diff --git a/homeassistant/components/esphome/config_flow.py b/homeassistant/components/esphome/config_flow.py
index 72d670ee029..03dab1f408c 100644
--- a/homeassistant/components/esphome/config_flow.py
+++ b/homeassistant/components/esphome/config_flow.py
@@ -57,6 +57,7 @@ ERROR_INVALID_ENCRYPTION_KEY = "invalid_psk"
 _LOGGER = logging.getLogger(__name__)
 
 ZERO_NOISE_PSK = "MDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDAwMDA="
+DEFAULT_NAME = "ESPHome"
 
 
 class EsphomeFlowHandler(ConfigFlow, domain=DOMAIN):
@@ -117,8 +118,8 @@ class EsphomeFlowHandler(ConfigFlow, domain=DOMAIN):
         self._host = entry_data[CONF_HOST]
         self._port = entry_data[CONF_PORT]
         self._password = entry_data[CONF_PASSWORD]
-        self._name = self._reauth_entry.title
         self._device_name = entry_data.get(CONF_DEVICE_NAME)
+        self._name = self._reauth_entry.title
 
         # Device without encryption allows fetching device info. We can then check
         # if the device is no longer using a password. If we did try with a password,
@@ -147,7 +148,7 @@ class EsphomeFlowHandler(ConfigFlow, domain=DOMAIN):
 
         return self.async_show_form(
             step_id="reauth_encryption_removed_confirm",
-            description_placeholders={"name": self._name},
+            description_placeholders={"name": self._async_get_human_readable_name()},
         )
 
     async def async_step_reauth_confirm(
@@ -172,7 +173,7 @@ class EsphomeFlowHandler(ConfigFlow, domain=DOMAIN):
             step_id="reauth_confirm",
             data_schema=vol.Schema({vol.Required(CONF_NOISE_PSK): str}),
             errors=errors,
-            description_placeholders={"name": self._name},
+            description_placeholders={"name": self._async_get_human_readable_name()},
         )
 
     async def async_step_reconfigure(
@@ -189,12 +190,14 @@ class EsphomeFlowHandler(ConfigFlow, domain=DOMAIN):
 
     @property
     def _name(self) -> str:
-        return self.__name or "ESPHome"
+        return self.__name or DEFAULT_NAME
 
     @_name.setter
     def _name(self, value: str) -> None:
         self.__name = value
-        self.context["title_placeholders"] = {"name": self._name}
+        self.context["title_placeholders"] = {
+            "name": self._async_get_human_readable_name()
+        }
 
     async def _async_try_fetch_device_info(self) -> ConfigFlowResult:
         """Try to fetch device info and return any errors."""
@@ -254,7 +257,8 @@ class EsphomeFlowHandler(ConfigFlow, domain=DOMAIN):
         if user_input is not None:
             return await self._async_try_fetch_device_info()
         return self.async_show_form(
-            step_id="discovery_confirm", description_placeholders={"name": self._name}
+            step_id="discovery_confirm",
+            description_placeholders={"name": self._async_get_human_readable_name()},
         )
 
     async def async_step_zeroconf(
@@ -274,8 +278,8 @@ class EsphomeFlowHandler(ConfigFlow, domain=DOMAIN):
         # Hostname is format: livingroom.local.
         device_name = discovery_info.hostname.removesuffix(".local.")
 
-        self._name = discovery_info.properties.get("friendly_name", device_name)
         self._device_name = device_name
+        self._name = discovery_info.properties.get("friendly_name", device_name)
         self._host = discovery_info.host
         self._port = discovery_info.port
         self._noise_required = bool(discovery_info.properties.get("api_encryption"))
@@ -593,9 +597,30 @@ class EsphomeFlowHandler(ConfigFlow, domain=DOMAIN):
             step_id="encryption_key",
             data_schema=vol.Schema({vol.Required(CONF_NOISE_PSK): str}),
             errors=errors,
-            description_placeholders={"name": self._name},
+            description_placeholders={"name": self._async_get_human_readable_name()},
         )
 
+    @callback
+    def _async_get_human_readable_name(self) -> str:
+        """Return a human readable name for the entry."""
+        entry: ConfigEntry | None = None
+        if self.source == SOURCE_REAUTH:
+            entry = self._reauth_entry
+        elif self.source == SOURCE_RECONFIGURE:
+            entry = self._reconfig_entry
+        friendly_name = self._name
+        device_name = self._device_name
+        if (
+            device_name
+            and friendly_name in (DEFAULT_NAME, device_name)
+            and entry
+            and entry.title != friendly_name
+        ):
+            friendly_name = entry.title
+        if not device_name or friendly_name == device_name:
+            return friendly_name
+        return f"{friendly_name} ({device_name})"
+
     async def async_step_authenticate(
         self, user_input: dict[str, Any] | None = None, error: str | None = None
     ) -> ConfigFlowResult:
@@ -614,7 +639,7 @@ class EsphomeFlowHandler(ConfigFlow, domain=DOMAIN):
         return self.async_show_form(
             step_id="authenticate",
             data_schema=vol.Schema({vol.Required("password"): str}),
-            description_placeholders={"name": self._name},
+            description_placeholders={"name": self._async_get_human_readable_name()},
             errors=errors,
         )
 
@@ -648,9 +673,9 @@ class EsphomeFlowHandler(ConfigFlow, domain=DOMAIN):
             return "connection_error"
         finally:
             await cli.disconnect(force=True)
-        self._name = self._device_info.friendly_name or self._device_info.name
-        self._device_name = self._device_info.name
         self._device_mac = format_mac(self._device_info.mac_address)
+        self._device_name = self._device_info.name
+        self._name = self._device_info.friendly_name or self._device_info.name
         return None
 
     async def fetch_device_info(self) -> str | None:
diff --git a/homeassistant/components/esphome/strings.json b/homeassistant/components/esphome/strings.json
index b95537e448e..68d641def6c 100644
--- a/homeassistant/components/esphome/strings.json
+++ b/homeassistant/components/esphome/strings.json
@@ -43,7 +43,7 @@
         "data_description": {
           "password": "Passwords are deprecated and will be removed in a future version. Please update your ESPHome device YAML configuration to use an encryption key instead."
         },
-        "description": "Please enter the password you set in your ESPHome device YAML configuration for {name}."
+        "description": "Please enter the password you set in your ESPHome device YAML configuration for `{name}`."
       },
       "encryption_key": {
         "data": {
@@ -52,7 +52,7 @@
         "data_description": {
           "noise_psk": "The encryption key is used to encrypt the connection between Home Assistant and the ESPHome device. You can find this in the api: section of your ESPHome device YAML configuration."
         },
-        "description": "Please enter the encryption key for {name}. You can find it in the ESPHome Dashboard or in your ESPHome device YAML configuration."
+        "description": "Please enter the encryption key for `{name}`. You can find it in the ESPHome Dashboard or in your ESPHome device YAML configuration."
       },
       "reauth_confirm": {
         "data": {
@@ -61,10 +61,10 @@
         "data_description": {
           "noise_psk": "[%key:component::esphome::config::step::encryption_key::data_description::noise_psk%]"
         },
-        "description": "The ESPHome device {name} enabled transport encryption or changed the encryption key. Please enter the updated key. You can find it in the ESPHome Dashboard or in your ESPHome device YAML configuration."
+        "description": "The ESPHome device `{name}` enabled transport encryption or changed the encryption key. Please enter the updated key. You can find it in the ESPHome Dashboard or in your ESPHome device YAML configuration."
       },
       "reauth_encryption_removed_confirm": {
-        "description": "The ESPHome device {name} disabled transport encryption. Please confirm that you want to remove the encryption key and allow unencrypted connections."
+        "description": "The ESPHome device `{name}` disabled transport encryption. Please confirm that you want to remove the encryption key and allow unencrypted connections."
       },
       "discovery_confirm": {
         "description": "Do you want to add the device `{name}` to Home Assistant?",
diff --git a/tests/components/esphome/test_config_flow.py b/tests/components/esphome/test_config_flow.py
index 19a42792ec2..3e81df734b3 100644
--- a/tests/components/esphome/test_config_flow.py
+++ b/tests/components/esphome/test_config_flow.py
@@ -27,6 +27,7 @@ from homeassistant.components.esphome.const import (
     DEFAULT_NEW_CONFIG_ALLOW_ALLOW_SERVICE_CALLS,
     DOMAIN,
 )
+from homeassistant.config_entries import ConfigFlowResult
 from homeassistant.const import CONF_HOST, CONF_PASSWORD, CONF_PORT
 from homeassistant.core import HomeAssistant
 from homeassistant.data_entry_flow import FlowResultType
@@ -50,6 +51,17 @@ def mock_setup_entry():
         yield
 
 
+def get_flow_context(hass: HomeAssistant, result: ConfigFlowResult) -> dict[str, Any]:
+    """Get the flow context from the result of async_init or async_configure."""
+    flow = next(
+        flow
+        for flow in hass.config_entries.flow.async_progress()
+        if flow["flow_id"] == result["flow_id"]
+    )
+
+    return flow["context"]
+
+
 @pytest.mark.usefixtures("mock_zeroconf")
 async def test_user_connection_works(
     hass: HomeAssistant, mock_client, mock_setup_entry: None
@@ -150,6 +162,9 @@ async def test_user_sets_unique_id(
 
     assert discovery_result["type"] is FlowResultType.FORM
     assert discovery_result["step_id"] == "discovery_confirm"
+    assert discovery_result["description_placeholders"] == {
+        "name": "test8266",
+    }
 
     discovery_result = await hass.config_entries.flow.async_configure(
         discovery_result["flow_id"],
@@ -234,6 +249,9 @@ async def test_user_causes_zeroconf_to_abort(
 
     assert discovery_result["type"] is FlowResultType.FORM
     assert discovery_result["step_id"] == "discovery_confirm"
+    assert discovery_result["description_placeholders"] == {
+        "name": "test8266",
+    }
 
     result = await hass.config_entries.flow.async_init(
         "esphome",
@@ -297,6 +315,7 @@ async def test_user_with_password(
 
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "authenticate"
+    assert result["description_placeholders"] == {"name": "test"}
 
     result = await hass.config_entries.flow.async_configure(
         result["flow_id"], user_input={CONF_PASSWORD: "password1"}
@@ -326,6 +345,7 @@ async def test_user_invalid_password(hass: HomeAssistant, mock_client) -> None:
 
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "authenticate"
+    assert result["description_placeholders"] == {"name": "test"}
 
     mock_client.connect.side_effect = InvalidAuthAPIError
 
@@ -335,6 +355,7 @@ async def test_user_invalid_password(hass: HomeAssistant, mock_client) -> None:
 
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "authenticate"
+    assert result["description_placeholders"] == {"name": "test"}
     assert result["errors"] == {"base": "invalid_auth"}
 
 
@@ -348,7 +369,7 @@ async def test_user_dashboard_has_wrong_key(
     """Test user step with key from dashboard that is incorrect."""
     mock_client.device_info.side_effect = [
         RequiresEncryptionAPIError,
-        InvalidEncryptionKeyAPIError,
+        InvalidEncryptionKeyAPIError("Wrong key", "test"),
         DeviceInfo(
             uses_password=False,
             name="test",
@@ -369,6 +390,7 @@ async def test_user_dashboard_has_wrong_key(
 
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "encryption_key"
+    assert result["description_placeholders"] == {"name": "test"}
 
     result = await hass.config_entries.flow.async_configure(
         result["flow_id"], user_input={CONF_NOISE_PSK: VALID_NOISE_PSK}
@@ -477,6 +499,7 @@ async def test_user_discovers_name_and_gets_key_from_dashboard_fails(
 
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "encryption_key"
+    assert result["description_placeholders"] == {"name": "test"}
 
     result = await hass.config_entries.flow.async_configure(
         result["flow_id"], user_input={CONF_NOISE_PSK: VALID_NOISE_PSK}
@@ -532,6 +555,7 @@ async def test_user_discovers_name_and_dashboard_is_unavailable(
 
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "encryption_key"
+    assert result["description_placeholders"] == {"name": "test"}
 
     result = await hass.config_entries.flow.async_configure(
         result["flow_id"], user_input={CONF_NOISE_PSK: VALID_NOISE_PSK}
@@ -563,6 +587,7 @@ async def test_login_connection_error(
 
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "authenticate"
+    assert result["description_placeholders"] == {"name": "test"}
 
     mock_client.connect.side_effect = APIConnectionError
 
@@ -572,6 +597,7 @@ async def test_login_connection_error(
 
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "authenticate"
+    assert result["description_placeholders"] == {"name": "test"}
     assert result["errors"] == {"base": "connection_error"}
 
 
@@ -588,12 +614,18 @@ async def test_discovery_initiation(
         port=6053,
         properties={
             "mac": "1122334455aa",
+            "friendly_name": "The Test",
         },
         type="mock_type",
     )
     flow = await hass.config_entries.flow.async_init(
         "esphome", context={"source": config_entries.SOURCE_ZEROCONF}, data=service_info
     )
+    assert get_flow_context(hass, flow) == {
+        "source": config_entries.SOURCE_ZEROCONF,
+        "title_placeholders": {"name": "The Test (test)"},
+        "unique_id": "11:22:33:44:55:aa",
+    }
 
     result = await hass.config_entries.flow.async_configure(
         flow["flow_id"], user_input={}
@@ -682,6 +714,7 @@ async def test_discovery_duplicate_data(
     )
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "discovery_confirm"
+    assert result["description_placeholders"] == {"name": "test"}
 
     result = await hass.config_entries.flow.async_init(
         "esphome", data=service_info, context={"source": config_entries.SOURCE_ZEROCONF}
@@ -742,6 +775,7 @@ async def test_user_requires_psk(
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "encryption_key"
     assert result["errors"] == {}
+    assert result["description_placeholders"] == {"name": "ESPHome"}
 
     assert len(mock_client.connect.mock_calls) == 2
     assert len(mock_client.device_info.mock_calls) == 2
@@ -764,6 +798,7 @@ async def test_encryption_key_valid_psk(
 
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "encryption_key"
+    assert result["description_placeholders"] == {"name": "ESPHome"}
 
     mock_client.device_info = AsyncMock(
         return_value=DeviceInfo(uses_password=False, name="test")
@@ -799,6 +834,7 @@ async def test_encryption_key_invalid_psk(
 
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "encryption_key"
+    assert result["description_placeholders"] == {"name": "ESPHome"}
 
     mock_client.device_info.side_effect = InvalidEncryptionKeyAPIError
     result = await hass.config_entries.flow.async_configure(
@@ -808,6 +844,7 @@ async def test_encryption_key_invalid_psk(
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "encryption_key"
     assert result["errors"] == {"base": "invalid_psk"}
+    assert result["description_placeholders"] == {"name": "ESPHome"}
     assert mock_client.noise_psk == INVALID_NOISE_PSK
 
 
@@ -823,6 +860,9 @@ async def test_reauth_initiation(hass: HomeAssistant, mock_client) -> None:
     result = await entry.start_reauth_flow(hass)
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "reauth_confirm"
+    assert result["description_placeholders"] == {
+        "name": "Mock Title (test)",
+    }
 
 
 @pytest.mark.usefixtures("mock_zeroconf")
@@ -1025,6 +1065,9 @@ async def test_reauth_fixed_via_dashboard_at_confirm(
 
     assert result["type"] is FlowResultType.FORM, result
     assert result["step_id"] == "reauth_confirm"
+    assert result["description_placeholders"] == {
+        "name": "Mock Title (test)",
+    }
 
     mock_dashboard["configured"].append(
         {
@@ -1070,6 +1113,9 @@ async def test_reauth_confirm_invalid(
 
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "reauth_confirm"
+    assert result["description_placeholders"] == {
+        "name": "Mock Title (test)",
+    }
     assert result["errors"]
     assert result["errors"]["base"] == "invalid_psk"
 
@@ -1108,6 +1154,9 @@ async def test_reauth_confirm_invalid_with_unique_id(
 
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "reauth_confirm"
+    assert result["description_placeholders"] == {
+        "name": "Mock Title (test)",
+    }
     assert result["errors"]
     assert result["errors"]["base"] == "invalid_psk"
 
@@ -1145,6 +1194,9 @@ async def test_reauth_encryption_key_removed(
     result = await entry.start_reauth_flow(hass)
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "reauth_encryption_removed_confirm"
+    assert result["description_placeholders"] == {
+        "name": "Mock Title (test)",
+    }
 
     result = await hass.config_entries.flow.async_configure(
         result["flow_id"], user_input={}
@@ -1370,6 +1422,7 @@ async def test_zeroconf_encryption_key_via_dashboard(
 
     assert flow["type"] is FlowResultType.FORM
     assert flow["step_id"] == "discovery_confirm"
+    assert flow["description_placeholders"] == {"name": "test8266"}
 
     mock_dashboard["configured"].append(
         {
@@ -1437,6 +1490,7 @@ async def test_zeroconf_encryption_key_via_dashboard_with_api_encryption_prop(
 
     assert flow["type"] is FlowResultType.FORM
     assert flow["step_id"] == "discovery_confirm"
+    assert flow["description_placeholders"] == {"name": "test8266"}
 
     mock_dashboard["configured"].append(
         {
@@ -1502,6 +1556,7 @@ async def test_zeroconf_no_encryption_key_via_dashboard(
 
     assert flow["type"] is FlowResultType.FORM
     assert flow["step_id"] == "discovery_confirm"
+    assert flow["description_placeholders"] == {"name": "test8266"}
 
     await dashboard.async_get_dashboard(hass).async_refresh()
 
@@ -1513,6 +1568,7 @@ async def test_zeroconf_no_encryption_key_via_dashboard(
 
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "encryption_key"
+    assert result["description_placeholders"] == {"name": "test8266"}
 
 
 async def test_option_flow_allow_service_calls(
@@ -1625,6 +1681,7 @@ async def test_user_discovers_name_no_dashboard(
 
     assert result["type"] is FlowResultType.FORM
     assert result["step_id"] == "encryption_key"
+    assert result["description_placeholders"] == {"name": "test"}
 
     result = await hass.config_entries.flow.async_configure(
         result["flow_id"], user_input={CONF_NOISE_PSK: VALID_NOISE_PSK}
@@ -1917,6 +1974,54 @@ async def test_reconfig_success_with_new_ip_same_name(
     assert entry.data[CONF_NOISE_PSK] == VALID_NOISE_PSK
 
 
+@pytest.mark.usefixtures("mock_zeroconf", "mock_setup_entry")
+async def test_reconfig_success_noise_psk_changes(
+    hass: HomeAssistant, mock_client: APIClient
+) -> None:
+    """Test reconfig initiation with new ip and new noise psk."""
+    entry = MockConfigEntry(
+        domain=DOMAIN,
+        data={
+            CONF_HOST: "127.0.0.1",
+            CONF_PORT: 6053,
+            CONF_PASSWORD: "",
+            CONF_DEVICE_NAME: "test",
+            CONF_NOISE_PSK: VALID_NOISE_PSK,
+        },
+        unique_id="11:22:33:44:55:aa",
+    )
+    entry.add_to_hass(hass)
+
+    result = await entry.start_reconfigure_flow(hass)
+    mock_client.device_info.side_effect = [
+        RequiresEncryptionAPIError,
+        InvalidEncryptionKeyAPIError("Wrong key", "test"),
+        DeviceInfo(uses_password=False, name="test", mac_address="11:22:33:44:55:aa"),
+    ]
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"], user_input={CONF_HOST: "127.0.0.1", CONF_PORT: 6053}
+    )
+
+    assert result["type"] is FlowResultType.FORM
+    assert result["step_id"] == "encryption_key"
+    assert result["description_placeholders"] == {"name": "Mock Title (test)"}
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"], user_input={CONF_NOISE_PSK: VALID_NOISE_PSK}
+    )
+
+    assert result["type"] is FlowResultType.FORM
+    assert result["step_id"] == "encryption_key"
+    assert result["description_placeholders"] == {"name": "Mock Title (test)"}
+    result = await hass.config_entries.flow.async_configure(
+        result["flow_id"], user_input={CONF_NOISE_PSK: VALID_NOISE_PSK}
+    )
+    assert result["type"] is FlowResultType.ABORT
+    assert result["reason"] == "reconfigure_successful"
+    assert entry.data[CONF_HOST] == "127.0.0.1"
+    assert entry.data[CONF_DEVICE_NAME] == "test"
+    assert entry.data[CONF_NOISE_PSK] == VALID_NOISE_PSK
+
+
 @pytest.mark.usefixtures("mock_zeroconf", "mock_setup_entry")
 async def test_reconfig_name_conflict_with_existing_entry(
     hass: HomeAssistant, mock_client: APIClient