diff --git a/download/download.go b/download/download.go
index 67aa73021d..06427ead59 100644
--- a/download/download.go
+++ b/download/download.go
@@ -111,11 +111,16 @@ func (d *Downloader) WithBundlePersistence(persist bool) *Downloader {
 	return d
 }
 
-// ClearCache resets the etag value on the downloader
+// ClearCache is deprecated. Use SetCache instead.
 func (d *Downloader) ClearCache() {
 	d.etag = ""
 }
 
+// SetCache sets the given etag value on the downloader.
+func (d *Downloader) SetCache(etag string) {
+	d.etag = etag
+}
+
 // Start tells the Downloader to begin downloading bundles.
 func (d *Downloader) Start(ctx context.Context) {
 	go d.doStart(ctx)
diff --git a/download/download_test.go b/download/download_test.go
index 042e40ec3f..9e62d2e10a 100644
--- a/download/download_test.go
+++ b/download/download_test.go
@@ -253,23 +253,13 @@ func TestEtagCachingLifecycle(t *testing.T) {
 		t.Fatalf("Expected empty downloader ETag but got %v", fixture.d.etag)
 	}
 
-	// simulate successful bundle activation and check updated etag on the downloader
+	// simulate downloader error on first bundle download
+	fixture.server.expCode = 500
 	fixture.server.expEtag = "some etag value"
 	_, err := fixture.d.oneShot(ctx)
-	if err != nil {
-		t.Fatal("Unexpected:", err)
-	} else if len(fixture.updates) != 1 {
-		t.Fatal("expected update")
-	} else if fixture.d.etag != fixture.server.expEtag {
-		t.Fatalf("Expected downloader ETag %v but got %v", fixture.server.expEtag, fixture.d.etag)
-	}
-
-	// simulate downloader error and check etag is cleared
-	fixture.server.expCode = 500
-	_, err = fixture.d.oneShot(ctx)
 	if err == nil {
 		t.Fatal("Expected error but got nil")
-	} else if len(fixture.updates) != 2 {
+	} else if len(fixture.updates) != 1 {
 		t.Fatal("expected update")
 	} else if fixture.d.etag != "" {
 		t.Fatalf("Expected empty downloader ETag but got %v", fixture.d.etag)
@@ -277,7 +267,17 @@ func TestEtagCachingLifecycle(t *testing.T) {
 
 	// simulate successful bundle activation and check updated etag on the downloader
 	fixture.server.expCode = 0
-	fixture.server.expEtag = "some new etag value"
+	_, err = fixture.d.oneShot(ctx)
+	if err != nil {
+		t.Fatal("Unexpected:", err)
+	} else if len(fixture.updates) != 2 {
+		t.Fatal("expected update")
+	} else if fixture.d.etag != fixture.server.expEtag {
+		t.Fatalf("Expected downloader ETag %v but got %v", fixture.server.expEtag, fixture.d.etag)
+	}
+
+	// simulate another successful bundle activation and check updated etag on the downloader
+	fixture.server.expEtag = "some etag value - 2"
 	_, err = fixture.d.oneShot(ctx)
 	if err != nil {
 		t.Fatal("Unexpected:", err)
@@ -287,16 +287,51 @@ func TestEtagCachingLifecycle(t *testing.T) {
 		t.Fatalf("Expected downloader ETag %v but got %v", fixture.server.expEtag, fixture.d.etag)
 	}
 
-	// simulate bundle activation error and check etag is cleared
+	// simulate bundle activation error and check etag is set from the last successful activation
 	fixture.mockBundleActivationError = true
-	fixture.server.expEtag = "some newer etag value"
+	fixture.server.expEtag = "some newer etag value - 3"
 	_, err = fixture.d.oneShot(ctx)
 	if err != nil {
 		t.Fatal("Unexpected:", err)
 	} else if len(fixture.updates) != 4 {
 		t.Fatal("expected update")
-	} else if fixture.d.etag != "" {
-		t.Fatalf("Expected empty downloader ETag but got %v", fixture.d.etag)
+	} else if fixture.d.etag != "some etag value - 2" {
+		t.Fatalf("Expected downloader ETag %v but got %v", "some etag value - 2", fixture.d.etag)
+	}
+
+	// simulate successful bundle activation and check updated etag on the downloader
+	fixture.server.expCode = 0
+	fixture.mockBundleActivationError = false
+	_, err = fixture.d.oneShot(ctx)
+	if err != nil {
+		t.Fatal("Unexpected:", err)
+	} else if len(fixture.updates) != 5 {
+		t.Fatal("expected update")
+	} else if fixture.d.etag != fixture.server.expEtag {
+		t.Fatalf("Expected downloader ETag %v but got %v", fixture.server.expEtag, fixture.d.etag)
+	}
+
+	// simulate downloader error and check etag is set from the last successful activation
+	fixture.server.expCode = 500
+	_, err = fixture.d.oneShot(ctx)
+	if err == nil {
+		t.Fatal("Expected error but got nil")
+	} else if len(fixture.updates) != 6 {
+		t.Fatal("expected update")
+	} else if fixture.d.etag != fixture.server.expEtag {
+		t.Fatalf("Expected downloader ETag %v but got %v", fixture.server.expEtag, fixture.d.etag)
+	}
+
+	// simulate bundle activation error and check etag is set from the last successful activation
+	fixture.mockBundleActivationError = true
+	fixture.server.expCode = 0
+	_, err = fixture.d.oneShot(ctx)
+	if err != nil {
+		t.Fatal("Unexpected:", err)
+	} else if len(fixture.updates) != 7 {
+		t.Fatal("expected update")
+	} else if fixture.d.etag != fixture.server.expEtag {
+		t.Fatalf("Expected downloader ETag %v but got %v", fixture.server.expEtag, fixture.d.etag)
 	}
 }
 
@@ -393,6 +428,7 @@ type testFixture struct {
 	server                    *testServer
 	updates                   []Update
 	mockBundleActivationError bool
+	etags                     map[string]string
 }
 
 func newTestFixture(t *testing.T) testFixture {
@@ -443,6 +479,7 @@ func newTestFixture(t *testing.T) testFixture {
 		client:  tc,
 		server:  &ts,
 		updates: []Update{},
+		etags:   make(map[string]string),
 	}
 }
 
@@ -451,16 +488,20 @@ func (t *testFixture) oneShot(ctx context.Context, u Update) {
 	t.updates = append(t.updates, u)
 
 	if u.Error != nil {
-		t.d.ClearCache()
+		etag := t.etags["test/bundle1"]
+		t.d.SetCache(etag)
 		return
 	}
 
 	if u.Bundle != nil {
 		if t.mockBundleActivationError {
-			t.d.ClearCache()
+			etag := t.etags["test/bundle1"]
+			t.d.SetCache(etag)
 			return
 		}
 	}
+
+	t.etags["test/bundle1"] = u.ETag
 }
 
 type testServer struct {
diff --git a/plugins/bundle/plugin.go b/plugins/bundle/plugin.go
index 2ac7622357..cd08bb5040 100644
--- a/plugins/bundle/plugin.go
+++ b/plugins/bundle/plugin.go
@@ -369,7 +369,8 @@ func (p *Plugin) process(ctx context.Context, name string, u download.Update) {
 		p.log(name).Error("Bundle load failed: %v", u.Error)
 		p.status[name].SetError(u.Error)
 		if !p.stopped {
-			p.downloaders[name].ClearCache()
+			etag := p.etags[name]
+			p.downloaders[name].SetCache(etag)
 		}
 		return
 	}
@@ -386,7 +387,8 @@ func (p *Plugin) process(ctx context.Context, name string, u download.Update) {
 			p.log(name).Error("Bundle activation failed: %v", err)
 			p.status[name].SetError(err)
 			if !p.stopped {
-				p.downloaders[name].ClearCache()
+				etag := p.etags[name]
+				p.downloaders[name].SetCache(etag)
 			}
 			return
 		}
@@ -399,7 +401,8 @@ func (p *Plugin) process(ctx context.Context, name string, u download.Update) {
 				p.log(name).Error("Persisting bundle to disk failed: %v", err)
 				p.status[name].SetError(err)
 				if !p.stopped {
-					p.downloaders[name].ClearCache()
+					etag := p.etags[name]
+					p.downloaders[name].SetCache(etag)
 				}
 				return
 			}
@@ -617,6 +620,7 @@ func (p *Plugin) getBundlePersistPath() (string, error) {
 type bundleLoader interface {
 	Start(context.Context)
 	Stop(context.Context)
+	SetCache(string)
 	ClearCache()
 }
 
@@ -656,3 +660,7 @@ func (*fileLoader) Stop(context.Context) {
 func (*fileLoader) ClearCache() {
 
 }
+
+func (*fileLoader) SetCache(string) {
+
+}