diff --git a/changelog.d/23922_websocket_source_reconnect.fix.md b/changelog.d/23922_websocket_source_reconnect.fix.md
new file mode 100644
index 0000000000000..a70b859079d02
--- /dev/null
+++ b/changelog.d/23922_websocket_source_reconnect.fix.md
@@ -0,0 +1,3 @@
+Fixed the `websocket` source entering a "zombie" state when the `connect_timeout_secs` threshold was reached with multiple sources running. The connection timeout is now applied per connect attempt with indefinite retries, rather than as a total timeout limit.
+
+authors: benjamin-awd
diff --git a/src/common/websocket.rs b/src/common/websocket.rs
index 7abb8c589cec6..dab85c0a922be 100644
--- a/src/common/websocket.rs
+++ b/src/common/websocket.rs
@@ -40,6 +40,8 @@ pub enum WebSocketError {
     DnsError { source: dns::DnsError },
     #[snafu(display("No addresses returned."))]
     NoAddresses,
+    #[snafu(display("Connection attempt timed out"))]
+    ConnectionTimedOut,
 }
 
 #[derive(Clone)]
@@ -138,6 +140,41 @@ impl WebSocketConnector {
         }
     }
 
+    /// Connects with exponential backoff, applying a timeout to each individual connection attempt.
+    /// This will retry forever until a connection is established.
+    pub(crate) async fn connect_backoff_with_timeout(
+        &self,
+        timeout_duration: Duration,
+    ) -> WebSocketStream<MaybeTlsStream<TcpStream>> {
+        let mut backoff = ExponentialBackoff::default();
+
+        loop {
+            match time::timeout(timeout_duration, self.connect()).await {
+                Ok(Ok(ws_stream)) => {
+                    emit!(WebSocketConnectionEstablished {});
+                    return ws_stream;
+                }
+                Ok(Err(error)) => {
+                    emit!(WebSocketConnectionFailedError {
+                        error: Box::new(error)
+                    });
+                }
+                Err(_) => {
+                    emit!(WebSocketConnectionFailedError {
+                        error: Box::new(WebSocketError::ConnectionTimedOut),
+                    });
+                }
+            }
+
+            time::sleep(
+                backoff
+                    .next()
+                    .expect("backoff iterator always returns some value"),
+            )
+            .await;
+        }
+    }
+
     #[cfg(feature = "sinks-websocket")]
     pub(crate) async fn healthcheck(&self) -> crate::Result<()> {
         self.connect().await.map(|_| ()).map_err(Into::into)
diff --git a/src/internal_events/websocket.rs b/src/internal_events/websocket.rs
index f08453f0f3585..f4d1cc1553541 100644
--- a/src/internal_events/websocket.rs
+++ b/src/internal_events/websocket.rs
@@ -45,6 +45,7 @@ impl InternalEvent for WebSocketConnectionFailedError {
         );
         counter!(
             "component_errors_total",
+            "protocol" => PROTOCOL,
             "error_code" => "websocket_connection_failed",
             "error_type" => error_type::CONNECTION_FAILED,
             "stage" => error_stage::SENDING,
@@ -232,6 +233,7 @@ impl InternalEvent for WebSocketSendError<'_> {
         );
         counter!(
             "component_errors_total",
+            "protocol" => PROTOCOL,
             "error_code" => "websocket_send_error",
             "error_type" => error_type::CONNECTION_FAILED,
             "stage" => error_stage::PROCESSING,
diff --git a/src/sources/websocket/source.rs b/src/sources/websocket/source.rs
index da515f21f3e37..cf3c75d40f534 100644
--- a/src/sources/websocket/source.rs
+++ b/src/sources/websocket/source.rs
@@ -21,10 +21,9 @@ use crate::{
     common::websocket::{PingInterval, WebSocketConnector, is_closed},
     config::SourceContext,
     internal_events::{
-        ConnectionOpen, OpenGauge, PROTOCOL, WebSocketBytesReceived, WebSocketConnectionError,
-        WebSocketConnectionEstablished, WebSocketConnectionFailedError,
-        WebSocketConnectionShutdown, WebSocketKind, WebSocketMessageReceived,
-        WebSocketReceiveError, WebSocketSendError,
+        ConnectionOpen, OpenGauge, PROTOCOL, WebSocketBytesReceived,
+        WebSocketConnectionFailedError, WebSocketConnectionShutdown, WebSocketKind,
+        WebSocketMessageReceived, WebSocketReceiveError, WebSocketSendError,
     },
     sources::websocket::config::WebSocketConfig,
     vector_lib::codecs::StreamDecodingError,
@@ -297,23 +296,12 @@ impl WebSocketSource {
     async fn try_create_sink_and_stream(
         &self,
     ) -> Result<(WebSocketSink, WebSocketStream), WebSocketSourceError> {
-        let connect_future = self.params.connector.connect_backoff();
-        let timeout = self.config.connect_timeout_secs;
-
-        let ws_stream = match time::timeout(timeout, connect_future).await {
-            Ok(ws) => ws,
-            Err(_) => {
-                emit!(WebSocketConnectionError {
-                    error: TungsteniteError::Io(std::io::Error::new(
-                        std::io::ErrorKind::TimedOut,
-                        "Connection attempt timed out",
-                    ))
-                });
-                return Err(WebSocketSourceError::ConnectTimeout);
-            }
-        };
+        let ws_stream = self
+            .params
+            .connector
+            .connect_backoff_with_timeout(self.config.connect_timeout_secs)
+            .await;
 
-        emit!(WebSocketConnectionEstablished {});
         let (sink, stream) = ws_stream.split();
 
         Ok((Box::pin(sink), Box::pin(stream)))