StateInspector = () => {
             value={searchTerm}
           />
         </Flex>
-        <Flex
-          flexDirection="column"
-          gap="spaces-3"
-          overflowY="auto"
-          pl="spaces-3"
-          pr="spaces-3"
-        >
-          {filteredItemGroups.map((item) => (
-            <Styled.Group
-              flexDirection="column"
-              gap="spaces-2"
-              key={item.group}
-            >
-              <Styled.GroupName
-                className="overflow-hidden overflow-ellipsis whitespace-nowrap flex-shrink-0"
-                kind="body-s"
-              >
-                {item.group}
-              </Styled.GroupName>
-              <List>
-                {item.items.map((eachItem) => (
-                  <ListItem key={eachItem.title} {...eachItem} />
-                ))}
-              </List>
-            </Styled.Group>
-          ))}
-        </Flex>
+        <EntityGroupsList
+          flexProps={{
+            pl: "spaces-3",
+            pr: "spaces-3",
+          }}
+          groups={filteredItemGroups.map((item) => {
+            return {
+              groupTitle: item.group,
+              items: item.items,
+              className: "",
+            };
+          })}
+        />
       </Flex>
       {selectedItem ? (
         <Flex
diff --git a/app/client/src/pages/Editor/Explorer/ExplorerIcons.tsx b/app/client/src/pages/Editor/Explorer/ExplorerIcons.tsx
index d4e02619c8..f490ee4371 100644
--- a/app/client/src/pages/Editor/Explorer/ExplorerIcons.tsx
+++ b/app/client/src/pages/Editor/Explorer/ExplorerIcons.tsx
@@ -350,8 +350,8 @@ export function AppsmithAIIcon() {
   );
 }
 
-export function ActionUrlIcon(url: string) {
-  return <img src={url} />;
+export function ActionUrlIcon(url: string, height?: string, width?: string) {
+  return <img height={height} src={url} width={width} />;
 }
 
 export function DefaultModuleIcon() {
diff --git a/app/client/src/pages/Editor/IDE/EditorPane/JS/Add.tsx b/app/client/src/pages/Editor/IDE/EditorPane/JS/Add.tsx
index ccfb10b9c7..a15f59e6af 100644
--- a/app/client/src/pages/Editor/IDE/EditorPane/JS/Add.tsx
+++ b/app/client/src/pages/Editor/IDE/EditorPane/JS/Add.tsx
@@ -21,6 +21,7 @@ import { getIDEViewMode } from "selectors/ideSelectors";
 import type { FlexProps } from "@appsmith/ads";
 import { EditorViewMode } from "ee/entities/IDE/constants";
 import { filterEntityGroupsBySearchTerm } from "IDE/utils";
+import { DEFAULT_GROUP_LIST_SIZE } from "../../constants";
 
 const AddJS = () => {
   const dispatch = useDispatch();
@@ -98,7 +99,14 @@ const AddJS = () => {
         />
         <SearchInput onChange={setSearchTerm} value={searchTerm} />
         {filteredItemGroups.length > 0 ? (
-          <EntityGroupsList groups={filteredItemGroups} showDivider />
+          <EntityGroupsList
+            flexProps={{
+              pb: "spaces-3",
+            }}
+            groups={filteredItemGroups}
+            showDivider
+            visibleItems={DEFAULT_GROUP_LIST_SIZE}
+          />
         ) : null}
         {filteredItemGroups.length === 0 && searchTerm !== "" ? (
           <NoSearchResults
diff --git a/app/client/src/pages/Editor/IDE/EditorPane/Query/Add.tsx b/app/client/src/pages/Editor/IDE/EditorPane/Query/Add.tsx
index 3df4391e67..a19e3c3f50 100644
--- a/app/client/src/pages/Editor/IDE/EditorPane/Query/Add.tsx
+++ b/app/client/src/pages/Editor/IDE/EditorPane/Query/Add.tsx
@@ -18,6 +18,7 @@ import { useSelector } from "react-redux";
 import { getIDEViewMode } from "selectors/ideSelectors";
 import { EditorViewMode } from "ee/entities/IDE/constants";
 import { filterEntityGroupsBySearchTerm } from "IDE/utils";
+import { DEFAULT_GROUP_LIST_SIZE } from "../../constants";
 
 const AddQuery = () => {
   const [searchTerm, setSearchTerm] = useState("");
@@ -59,7 +60,14 @@ const AddQuery = () => {
         />
         <SearchInput autoFocus onChange={setSearchTerm} value={searchTerm} />
         {filteredItemGroups.length > 0 ? (
-          <EntityGroupsList groups={filteredItemGroups} showDivider />
+          <EntityGroupsList
+            flexProps={{
+              pb: "spaces-3",
+            }}
+            groups={filteredItemGroups}
+            showDivider
+            visibleItems={DEFAULT_GROUP_LIST_SIZE}
+          />
         ) : null}
         {filteredItemGroups.length === 0 && searchTerm !== "" ? (
           <NoSearchResults
diff --git a/app/client/src/pages/Editor/IDE/LeftPane/DataSidePane.tsx b/app/client/src/pages/Editor/IDE/LeftPane/DataSidePane.tsx
index f787b141dd..2219569a63 100644
--- a/app/client/src/pages/Editor/IDE/LeftPane/DataSidePane.tsx
+++ b/app/client/src/pages/Editor/IDE/LeftPane/DataSidePane.tsx
@@ -1,6 +1,6 @@
 import React, { useCallback, useEffect, useMemo, useState } from "react";
 import styled from "styled-components";
-import { Flex, List, ListItem, Text } from "@appsmith/ads";
+import { EntityGroupsList, Flex } from "@appsmith/ads";
 import { useSelector } from "react-redux";
 import {
   getDatasourceUsageCountForApp,
@@ -43,10 +43,6 @@ const DatasourceIcon = styled.img`
   width: 16px;
 `;
 
-const StyledList = styled(List)`
-  gap: 0;
-`;
-
 interface DataSidePaneProps {
   // TODO: Fix this the next time the file is edited
   // eslint-disable-next-line @typescript-eslint/no-explicit-any
@@ -128,45 +124,33 @@ const DataSidePane = (props: DataSidePaneProps) => {
             icon={"datasource-v3"}
           />
         ) : null}
-        <Flex
-          flexDirection={"column"}
-          gap="spaces-4"
-          overflowY="auto"
-          px="spaces-3"
-        >
-          {Object.entries(groupedDatasources).map(([key, value]) => (
-            <Flex flexDirection={"column"} key={key}>
-              <Flex px="spaces-3" py="spaces-1">
-                <Text
-                  className="overflow-hidden overflow-ellipsis whitespace-nowrap"
-                  kind="body-s"
-                >
-                  {key}
-                </Text>
-              </Flex>
-              <StyledList>
-                {value.map((data) => (
-                  <ListItem
-                    className="t--datasource"
-                    description={get(dsUsageMap, data.id, "")}
-                    descriptionType="block"
-                    isSelected={currentSelectedDatasource === data.id}
-                    key={data.id}
-                    onClick={() => goToDatasource(data.id)}
-                    startIcon={
-                      <DatasourceIcon
-                        src={getAssetUrl(
-                          groupedPlugins[data.pluginId].iconLocation,
-                        )}
-                      />
-                    }
-                    title={data.name}
-                  />
-                ))}
-              </StyledList>
-            </Flex>
-          ))}
-        </Flex>
+        <EntityGroupsList
+          flexProps={{ px: "spaces-3" }}
+          groups={Object.entries(groupedDatasources).map(([key, value]) => {
+            return {
+              groupTitle: key,
+              items: value.map((data) => {
+                return {
+                  id: data.id,
+                  title: data.name,
+                  startIcon: (
+                    <DatasourceIcon
+                      src={getAssetUrl(
+                        groupedPlugins[data.pluginId].iconLocation,
+                      )}
+                    />
+                  ),
+                  description: get(dsUsageMap, data.id, ""),
+                  descriptionType: "block",
+                  className: "t--datasource",
+                  isSelected: currentSelectedDatasource === data.id,
+                  onClick: () => goToDatasource(data.id),
+                };
+              }),
+              className: "",
+            };
+          })}
+        />
       </PaneBody>
     </Flex>
   );
diff --git a/app/client/src/pages/Editor/IDE/RightPane/components/CreateNewQueryModal.tsx b/app/client/src/pages/Editor/IDE/RightPane/components/CreateNewQueryModal.tsx
index 78d09fdaa0..c197ab609c 100644
--- a/app/client/src/pages/Editor/IDE/RightPane/components/CreateNewQueryModal.tsx
+++ b/app/client/src/pages/Editor/IDE/RightPane/components/CreateNewQueryModal.tsx
@@ -12,6 +12,7 @@ import { CREATE_A_NEW_ITEM, createMessage } from "ee/constants/messages";
 import { useGroupedAddQueryOperations } from "ee/pages/Editor/IDE/EditorPane/Query/hooks";
 import { getShowCreateNewModal } from "selectors/ideSelectors";
 import { setShowQueryCreateNewModal } from "actions/ideActions";
+import { DEFAULT_GROUP_LIST_SIZE } from "../../constants";
 
 const CreateNewQueryModal: React.FC = () => {
   const dispatch = useDispatch();
@@ -36,7 +37,11 @@ const CreateNewQueryModal: React.FC = () => {
       <ModalContent className="!w-[400px] action-creator-create-new-modal">
         <ModalHeader>{createMessage(CREATE_A_NEW_ITEM, "query")}</ModalHeader>
         <ModalBody>
-          <EntityGroupsList groups={itemGroups} showDivider />
+          <EntityGroupsList
+            groups={itemGroups}
+            showDivider
+            visibleItems={DEFAULT_GROUP_LIST_SIZE}
+          />
         </ModalBody>
       </ModalContent>
     </Modal>
diff --git a/app/client/src/pages/Editor/IDE/constants.ts b/app/client/src/pages/Editor/IDE/constants.ts
new file mode 100644
index 0000000000..3f7096e37f
--- /dev/null
+++ b/app/client/src/pages/Editor/IDE/constants.ts
@@ -0,0 +1 @@
+export const DEFAULT_GROUP_LIST_SIZE = 5;