diff --git a/ui/src/components/PrivateKeys/PrivateKeySelectWithAdd.vue b/ui/src/components/PrivateKeys/PrivateKeySelectWithAdd.vue
new file mode 100644
index 00000000000..322ce621fb8
--- /dev/null
+++ b/ui/src/components/PrivateKeys/PrivateKeySelectWithAdd.vue
@@ -0,0 +1,62 @@
+<template>
+  <div>
+    <v-select
+      v-model="selectedPrivateKeyName"
+      :items="privateKeysNames"
+      :list-props="{ class: 'py-0' }"
+      label="Private Key"
+      hint="Select a private key file for authentication"
+      persistent-hint
+      data-test="private-keys-select"
+    >
+      <template #append-item>
+        <v-divider />
+        <v-list-item
+          data-test="add-private-key-btn"
+          @click="showPrivateKeyAdd = true"
+        >
+          <template #prepend>
+            <v-icon
+              color="primary"
+              icon="mdi-plus"
+            />
+          </template>
+          <v-list-item-title class="text-primary">
+            Add New Private Key
+          </v-list-item-title>
+        </v-list-item>
+      </template>
+    </v-select>
+
+    <PrivateKeyAdd
+      v-model="showPrivateKeyAdd"
+      @update="handlePrivateKeyAdded"
+    />
+  </div>
+</template>
+
+<script setup lang="ts">
+import { ref, computed } from "vue";
+import PrivateKeyAdd from "@/components/PrivateKeys/PrivateKeyAdd.vue";
+import usePrivateKeysStore from "@/store/modules/private_keys";
+import { IPrivateKey } from "@/interfaces/IPrivateKey";
+
+const emit = defineEmits<{ "key-added": [] }>();
+
+const selectedPrivateKeyName = defineModel<string>({ required: true });
+const privateKeysStore = usePrivateKeysStore();
+const showPrivateKeyAdd = ref(false);
+
+const privateKeysNames = computed(() => privateKeysStore.privateKeys.map((item: IPrivateKey) => item.name));
+
+const handlePrivateKeyAdded = () => {
+  privateKeysStore.getPrivateKeyList();
+  const newestKey = privateKeysStore.privateKeys[privateKeysStore.privateKeys.length - 1];
+  if (newestKey) {
+    selectedPrivateKeyName.value = newestKey.name;
+    emit("key-added");
+  }
+};
+
+defineExpose({ selectedPrivateKeyName });
+</script>
diff --git a/ui/src/components/Terminal/TerminalLoginForm.vue b/ui/src/components/Terminal/TerminalLoginForm.vue
index 86ee6ec54e9..a3e22cd7926 100644
--- a/ui/src/components/Terminal/TerminalLoginForm.vue
+++ b/ui/src/components/Terminal/TerminalLoginForm.vue
@@ -40,17 +40,10 @@
         @update:model-value="togglePassphraseField"
       />
 
-      <v-select
+      <PrivateKeySelectWithAdd
         v-if="authenticationMethod === TerminalAuthMethods.PrivateKey"
         v-model="selectedPrivateKeyName"
-        :items="privateKeysNames"
-        item-text="name"
-        item-value="data"
-        label="Private Key"
-        hint="Select a private key file for authentication"
-        persistent-hint
-        data-test="private-keys-select"
-        @update:model-value="togglePassphraseField"
+        @key-added="togglePassphraseField"
       />
 
       <v-text-field
@@ -127,6 +120,7 @@ import * as yup from "yup";
 import { useField } from "vee-validate";
 import FormDialog from "@/components/Dialogs/FormDialog.vue";
 import SSHIDHelper from "./SSHIDHelper.vue";
+import PrivateKeySelectWithAdd from "@/components/PrivateKeys/PrivateKeySelectWithAdd.vue";
 import { LoginFormData, TerminalAuthMethods } from "@/interfaces/ITerminal";
 import { IPrivateKey } from "@/interfaces/IPrivateKey";
 import usePrivateKeysStore from "@/store/modules/private_keys";
@@ -146,7 +140,6 @@ const { privateKeys } = usePrivateKeysStore();
 const authenticationMethod = ref(TerminalAuthMethods.Password);
 const showPassword = ref(false);
 const selectedPrivateKeyName = ref(privateKeys[0]?.name || "");
-const privateKeysNames = privateKeys.map((item: IPrivateKey) => item.name);
 const showPassphraseField = ref(false);
 const showTerminalHelper = ref(false);
 
diff --git a/ui/tests/components/PrivateKeys/PrivateKeySelectWithAdd.spec.ts b/ui/tests/components/PrivateKeys/PrivateKeySelectWithAdd.spec.ts
new file mode 100644
index 00000000000..ac2773cd74c
--- /dev/null
+++ b/ui/tests/components/PrivateKeys/PrivateKeySelectWithAdd.spec.ts
@@ -0,0 +1,83 @@
+import { setActivePinia, createPinia } from "pinia";
+import { beforeEach, describe, expect, it, vi } from "vitest";
+import { createVuetify } from "vuetify";
+import { flushPromises, mount, VueWrapper } from "@vue/test-utils";
+import PrivateKeySelectWithAdd from "@/components/PrivateKeys/PrivateKeySelectWithAdd.vue";
+import { SnackbarPlugin } from "@/plugins/snackbar";
+import usePrivateKeysStore from "@/store/modules/private_keys";
+import { nextTick } from "vue";
+
+type PrivateKeySelectWithAddWrapper = VueWrapper<InstanceType<typeof PrivateKeySelectWithAdd>>;
+
+const mockPrivateKeys = [
+  { id: 1, name: "test-key-1", data: "private-key-data-1", hasPassphrase: true, fingerprint: "fingerprint-1" },
+  { id: 2, name: "test-key-2", data: "private-key-data-2", hasPassphrase: false, fingerprint: "fingerprint-2" },
+  { id: 3, name: "test-key-3", data: "private-key-data-3", hasPassphrase: false, fingerprint: "fingerprint-3" },
+];
+
+describe("Private Key Select With Add", () => {
+  let wrapper: PrivateKeySelectWithAddWrapper;
+  setActivePinia(createPinia());
+  const privateKeysStore = usePrivateKeysStore();
+  const vuetify = createVuetify();
+
+  beforeEach(() => {
+    privateKeysStore.privateKeys = mockPrivateKeys;
+
+    wrapper = mount(PrivateKeySelectWithAdd, {
+      global: {
+        plugins: [vuetify, SnackbarPlugin],
+        stubs: {
+          "v-file-upload": true,
+          "v-file-upload-item": true,
+        },
+      },
+      props: { modelValue: "test-key-1" },
+    });
+  });
+
+  it("Renders the private key select", () => {
+    const select = wrapper.find('[data-test="private-keys-select"]');
+    expect(select.exists()).toBe(true);
+  });
+
+  it("Displays all private keys in the select", () => {
+    const select = wrapper.findComponent({ name: "VSelect" });
+    expect(select.props("items")).toEqual(["test-key-1", "test-key-2", "test-key-3"]);
+  });
+
+  it("Auto-selects newly added key and emits key-added event", async () => {
+    const newKey = { id: 4, name: "new-test-key", data: "new-key-data", hasPassphrase: false, fingerprint: "new-fingerprint" };
+
+    const getPrivateKeyListSpy = vi.spyOn(privateKeysStore, "getPrivateKeyList").mockImplementation(() => {
+      privateKeysStore.privateKeys = [...mockPrivateKeys, newKey];
+    });
+
+    const privateKeyAdd = wrapper.findComponent({ name: "PrivateKeyAdd" });
+    await privateKeyAdd.vm.$emit("update");
+    await nextTick();
+    await flushPromises();
+
+    expect(getPrivateKeyListSpy).toHaveBeenCalled();
+    expect(wrapper.emitted("key-added")).toBeTruthy();
+    expect(wrapper.vm.selectedPrivateKeyName).toBe("new-test-key");
+  });
+
+  it("Handles empty private keys list", async () => {
+    privateKeysStore.privateKeys = [];
+
+    await nextTick();
+
+    const select = wrapper.findComponent({ name: "VSelect" });
+    expect(select.props("items")).toEqual([]);
+  });
+
+  it("Updates model value when selecting a key", async () => {
+    const select = wrapper.findComponent({ name: "VSelect" });
+    await select.setValue("test-key-2");
+    await flushPromises();
+
+    expect(wrapper.emitted("update:modelValue")).toBeTruthy();
+    expect(wrapper.emitted("update:modelValue")?.[0]).toEqual(["test-key-2"]);
+  });
+});
diff --git a/ui/tests/components/Terminal/TerminalLoginForm.spec.ts b/ui/tests/components/Terminal/TerminalLoginForm.spec.ts
index 5a9063d7703..6c448558f60 100644
--- a/ui/tests/components/Terminal/TerminalLoginForm.spec.ts
+++ b/ui/tests/components/Terminal/TerminalLoginForm.spec.ts
@@ -7,6 +7,7 @@ import TerminalLoginForm from "@/components/Terminal/TerminalLoginForm.vue";
 import { IPrivateKey } from "@/interfaces/IPrivateKey";
 import { TerminalAuthMethods } from "@/interfaces/ITerminal";
 import usePrivateKeysStore from "@/store/modules/private_keys";
+import { SnackbarPlugin } from "@/plugins/snackbar";
 
 const mockPrivateKeys: Array<IPrivateKey> = [
   { id: 1, name: "test-key-1", data: "private-key-data-1", hasPassphrase: true, fingerprint: "fingerprint-1" },
@@ -25,7 +26,7 @@ describe("Terminal Login Form", () => {
 
     wrapper = mount(TerminalLoginForm, {
       global: {
-        plugins: [vuetify],
+        plugins: [vuetify, SnackbarPlugin],
       },
       props: {
         modelValue: true,