diff --git a/libraries/AC_AttitudeControl/AC_PosControl.cpp b/libraries/AC_AttitudeControl/AC_PosControl.cpp
index 04a467ab8f8..6538adf455a 100644
--- a/libraries/AC_AttitudeControl/AC_PosControl.cpp
+++ b/libraries/AC_AttitudeControl/AC_PosControl.cpp
@@ -1672,23 +1672,34 @@ void AC_PosControl::init_ekf_NE_reset()
 void AC_PosControl::handle_ekf_NE_reset()
 {
     // Check for EKF-reported NE position shift since last update
-    Vector2f pos_shift;
-    uint32_t reset_ms = _ahrs.getLastPosNorthEastReset(pos_shift);
+    Vector2f pos_shift_ne_m;
+    uint32_t reset_ms = _ahrs.getLastPosNorthEastReset(pos_shift_ne_m);
+    // todo: the actual difference in position and velocity estimation.
+    // This will prevent the need to pause error calculation for one cycle.
+
     if (reset_ms != _ekf_ne_reset_ms) {
-        // Reset NE controller to preserve relative position control during Loiter, PosHold, etc.
         // This ensures controller output remains continuous after EKF realigns the origin.
 
-        // ToDo: move EKF steps into the offsets for modes setting absolute position and velocity
-        // for this we need some sort of switch to select what type of EKF handling we want to use
+        // Reconstruct position target relative to the to new EKF estimation to maintain the current position error
+        Vector2p delta_pos_estimate_ne_m = _p_pos_ne_m.get_error().topostype() - (_pos_target_neu_m.xy() - _pos_estimate_neu_m.xy());
+        _pos_target_neu_m.xy() += delta_pos_estimate_ne_m;
 
-        // Reconstruct target and desired positions relative to new EKF origin
-        _pos_target_neu_m.xy() = _pos_estimate_neu_m.xy() + _p_pos_ne_m.get_error().topostype();
-        _pos_desired_neu_m.xy() = _pos_target_neu_m.xy() - _pos_offset_neu_m.xy();
-
-        // Reconstruct velocity targets based on PID error and velocity estimate
-        _vel_target_neu_ms.xy() = _vel_estimate_neu_ms.xy() + _pid_vel_ne_cm.get_error() * 0.01;
-        _vel_desired_neu_ms.xy() = _vel_target_neu_ms.xy() - _vel_offset_neu_ms.xy();
+        // Reconstruct velocity target relative to the to new EKF estimation to maintain the current velocity error
+        Vector2f delta_vel_estimate_ne_ms = _pid_vel_ne_cm.get_error() * 0.01 - (_vel_target_neu_ms.xy() - _vel_estimate_neu_ms.xy());
+        _vel_target_neu_ms.xy() += delta_vel_estimate_ne_ms;
 
+        switch (_ekf_reset_method) {
+        case EKFResetMethod::MoveTarget:
+            // Reset NE controller desired position and velocity to preserve actual position control during Loiter, PosHold, etc.
+            _pos_desired_neu_m.xy() += delta_pos_estimate_ne_m;
+            _vel_desired_neu_ms.xy() += delta_vel_estimate_ne_ms;
+            break;
+        case EKFResetMethod::MoveVehicle:
+            // Move the change in estimate into the offsest to move the aircraft to our new estimate smoothly during Auto, Guided, etc.
+            _pos_offset_neu_m.xy() += delta_pos_estimate_ne_m;
+            _vel_offset_neu_ms.xy() += delta_vel_estimate_ne_ms;
+            break;
+        }
         _ekf_ne_reset_ms = reset_ms;
     }
 }
@@ -1704,23 +1715,33 @@ void AC_PosControl::init_ekf_U_reset()
 void AC_PosControl::handle_ekf_U_reset()
 {
     // Check for EKF-reported Down-axis shift since last update
-    float alt_shift_d_m;
-    uint32_t reset_ms = _ahrs.getLastPosDownReset(alt_shift_d_m);
+    float pos_shift_d_m;
+    uint32_t reset_ms = _ahrs.getLastPosDownReset(pos_shift_d_m);
+    // todo: the actual difference in position and velocity estimation.
+    // This will prevent the need to pause error calculation for one cycle.
+
     if (reset_ms != 0 && reset_ms != _ekf_u_reset_ms) {
-        // Reset U controller to preserve continuity during relative-altitude modes (e.g., Loiter, PosHold).
-        // Compensates for EKF origin shift without abrupt position or velocity discontinuities.
+        // This ensures controller output remains continuous after EKF realigns the origin.
+        // Reconstruct position target relative to the to new EKF estimation to maintain the current position error
+        postype_t delta_pos_estimate_u_m = _p_pos_u_m.get_error() - (_pos_target_neu_m.z - _pos_estimate_neu_m.z);
+        _pos_target_neu_m.z += delta_pos_estimate_u_m;
 
-        // ToDo: move EKF steps into the offsets for modes setting absolute position and velocity
-        // for this we need some sort of switch to select what type of EKF handling we want to use
-
-        // Reconstruct vertical position targets from measured altitude + P error
-        _pos_target_neu_m.z = _pos_estimate_neu_m.z + _p_pos_u_m.get_error();
-        _pos_desired_neu_m.z = _pos_target_neu_m.z - (_pos_offset_neu_m.z + _pos_terrain_u_m);
-
-        // Reconstruct vertical velocity targets from measured velocity + PID error
-        _vel_target_neu_ms.z = _vel_estimate_neu_ms.z + _pid_vel_u_cm.get_error() * 0.01;
-        _vel_desired_neu_ms.z = _vel_target_neu_ms.z - (_vel_offset_neu_ms.z + _vel_terrain_u_ms);
+        // Reconstruct velocity target relative to the to new EKF estimation to maintain the current velocity error
+        float delta_vel_estimate_u_ms = _pid_vel_u_cm.get_error() * 0.01 - (_vel_target_neu_ms.z - _vel_estimate_neu_ms.z);
+        _vel_target_neu_ms.z += delta_vel_estimate_u_ms;
 
+        switch (_ekf_reset_method) {
+        case EKFResetMethod::MoveTarget:
+            // Reset U controller desired position and velocity to preserve actual position control during Loiter, PosHold, etc.
+            _pos_desired_neu_m.z += delta_pos_estimate_u_m;
+            _vel_desired_neu_ms.z += delta_vel_estimate_u_ms;
+            break;
+        case EKFResetMethod::MoveVehicle:
+            // Move the change in estimate into the offsest to move the aircraft to our new estimate smoothly during Auto, Guided, etc.
+            _pos_offset_neu_m.z += delta_pos_estimate_u_m;
+            _vel_offset_neu_ms.z += delta_vel_estimate_u_ms;
+            break;
+        }
         _ekf_u_reset_ms = reset_ms;
     }
 }
diff --git a/libraries/AC_AttitudeControl/AC_PosControl.h b/libraries/AC_AttitudeControl/AC_PosControl.h
index cbb1eb1c62a..b793405cc82 100644
--- a/libraries/AC_AttitudeControl/AC_PosControl.h
+++ b/libraries/AC_AttitudeControl/AC_PosControl.h
@@ -566,6 +566,13 @@ public:
     // When enabled, disables use of horizontal velocity estimates.
     void set_vibe_comp(bool on_off) { _vibe_comp_enabled = on_off; }
 
+    // Reset handling method
+    enum class EKFResetMethod : uint8_t {
+        MoveTarget = 0,     // the target position is reset so the vehicle does not physically move
+        MoveVehicle = 1     // the target position is smoothly transitioned so the vehicle moves to its previous position coordinates
+    };
+    void set_reset_handling_method(EKFResetMethod reset_method) { _ekf_reset_method = reset_method; }
+
     // Returns confidence (0–1) in vertical control authority based on output usage.
     // Used to assess throttle margin and PID effectiveness.
     float get_vel_U_control_ratio() const { return constrain_float(_vel_u_control_ratio, 0.0f, 1.0f); }
@@ -749,6 +756,7 @@ protected:
     // ekf reset handling
     uint32_t    _ekf_ne_reset_ms;       // system time of last recorded ekf ne position reset
     uint32_t    _ekf_u_reset_ms;        // system time of last recorded ekf altitude reset
+    EKFResetMethod _ekf_reset_method = EKFResetMethod::MoveTarget;  // EKF reset handling method.  Loiter should use MoveTarget, Auto should use MoveVehicle
 
     // high vibration handling
     bool        _vibe_comp_enabled;     // true when high vibration compensation is on