diff --git a/supervisor/backups/backup.py b/supervisor/backups/backup.py
index 094d60c98..6fad87a82 100644
--- a/supervisor/backups/backup.py
+++ b/supervisor/backups/backup.py
@@ -183,7 +183,15 @@ class Backup(CoreSysAttributes):
             days=self.sys_backups.days_until_stale
         )
 
-    def new(self, slug, name, date, sys_type, password=None, compressed=True):
+    def new(
+        self,
+        slug: str,
+        name: str,
+        date: str,
+        sys_type: BackupType,
+        password: str | None = None,
+        compressed: bool = True,
+    ):
         """Initialize a new backup."""
         # Init metadata
         self._data[ATTR_VERSION] = 2
@@ -288,7 +296,7 @@ class Backup(CoreSysAttributes):
 
     async def __aenter__(self):
         """Async context to open a backup."""
-        self._tmp = TemporaryDirectory(dir=str(self.sys_config.path_tmp))
+        self._tmp = TemporaryDirectory(dir=str(self.tarfile.parent))
 
         # create a backup
         if not self.tarfile.is_file():
diff --git a/tests/backups/test_backup.py b/tests/backups/test_backup.py
new file mode 100644
index 000000000..3e7b07e1b
--- /dev/null
+++ b/tests/backups/test_backup.py
@@ -0,0 +1,22 @@
+"""Test backups."""
+
+from os import listdir
+from pathlib import Path
+
+from supervisor.backups.backup import Backup
+from supervisor.backups.const import BackupType
+from supervisor.coresys import CoreSys
+
+
+async def test_new_backup_stays_in_folder(coresys: CoreSys, tmp_path: Path):
+    """Test making a new backup operates entirely within folder where backup will be stored."""
+    backup = Backup(coresys, tmp_path / "my_backup.tar")
+    backup.new("test", "test", "2023-07-21T21:05:00.000000+00:00", BackupType.FULL)
+    assert not listdir(tmp_path)
+
+    async with backup:
+        assert len(listdir(tmp_path)) == 1
+        assert not backup.tarfile.exists()
+
+    assert len(listdir(tmp_path)) == 1
+    assert backup.tarfile.exists()