diff --git a/components/buildless-serverless/api/v1alpha2/function_types.go b/components/buildless-serverless/api/v1alpha2/function_types.go
index e618c16b0..75e2cc56b 100644
--- a/components/buildless-serverless/api/v1alpha2/function_types.go
+++ b/components/buildless-serverless/api/v1alpha2/function_types.go
@@ -43,7 +43,7 @@ type FunctionSpec struct {
 	RuntimeImageOverride string `json:"runtimeImageOverride,omitempty"`
 
 	// Contains the Function's source code configuration.
-	/*    // +kubebuilder:validation:XValidation:message="Use GitRepository or Inline source",rule="has(self.gitRepository) && !has(self.inline) || !has(self.gitRepository) && has(self.inline)" */
+	// +kubebuilder:validation:XValidation:message="Use GitRepository or Inline source",rule="has(self.gitRepository) && !has(self.inline) || !has(self.gitRepository) && has(self.inline)"
 	// +kubebuilder:validation:Required
 	Source Source `json:"source"`
 
@@ -78,7 +78,7 @@ type FunctionSpec struct {
 type Source struct {
 	// Defines the Function as git-sourced. Can't be used together with **Inline**.
 	// +optional
-	//	GitRepository *GitRepositorySource `json:"gitRepository,omitempty"`
+	GitRepository *GitRepositorySource `json:"gitRepository,omitempty"`
 
 	// Defines the Function as the inline Function. Can't be used together with **GitRepository**.
 	// +optional
@@ -96,6 +96,33 @@ type InlineSource struct {
 	Dependencies string `json:"dependencies,omitempty"`
 }
 
+type GitRepositorySource struct {
+	// +kubebuilder:validation:Required
+
+	// Specifies the URL of the Git repository with the Function's code and dependencies.
+	// Depending on whether the repository is public or private and what authentication method is used to access it,
+	// the URL must start with the `http(s)`, `git`, or `ssh` prefix.
+	URL string `json:"url"`
+
+	// // Specifies the authentication method. Required for SSH.
+	// // +optional
+	// Auth *RepositoryAuth `json:"auth,omitempty"`
+
+	// +kubebuilder:validation:XValidation:message="BaseDir is required and cannot be empty",rule="has(self.baseDir) && (self.baseDir.trim().size() != 0)"
+	// +kubebuilder:validation:XValidation:message="Reference is required and cannot be empty",rule="has(self.reference) && (self.reference.trim().size() != 0)"
+	Repository `json:",inline"`
+}
+
+type Repository struct {
+	// Specifies the relative path to the Git directory that contains the source code
+	// from which the Function is built.
+	BaseDir string `json:"baseDir,omitempty"`
+
+	// Specifies either the branch name, tag or commit revision from which the Function Controller
+	// automatically fetches the changes in the Function's code and dependencies.
+	Reference string `json:"reference,omitempty"`
+}
+
 type ResourceConfiguration struct {
 	// Specifies resources requested by the Function's Pod.
 	// +optional
@@ -256,3 +283,21 @@ func (f *Function) PodLabels() map[string]string {
 	}
 	return labels.Merge(result, map[string]string{PodAppNameLabel: f.GetName()})
 }
+
+func (f *Function) HasGitSources() bool {
+	return f.Spec.Source.GitRepository != nil
+}
+
+func (f *Function) HasInlineSources() bool {
+	return f.Spec.Source.Inline != nil
+}
+
+func (f *Function) HasPythonRuntime() bool {
+	runtime := f.Spec.Runtime
+	return runtime == Python312
+}
+
+func (f *Function) HasNodejsRuntime() bool {
+	runtime := f.Spec.Runtime
+	return runtime == NodeJs20 || runtime == NodeJs22
+}
diff --git a/components/buildless-serverless/api/v1alpha2/zz_generated.deepcopy.go b/components/buildless-serverless/api/v1alpha2/zz_generated.deepcopy.go
index 05f5052a8..0b5b40a7d 100644
--- a/components/buildless-serverless/api/v1alpha2/zz_generated.deepcopy.go
+++ b/components/buildless-serverless/api/v1alpha2/zz_generated.deepcopy.go
@@ -152,6 +152,22 @@ func (in *FunctionStatus) DeepCopy() *FunctionStatus {
 	return out
 }
 
+// DeepCopyInto is an autogenerated deepcopy function, copying the receiver, writing into out. in must be non-nil.
+func (in *GitRepositorySource) DeepCopyInto(out *GitRepositorySource) {
+	*out = *in
+	out.Repository = in.Repository
+}
+
+// DeepCopy is an autogenerated deepcopy function, copying the receiver, creating a new GitRepositorySource.
+func (in *GitRepositorySource) DeepCopy() *GitRepositorySource {
+	if in == nil {
+		return nil
+	}
+	out := new(GitRepositorySource)
+	in.DeepCopyInto(out)
+	return out
+}
+
 // DeepCopyInto is an autogenerated deepcopy function, copying the receiver, writing into out. in must be non-nil.
 func (in *InlineSource) DeepCopyInto(out *InlineSource) {
 	*out = *in
@@ -167,6 +183,21 @@ func (in *InlineSource) DeepCopy() *InlineSource {
 	return out
 }
 
+// DeepCopyInto is an autogenerated deepcopy function, copying the receiver, writing into out. in must be non-nil.
+func (in *Repository) DeepCopyInto(out *Repository) {
+	*out = *in
+}
+
+// DeepCopy is an autogenerated deepcopy function, copying the receiver, creating a new Repository.
+func (in *Repository) DeepCopy() *Repository {
+	if in == nil {
+		return nil
+	}
+	out := new(Repository)
+	in.DeepCopyInto(out)
+	return out
+}
+
 // DeepCopyInto is an autogenerated deepcopy function, copying the receiver, writing into out. in must be non-nil.
 func (in *ResourceConfiguration) DeepCopyInto(out *ResourceConfiguration) {
 	*out = *in
@@ -225,6 +256,11 @@ func (in *SecretMount) DeepCopy() *SecretMount {
 // DeepCopyInto is an autogenerated deepcopy function, copying the receiver, writing into out. in must be non-nil.
 func (in *Source) DeepCopyInto(out *Source) {
 	*out = *in
+	if in.GitRepository != nil {
+		in, out := &in.GitRepository, &out.GitRepository
+		*out = new(GitRepositorySource)
+		**out = **in
+	}
 	if in.Inline != nil {
 		in, out := &in.Inline, &out.Inline
 		*out = new(InlineSource)
diff --git a/components/buildless-serverless/config/crd/bases/serverless.kyma-project.io_functions.yaml b/components/buildless-serverless/config/crd/bases/serverless.kyma-project.io_functions.yaml
index ecef32734..e19f32617 100644
--- a/components/buildless-serverless/config/crd/bases/serverless.kyma-project.io_functions.yaml
+++ b/components/buildless-serverless/config/crd/bases/serverless.kyma-project.io_functions.yaml
@@ -300,10 +300,37 @@ spec:
                   type: object
                 type: array
               source:
-                description: |-
-                  Contains the Function's source code configuration.
-                  // +kubebuilder:validation:XValidation:message="Use GitRepository or Inline source",rule="has(self.gitRepository) && !has(self.inline) || !has(self.gitRepository) && has(self.inline)"
+                description: Contains the Function's source code configuration.
                 properties:
+                  gitRepository:
+                    description: Defines the Function as git-sourced. Can't be used
+                      together with **Inline**.
+                    properties:
+                      baseDir:
+                        description: |-
+                          Specifies the relative path to the Git directory that contains the source code
+                          from which the Function is built.
+                        type: string
+                      reference:
+                        description: |-
+                          Specifies either the branch name, tag or commit revision from which the Function Controller
+                          automatically fetches the changes in the Function's code and dependencies.
+                        type: string
+                      url:
+                        description: |-
+                          Specifies the URL of the Git repository with the Function's code and dependencies.
+                          Depending on whether the repository is public or private and what authentication method is used to access it,
+                          the URL must start with the `http(s)`, `git`, or `ssh` prefix.
+                        type: string
+                    required:
+                    - url
+                    type: object
+                    x-kubernetes-validations:
+                    - message: BaseDir is required and cannot be empty
+                      rule: has(self.baseDir) && (self.baseDir.trim().size() != 0)
+                    - message: Reference is required and cannot be empty
+                      rule: has(self.reference) && (self.reference.trim().size() !=
+                        0)
                   inline:
                     description: Defines the Function as the inline Function. Can't
                       be used together with **GitRepository**.
@@ -319,6 +346,10 @@ spec:
                     - source
                     type: object
                 type: object
+                x-kubernetes-validations:
+                - message: Use GitRepository or Inline source
+                  rule: has(self.gitRepository) && !has(self.inline) || !has(self.gitRepository)
+                    && has(self.inline)
             required:
             - runtime
             - source
diff --git a/components/buildless-serverless/internal/controller/resources/deployment.go b/components/buildless-serverless/internal/controller/resources/deployment.go
index a360623e0..e51705354 100644
--- a/components/buildless-serverless/internal/controller/resources/deployment.go
+++ b/components/buildless-serverless/internal/controller/resources/deployment.go
@@ -1,7 +1,9 @@
 package resources
 
 import (
+	"fmt"
 	"path"
+	"strings"
 
 	serverlessv1alpha2 "github.com/kyma-project/serverless/api/v1alpha2"
 	"github.com/kyma-project/serverless/internal/config"
@@ -65,10 +67,10 @@ func (d *Deployment) podRunAsUserUID() *int64 {
 
 func (d *Deployment) podSpec() corev1.PodSpec {
 	secretVolumes, secretVolumeMounts := d.deploymentSecretVolumes()
-	defaultProcMount := corev1.DefaultProcMount
 
 	return corev1.PodSpec{
-		Volumes: append(d.volumes(), secretVolumes...),
+		Volumes:        append(d.volumes(), secretVolumes...),
+		InitContainers: d.initContainerForGitRepository(),
 		Containers: []corev1.Container{
 			{
 				Name:       d.name(),
@@ -130,8 +132,8 @@ func (d *Deployment) podSpec() corev1.PodSpec {
 							"ALL",
 						},
 					},
-					ProcMount:              &defaultProcMount,
-					ReadOnlyRootFilesystem: ptr.To[bool](true),
+					ProcMount:              ptr.To(corev1.DefaultProcMount),
+					ReadOnlyRootFilesystem: ptr.To[bool](false),
 				},
 			},
 		},
@@ -145,6 +147,53 @@ func (d *Deployment) podSpec() corev1.PodSpec {
 	}
 }
 
+func (d *Deployment) initContainerForGitRepository() []corev1.Container {
+	if !d.function.HasGitSources() {
+		return []corev1.Container{}
+	}
+	return []corev1.Container{
+		{
+			Name: fmt.Sprintf("%s-init", d.name()),
+			//TODO: should we use this image?
+			Image:      "europe-docker.pkg.dev/kyma-project/prod/alpine-git:v20250212-39c86988",
+			WorkingDir: d.workingSourcesDir(),
+			Command: []string{
+				"sh",
+				"-c",
+				d.initContainerCommand(),
+			},
+			VolumeMounts: []corev1.VolumeMount{
+				{
+					Name:      "git-repository",
+					ReadOnly:  false,
+					MountPath: "/git-repository",
+				},
+			},
+			SecurityContext: &corev1.SecurityContext{
+				Privileged: ptr.To[bool](false),
+				Capabilities: &corev1.Capabilities{
+					Drop: []corev1.Capability{
+						"ALL",
+					},
+				},
+				ProcMount:              ptr.To(corev1.DefaultProcMount),
+				ReadOnlyRootFilesystem: ptr.To[bool](false),
+			},
+		},
+	}
+}
+
+func (d *Deployment) initContainerCommand() string {
+	gitRepo := d.function.Spec.Source.GitRepository
+	return fmt.Sprintf(`git clone --depth 1 --branch %s %s /git-repository/repo;
+mkdir /git-repository/src;
+cp /git-repository/repo/%s/* /git-repository/src`,
+		gitRepo.Reference,
+		gitRepo.URL,
+		strings.Trim(gitRepo.BaseDir, "/ "),
+	)
+}
+
 func (d *Deployment) replicas() *int32 {
 	replicas := d.function.Spec.Replicas
 	if replicas != nil {
@@ -155,7 +204,6 @@ func (d *Deployment) replicas() *int32 {
 }
 
 func (d *Deployment) volumes() []corev1.Volume {
-	runtime := d.function.Spec.Runtime
 	volumes := []corev1.Volume{
 		{
 			// used for writing sources (code&deps) to the sources dir
@@ -180,7 +228,15 @@ func (d *Deployment) volumes() []corev1.Volume {
 			},
 		},
 	}
-	if runtime == serverlessv1alpha2.Python312 {
+	if d.function.HasGitSources() {
+		volumes = append(volumes, corev1.Volume{
+			Name: "git-repository",
+			VolumeSource: corev1.VolumeSource{
+				EmptyDir: &corev1.EmptyDirVolumeSource{},
+			},
+		})
+	}
+	if d.function.HasPythonRuntime() {
 		volumes = append(volumes, corev1.Volume{
 			// required by pip to save deps to .local dir
 			Name: "local",
@@ -193,7 +249,6 @@ func (d *Deployment) volumes() []corev1.Volume {
 }
 
 func (d *Deployment) volumeMounts() []corev1.VolumeMount {
-	runtime := d.function.Spec.Runtime
 	volumeMounts := []corev1.VolumeMount{
 		{
 			Name:      "sources",
@@ -205,15 +260,20 @@ func (d *Deployment) volumeMounts() []corev1.VolumeMount {
 			MountPath: "/tmp",
 		},
 	}
-	if runtime == serverlessv1alpha2.NodeJs20 || runtime == serverlessv1alpha2.NodeJs22 {
+	if d.function.HasGitSources() {
+		volumeMounts = append(volumeMounts, corev1.VolumeMount{
+			Name:      "git-repository",
+			MountPath: "/git-repository",
+		})
+	}
+	if d.function.HasNodejsRuntime() {
 		volumeMounts = append(volumeMounts, corev1.VolumeMount{
 			Name:      "package-registry-config",
-			ReadOnly:  true,
 			MountPath: path.Join(d.workingSourcesDir(), "package-registry-config/.npmrc"),
 			SubPath:   ".npmrc",
 		})
 	}
-	if runtime == serverlessv1alpha2.Python312 {
+	if d.function.HasPythonRuntime() {
 		volumeMounts = append(volumeMounts,
 			corev1.VolumeMount{
 				Name:      "local",
@@ -221,7 +281,6 @@ func (d *Deployment) volumeMounts() []corev1.VolumeMount {
 			},
 			corev1.VolumeMount{
 				Name:      "package-registry-config",
-				ReadOnly:  true,
 				MountPath: path.Join(d.workingSourcesDir(), "package-registry-config/pip.conf"),
 				SubPath:   "pip.conf",
 			})
@@ -248,45 +307,72 @@ func (d *Deployment) runtimeImage() string {
 }
 
 func (d *Deployment) workingSourcesDir() string {
-	switch d.function.Spec.Runtime {
-	case serverlessv1alpha2.NodeJs20, serverlessv1alpha2.NodeJs22:
+	if d.function.HasNodejsRuntime() {
 		return "/usr/src/app/function"
-	case serverlessv1alpha2.Python312:
+	} else if d.function.HasPythonRuntime() {
 		return "/kubeless"
-	default:
-		return ""
 	}
+	return ""
 }
 
 func (d *Deployment) runtimeCommand() string {
+	var result []string
+	result = append(result, d.runtimeCommandSources())
+	result = append(result, d.runtimeCommandInstall())
+	result = append(result, d.runtimeCommandStart())
+
+	return strings.Join(result, "\n")
+}
+
+func (d *Deployment) runtimeCommandSources() string {
+	spec := &d.function.Spec
+	if spec.Source.GitRepository != nil {
+		return d.runtimeCommandGitSources()
+	}
+	return d.runtimeCommandInlineSources()
+}
+
+func (d *Deployment) runtimeCommandGitSources() string {
+	return "cp /git-repository/src/* .;"
+}
+
+func (d *Deployment) runtimeCommandInlineSources() string {
+	var result []string
 	spec := &d.function.Spec
 	dependencies := spec.Source.Inline.Dependencies
-	switch spec.Runtime {
-	case serverlessv1alpha2.NodeJs20, serverlessv1alpha2.NodeJs22:
-		if dependencies != "" {
-			return `echo "${FUNC_HANDLER_SOURCE}" > handler.js;
-echo "${FUNC_HANDLER_DEPENDENCIES}" > package.json;
-npm install --prefer-offline --no-audit --progress=false;
-cd ..;
-npm start;`
-		}
-		return `echo "${FUNC_HANDLER_SOURCE}" > handler.js;
-cd ..;
+
+	handlerName, dependenciesName := "", ""
+	if d.function.HasNodejsRuntime() {
+		handlerName, dependenciesName = "handler.js", "package.json"
+	} else if d.function.HasPythonRuntime() {
+		handlerName, dependenciesName = "handler.py", "requirements.txt"
+	}
+
+	result = append(result, fmt.Sprintf(`echo "${FUNC_HANDLER_SOURCE}" > %s;`, handlerName))
+	if dependencies != "" {
+		result = append(result, fmt.Sprintf(`echo "${FUNC_HANDLER_DEPENDENCIES}" > %s;`, dependenciesName))
+	}
+	return strings.Join(result, "\n")
+}
+
+func (d *Deployment) runtimeCommandInstall() string {
+	if d.function.HasNodejsRuntime() {
+		return `npm install --prefer-offline --no-audit --progress=false;`
+	} else if d.function.HasPythonRuntime() {
+		return `PIP_CONFIG_FILE=package-registry-config/pip.conf pip install --user --no-cache-dir -r /kubeless/requirements.txt;`
+	}
+	return ""
+}
+
+func (d *Deployment) runtimeCommandStart() string {
+	if d.function.HasNodejsRuntime() {
+		return `cd ..;
 npm start;`
-	case serverlessv1alpha2.Python312:
-		if dependencies != "" {
-			return `echo "${FUNC_HANDLER_SOURCE}" > handler.py;
-echo "${FUNC_HANDLER_DEPENDENCIES}" > requirements.txt;
-PIP_CONFIG_FILE=package-registry-config/pip.conf pip install --user --no-cache-dir -r /kubeless/requirements.txt;
-cd ..;
-python /kubeless.py;`
-		}
-		return `echo "${FUNC_HANDLER_SOURCE}" > handler.py;
-cd ..;
+	} else if d.function.HasPythonRuntime() {
+		return `cd ..;
 python /kubeless.py;`
-	default:
-		return ""
 	}
+	return ""
 }
 
 func (d *Deployment) envs() []corev1.EnvVar {
@@ -296,14 +382,6 @@ func (d *Deployment) envs() []corev1.EnvVar {
 			Name:  "SERVICE_NAMESPACE",
 			Value: d.function.Namespace,
 		},
-		{
-			Name:  "FUNC_HANDLER_SOURCE",
-			Value: spec.Source.Inline.Source,
-		},
-		{
-			Name:  "FUNC_HANDLER_DEPENDENCIES",
-			Value: spec.Source.Inline.Dependencies,
-		},
 		{
 			Name:  "TRACE_COLLECTOR_ENDPOINT",
 			Value: d.functionConfig.FunctionTraceCollectorEndpoint,
@@ -313,6 +391,18 @@ func (d *Deployment) envs() []corev1.EnvVar {
 			Value: d.functionConfig.FunctionPublisherProxyAddress,
 		},
 	}
+	if d.function.HasInlineSources() {
+		envs = append(envs, []corev1.EnvVar{
+			{
+				Name:  "FUNC_HANDLER_SOURCE",
+				Value: spec.Source.Inline.Source,
+			},
+			{
+				Name:  "FUNC_HANDLER_DEPENDENCIES",
+				Value: spec.Source.Inline.Dependencies,
+			},
+		}...)
+	}
 	if spec.Runtime == serverlessv1alpha2.Python312 {
 		envs = append(envs, []corev1.EnvVar{
 			{
diff --git a/components/buildless-serverless/internal/controller/resources/deployment_test.go b/components/buildless-serverless/internal/controller/resources/deployment_test.go
index ab4e7a506..06d4c3b12 100644
--- a/components/buildless-serverless/internal/controller/resources/deployment_test.go
+++ b/components/buildless-serverless/internal/controller/resources/deployment_test.go
@@ -151,6 +151,7 @@ func TestDeployment_construct(t *testing.T) {
 				"sh",
 				"-c",
 				`echo "${FUNC_HANDLER_SOURCE}" > handler.py;
+PIP_CONFIG_FILE=package-registry-config/pip.conf pip install --user --no-cache-dir -r /kubeless/requirements.txt;
 cd ..;
 python /kubeless.py;`,
 			},
@@ -214,7 +215,6 @@ python /kubeless.py;`,
 			r.Spec.Template.Spec.Containers[0].VolumeMounts,
 			corev1.VolumeMount{
 				Name:      "package-registry-config",
-				ReadOnly:  true,
 				MountPath: "/kubeless/package-registry-config/pip.conf",
 				SubPath:   "pip.conf",
 			})
@@ -259,6 +259,34 @@ python /kubeless.py;`,
 				},
 			})
 	})
+	t.Run("doesn't create init container for inline function", func(t *testing.T) {
+		d := minimalDeployment()
+
+		r := d.construct()
+
+		require.NotNil(t, r)
+		require.Empty(t, r.Spec.Template.Spec.InitContainers)
+	})
+	t.Run("create init container for git function with data based on function", func(t *testing.T) {
+		d := minimalDeployment()
+		d.function.Spec.Source = serverlessv1alpha2.Source{
+			GitRepository: &serverlessv1alpha2.GitRepositorySource{
+				URL: "wonderful-germain",
+				Repository: serverlessv1alpha2.Repository{
+					BaseDir:   "recursing-mcnulty",
+					Reference: "epic-mendel"}}}
+
+		r := d.construct()
+
+		require.NotNil(t, r)
+		require.Len(t, r.Spec.Template.Spec.InitContainers, 1)
+		c := r.Spec.Template.Spec.InitContainers[0]
+		expectedCommand := []string{"sh", "-c",
+			`git clone --depth 1 --branch epic-mendel wonderful-germain /git-repository/repo;
+mkdir /git-repository/src;
+cp /git-repository/repo/recursing-mcnulty/* /git-repository/src`}
+		require.Equal(t, expectedCommand, c.Command)
+	})
 }
 
 func TestDeployment_name(t *testing.T) {
@@ -472,11 +500,13 @@ func TestDeployment_volumeMounts(t *testing.T) {
 	tests := []struct {
 		name    string
 		runtime serverlessv1alpha2.Runtime
+		source  serverlessv1alpha2.Source
 		want    []corev1.VolumeMount
 	}{
 		{
-			name:    "build volume mounts for nodejs20 based on function",
+			name:    "build volume mounts for inline nodejs20 based on function",
 			runtime: serverlessv1alpha2.NodeJs20,
+			source:  serverlessv1alpha2.Source{Inline: &serverlessv1alpha2.InlineSource{Source: "x", Dependencies: "x"}},
 			want: []corev1.VolumeMount{
 				{
 					Name:      "sources",
@@ -489,15 +519,16 @@ func TestDeployment_volumeMounts(t *testing.T) {
 				},
 				{
 					Name:      "package-registry-config",
-					ReadOnly:  true,
+					ReadOnly:  false,
 					MountPath: "/usr/src/app/function/package-registry-config/.npmrc",
 					SubPath:   ".npmrc",
 				},
 			},
 		},
 		{
-			name:    "build volume mounts for nodejs22 based on function",
+			name:    "build volume mounts for inline nodejs22 based on function",
 			runtime: serverlessv1alpha2.NodeJs22,
+			source:  serverlessv1alpha2.Source{Inline: &serverlessv1alpha2.InlineSource{Source: "x", Dependencies: "x"}},
 			want: []corev1.VolumeMount{
 				{
 					Name:      "sources",
@@ -510,15 +541,16 @@ func TestDeployment_volumeMounts(t *testing.T) {
 				},
 				{
 					Name:      "package-registry-config",
-					ReadOnly:  true,
+					ReadOnly:  false,
 					MountPath: "/usr/src/app/function/package-registry-config/.npmrc",
 					SubPath:   ".npmrc",
 				},
 			},
 		},
 		{
-			name:    "build volume mounts for python312 based on function",
+			name:    "build volume mounts for inline python312 based on function",
 			runtime: serverlessv1alpha2.Python312,
+			source:  serverlessv1alpha2.Source{Inline: &serverlessv1alpha2.InlineSource{Source: "x", Dependencies: "x"}},
 			want: []corev1.VolumeMount{
 				{
 					Name:      "sources",
@@ -535,7 +567,67 @@ func TestDeployment_volumeMounts(t *testing.T) {
 				},
 				{
 					Name:      "package-registry-config",
-					ReadOnly:  true,
+					ReadOnly:  false,
+					MountPath: "/kubeless/package-registry-config/pip.conf",
+					SubPath:   "pip.conf",
+				},
+			},
+		},
+		{
+			name:    "build volume mounts for git nodejs22 based on function",
+			runtime: serverlessv1alpha2.NodeJs22,
+			source: serverlessv1alpha2.Source{GitRepository: &serverlessv1alpha2.GitRepositorySource{
+				URL: "x", Repository: serverlessv1alpha2.Repository{BaseDir: "x", Reference: "x"}}},
+			want: []corev1.VolumeMount{
+				{
+					Name:      "sources",
+					MountPath: "/usr/src/app/function",
+				},
+				{
+					Name:      "tmp",
+					ReadOnly:  false,
+					MountPath: "/tmp",
+				},
+				{
+					Name:      "git-repository",
+					ReadOnly:  false,
+					MountPath: "/git-repository",
+				},
+				{
+					Name:      "package-registry-config",
+					ReadOnly:  false,
+					MountPath: "/usr/src/app/function/package-registry-config/.npmrc",
+					SubPath:   ".npmrc",
+				},
+			},
+		},
+		{
+			name:    "build volume mounts for git python312 based on function",
+			runtime: serverlessv1alpha2.Python312,
+			source: serverlessv1alpha2.Source{GitRepository: &serverlessv1alpha2.GitRepositorySource{
+				URL: "x", Repository: serverlessv1alpha2.Repository{BaseDir: "x", Reference: "x"}}},
+			want: []corev1.VolumeMount{
+				{
+					Name:      "sources",
+					MountPath: "/kubeless",
+				},
+				{
+					Name:      "tmp",
+					ReadOnly:  false,
+					MountPath: "/tmp",
+				},
+				{
+					Name:      "git-repository",
+					ReadOnly:  false,
+					MountPath: "/git-repository",
+				},
+				{
+					Name:      "local",
+					MountPath: "/.local",
+				},
+				{
+					Name:      "package-registry-config",
+					ReadOnly:  false,
 					MountPath: "/kubeless/package-registry-config/pip.conf",
 					SubPath:   "pip.conf",
 				},
@@ -548,6 +640,7 @@ func TestDeployment_volumeMounts(t *testing.T) {
 				function: &serverlessv1alpha2.Function{
 					Spec: serverlessv1alpha2.FunctionSpec{
 						Runtime: tt.runtime,
+						Source:  tt.source,
 					},
 				},
 			}
@@ -566,11 +659,69 @@ func TestDeployment_volumes(t *testing.T) {
 	tests := []struct {
 		name    string
 		runtime serverlessv1alpha2.Runtime
+		source  serverlessv1alpha2.Source
 		want    []corev1.Volume
 	}{
 		{
-			name:    "build volumes for nodejs20 based on function",
+			name:    "build volumes for inline nodejs20 based on function",
 			runtime: serverlessv1alpha2.NodeJs20,
+			source:  serverlessv1alpha2.Source{Inline: &serverlessv1alpha2.InlineSource{Source: "x", Dependencies: "x"}},
+			want: []corev1.Volume{
+				{
+					Name: "sources",
+					VolumeSource: corev1.VolumeSource{
+						EmptyDir: &corev1.EmptyDirVolumeSource{},
+					},
+				},
+				{
+					Name: "package-registry-config",
+					VolumeSource: corev1.VolumeSource{
+						Secret: &corev1.SecretVolumeSource{
+							SecretName: "test-secret-name",
+							Optional:   ptr.To[bool](true),
+						},
+					},
+				},
+				{
+					Name: "tmp",
+					VolumeSource: corev1.VolumeSource{
+						EmptyDir: &corev1.EmptyDirVolumeSource{},
+					},
+				},
+			},
+		},
+		{
+			name:    "build volumes for inline nodejs22 based on function",
+			runtime: serverlessv1alpha2.NodeJs22,
+			source:  serverlessv1alpha2.Source{Inline: &serverlessv1alpha2.InlineSource{Source: "x", Dependencies: "x"}},
+			want: []corev1.Volume{
+				{
+					Name: "sources",
+					VolumeSource: corev1.VolumeSource{
+						EmptyDir: &corev1.EmptyDirVolumeSource{},
+					},
+				},
+				{
+					Name: "package-registry-config",
+					VolumeSource: corev1.VolumeSource{
+						Secret: &corev1.SecretVolumeSource{
+							SecretName: "test-secret-name",
+							Optional:   ptr.To[bool](true),
+						},
+					},
+				},
+				{
+					Name: "tmp",
+					VolumeSource: corev1.VolumeSource{
+						EmptyDir: &corev1.EmptyDirVolumeSource{},
+					},
+				},
+			},
+		},
+		{
+			name:    "build volumes for inline python312 based on function",
+			runtime: serverlessv1alpha2.Python312,
+			source:  serverlessv1alpha2.Source{Inline: &serverlessv1alpha2.InlineSource{Source: "x", Dependencies: "x"}},
 			want: []corev1.Volume{
 				{
 					Name: "sources",
@@ -593,11 +744,19 @@ func TestDeployment_volumes(t *testing.T) {
 						EmptyDir: &corev1.EmptyDirVolumeSource{},
 					},
 				},
+				{
+					Name: "local",
+					VolumeSource: corev1.VolumeSource{
+						EmptyDir: &corev1.EmptyDirVolumeSource{},
+					},
+				},
 			},
 		},
 		{
-			name:    "build volumes for nodejs22 based on function",
+			name:    "build volumes for git nodejs22 based on function",
 			runtime: serverlessv1alpha2.NodeJs22,
+			source: serverlessv1alpha2.Source{GitRepository: &serverlessv1alpha2.GitRepositorySource{
+				URL: "x", Repository: serverlessv1alpha2.Repository{BaseDir: "x", Reference: "x"}}},
 			want: []corev1.Volume{
 				{
 					Name: "sources",
@@ -620,11 +779,19 @@ func TestDeployment_volumes(t *testing.T) {
 						EmptyDir: &corev1.EmptyDirVolumeSource{},
 					},
 				},
+				{
+					Name: "git-repository",
+					VolumeSource: corev1.VolumeSource{
+						EmptyDir: &corev1.EmptyDirVolumeSource{},
+					},
+				},
 			},
 		},
 		{
-			name:    "build volumes for python312 based on function",
+			name:    "build volumes for inline python312 based on function",
 			runtime: serverlessv1alpha2.Python312,
+			source: serverlessv1alpha2.Source{GitRepository: &serverlessv1alpha2.GitRepositorySource{
+				URL: "x", Repository: serverlessv1alpha2.Repository{BaseDir: "x", Reference: "x"}}},
 			want: []corev1.Volume{
 				{
 					Name: "sources",
@@ -647,6 +814,12 @@ func TestDeployment_volumes(t *testing.T) {
 						EmptyDir: &corev1.EmptyDirVolumeSource{},
 					},
 				},
+				{
+					Name: "git-repository",
+					VolumeSource: corev1.VolumeSource{
+						EmptyDir: &corev1.EmptyDirVolumeSource{},
+					},
+				},
 				{
 					Name: "local",
 					VolumeSource: corev1.VolumeSource{
@@ -663,6 +836,7 @@ func TestDeployment_volumes(t *testing.T) {
 				function: &serverlessv1alpha2.Function{
 					Spec: serverlessv1alpha2.FunctionSpec{
 						Runtime: tt.runtime,
+						Source:  tt.source,
 					},
 				},
 			}
@@ -759,7 +933,7 @@ func TestDeployment_envs(t *testing.T) {
 		want     []corev1.EnvVar
 	}{
 		{
-			name: "build envs based on nodejs20 function",
+			name: "build envs based on inline nodejs20 function",
 			function: &serverlessv1alpha2.Function{
 				ObjectMeta: metav1.ObjectMeta{
 					Namespace: "function-namespace",
@@ -798,7 +972,7 @@ func TestDeployment_envs(t *testing.T) {
 			},
 		},
 		{
-			name: "build envs based on nodejs22 function",
+			name: "build envs based on inline nodejs22 function",
 			function: &serverlessv1alpha2.Function{
 				ObjectMeta: metav1.ObjectMeta{
 					Namespace: "function-namespace",
@@ -837,7 +1011,41 @@ func TestDeployment_envs(t *testing.T) {
 			},
 		},
 		{
-			name: "build envs based on python312 function",
+			name: "build envs based on git nodejs22 function",
+			function: &serverlessv1alpha2.Function{
+				ObjectMeta: metav1.ObjectMeta{
+					Namespace: "function-namespace",
+				},
+				Spec: serverlessv1alpha2.FunctionSpec{
+					Runtime: serverlessv1alpha2.NodeJs22,
+					Source: serverlessv1alpha2.Source{
+						GitRepository: &serverlessv1alpha2.GitRepositorySource{
+							URL: "/some/url",
+							Repository: serverlessv1alpha2.Repository{
+								BaseDir:   "/some/dir",
+								Reference: "some-reference",
+							},
+						},
+					},
+				},
+			},
+			want: []corev1.EnvVar{
+				{
+					Name:  "SERVICE_NAMESPACE",
+					Value: "function-namespace",
+				},
+				{
+					Name:  "TRACE_COLLECTOR_ENDPOINT",
+					Value: "test-trace-collector-endpoint",
+				},
+				{
+					Name:  "PUBLISHER_PROXY_ADDRESS",
+					Value: "test-proxy-address",
+				},
+			},
+		},
+		{
+			name: "build envs based on inline python312 function",
 			function: &serverlessv1alpha2.Function{
 				ObjectMeta: metav1.ObjectMeta{
 					Namespace: "function-namespace",
@@ -896,7 +1104,7 @@ func TestDeployment_envs(t *testing.T) {
 
 			r := d.envs()
 
-			assert.Equal(t, tt.want, r)
+			assert.ElementsMatch(t, tt.want, r)
 		})
 	}
 }
@@ -908,7 +1116,7 @@ func TestDeployment_runtimeCommand(t *testing.T) {
 		want     string
 	}{
 		{
-			name: "build runtime command for python312 without dependencies",
+			name: "build runtime command for inline python312 without dependencies",
 			function: &serverlessv1alpha2.Function{
 				Spec: serverlessv1alpha2.FunctionSpec{
 					Runtime: serverlessv1alpha2.Python312,
@@ -920,11 +1128,12 @@ func TestDeployment_runtimeCommand(t *testing.T) {
 				},
 			},
 			want: `echo "${FUNC_HANDLER_SOURCE}" > handler.py;
+PIP_CONFIG_FILE=package-registry-config/pip.conf pip install --user --no-cache-dir -r /kubeless/requirements.txt;
 cd ..;
 python /kubeless.py;`,
 		},
 		{
-			name: "build runtime command for python312 with dependencies",
+			name: "build runtime command for inline python312 with dependencies",
 			function: &serverlessv1alpha2.Function{
 				Spec: serverlessv1alpha2.FunctionSpec{
 					Runtime: serverlessv1alpha2.Python312,
@@ -943,7 +1152,28 @@ cd ..;
 python /kubeless.py;`,
 		},
 		{
-			name: "build runtime command for nodejs20 without dependencies",
+			name: "build runtime command for git python312",
+			function: &serverlessv1alpha2.Function{
+				Spec: serverlessv1alpha2.FunctionSpec{
+					Runtime: serverlessv1alpha2.Python312,
+					Source: serverlessv1alpha2.Source{
+						GitRepository: &serverlessv1alpha2.GitRepositorySource{
+							URL: "/some/url",
+							Repository: serverlessv1alpha2.Repository{
+								BaseDir:   "/some/dir",
+								Reference: "some-reference",
+							},
+						},
+					},
+				},
+			},
+			want: `cp /git-repository/src/* .;
+PIP_CONFIG_FILE=package-registry-config/pip.conf pip install --user --no-cache-dir -r /kubeless/requirements.txt;
+cd ..;
+python /kubeless.py;`,
+		},
+		{
+			name: "build runtime command for inline nodejs20 without dependencies",
 			function: &serverlessv1alpha2.Function{
 				Spec: serverlessv1alpha2.FunctionSpec{
 					Runtime: serverlessv1alpha2.NodeJs20,
@@ -955,11 +1185,12 @@ python /kubeless.py;`,
 				},
 			},
 			want: `echo "${FUNC_HANDLER_SOURCE}" > handler.js;
+npm install --prefer-offline --no-audit --progress=false;
 cd ..;
 npm start;`,
 		},
 		{
-			name: "build runtime command for nodejs20 with dependencies",
+			name: "build runtime command for inline nodejs20 with dependencies",
 			function: &serverlessv1alpha2.Function{
 				Spec: serverlessv1alpha2.FunctionSpec{
 					Runtime: serverlessv1alpha2.NodeJs20,
@@ -978,7 +1209,28 @@ cd ..;
 npm start;`,
 		},
 		{
-			name: "build runtime command for nodejs22 without dependencies",
+			name: "build runtime command for git nodejs20",
+			function: &serverlessv1alpha2.Function{
+				Spec: serverlessv1alpha2.FunctionSpec{
+					Runtime: serverlessv1alpha2.NodeJs20,
+					Source: serverlessv1alpha2.Source{
+						GitRepository: &serverlessv1alpha2.GitRepositorySource{
+							URL: "/some/url",
+							Repository: serverlessv1alpha2.Repository{
+								BaseDir:   "/some/dir",
+								Reference: "some-reference",
+							},
+						},
+					},
+				},
+			},
+			want: `cp /git-repository/src/* .;
+npm install --prefer-offline --no-audit --progress=false;
+cd ..;
+npm start;`,
+		},
+		{
+			name: "build runtime command for inline nodejs22 without dependencies",
 			function: &serverlessv1alpha2.Function{
 				Spec: serverlessv1alpha2.FunctionSpec{
 					Runtime: serverlessv1alpha2.NodeJs22,
@@ -990,11 +1242,12 @@ npm start;`,
 				},
 			},
 			want: `echo "${FUNC_HANDLER_SOURCE}" > handler.js;
+npm install --prefer-offline --no-audit --progress=false;
 cd ..;
 npm start;`,
 		},
 		{
-			name: "build runtime command for nodejs22 with dependencies",
+			name: "build runtime command for inline nodejs22 with dependencies",
 			function: &serverlessv1alpha2.Function{
 				Spec: serverlessv1alpha2.FunctionSpec{
 					Runtime: serverlessv1alpha2.NodeJs22,
@@ -1010,6 +1263,27 @@ npm start;`,
 echo "${FUNC_HANDLER_DEPENDENCIES}" > package.json;
 npm install --prefer-offline --no-audit --progress=false;
 cd ..;
+npm start;`,
+		},
+		{
+			name: "build runtime command for git nodejs22",
+			function: &serverlessv1alpha2.Function{
+				Spec: serverlessv1alpha2.FunctionSpec{
+					Runtime: serverlessv1alpha2.NodeJs22,
+					Source: serverlessv1alpha2.Source{
+						GitRepository: &serverlessv1alpha2.GitRepositorySource{
+							URL: "/some/url",
+							Repository: serverlessv1alpha2.Repository{
+								BaseDir:   "/some/dir",
+								Reference: "some-reference",
+							},
+						},
+					},
+				},
+			},
+			want: `cp /git-repository/src/* .;
+npm install --prefer-offline --no-audit --progress=false;
+cd ..;
 npm start;`,
 		},
 	}
diff --git a/components/buildless-serverless/internal/controller/state/handle_deployment.go b/components/buildless-serverless/internal/controller/state/handle_deployment.go
index 56c9ba16d..2f30e406d 100644
--- a/components/buildless-serverless/internal/controller/state/handle_deployment.go
+++ b/components/buildless-serverless/internal/controller/state/handle_deployment.go
@@ -23,6 +23,7 @@ import (
 func sFnHandleDeployment(ctx context.Context, m *fsm.StateMachine) (fsm.StateFn, *ctrl.Result, error) {
 	m.State.BuiltDeployment = resources.NewDeployment(&m.State.Function, &m.FunctionConfig)
 	builtDeployment := m.State.BuiltDeployment.Deployment
+	//TODO: refactor this method - split get from create
 
 	clusterDeployment, resultGet, errGet := getOrCreateDeployment(ctx, m, builtDeployment)
 	if clusterDeployment == nil {
@@ -111,6 +112,7 @@ func deploymentChanged(a *appsv1.Deployment, b *appsv1.Deployment) bool {
 		len(b.Spec.Template.Spec.Containers) != 1 {
 		return true
 	}
+
 	aContainer := a.Spec.Template.Spec.Containers[0]
 	bContainer := b.Spec.Template.Spec.Containers[0]
 
@@ -134,7 +136,28 @@ func deploymentChanged(a *appsv1.Deployment, b *appsv1.Deployment) bool {
 		resourcesChanged ||
 		envChanged ||
 		volumeMountsChanged ||
-		portsChanged
+		portsChanged ||
+		initContainerChanged(a, b)
+}
+
+func initContainerChanged(a *appsv1.Deployment, b *appsv1.Deployment) bool {
+	// there are no init containers for inline function and one init container for git function
+	// when count of init containers is not equal function type has been changed
+	if len(a.Spec.Template.Spec.InitContainers) > 1 ||
+		len(b.Spec.Template.Spec.InitContainers) > 1 ||
+		len(a.Spec.Template.Spec.InitContainers) != len(b.Spec.Template.Spec.InitContainers) {
+		return true
+	}
+	if len(a.Spec.Template.Spec.InitContainers) == 0 {
+		return false
+	}
+	aInitContainer := a.Spec.Template.Spec.InitContainers[0]
+	bInitContainer := b.Spec.Template.Spec.InitContainers[0]
+
+	initCommandChanged := !reflect.DeepEqual(aInitContainer.Command, bInitContainer.Command)
+	initVolumeMountsChanged := !reflect.DeepEqual(aInitContainer.VolumeMounts, bInitContainer.VolumeMounts)
+	return initCommandChanged ||
+		initVolumeMountsChanged
 }
 
 func updateDeployment(ctx context.Context, m *fsm.StateMachine, clusterDeployment *appsv1.Deployment) (requeueNeeded bool, err error) {
diff --git a/components/buildless-serverless/internal/controller/state/handle_deployment_test.go b/components/buildless-serverless/internal/controller/state/handle_deployment_test.go
index 6ac692a4f..bd0e63f33 100644
--- a/components/buildless-serverless/internal/controller/state/handle_deployment_test.go
+++ b/components/buildless-serverless/internal/controller/state/handle_deployment_test.go
@@ -810,6 +810,96 @@ func Test_deploymentChanged(t *testing.T) {
 			},
 			want: false,
 		},
+		{
+			name: "when there are no init containers should return false",
+			args: args{
+				a: &appsv1.Deployment{
+					Spec: appsv1.DeploymentSpec{
+						Template: corev1.PodTemplateSpec{
+							Spec: corev1.PodSpec{
+								InitContainers: []corev1.Container{},
+								Containers:     []corev1.Container{{}}}}}},
+				b: &appsv1.Deployment{
+					Spec: appsv1.DeploymentSpec{
+						Template: corev1.PodTemplateSpec{
+							Spec: corev1.PodSpec{
+								InitContainers: []corev1.Container{},
+								Containers:     []corev1.Container{{}}}}}},
+			},
+			want: false,
+		},
+		{
+			name: "when init containers count is different should return true",
+			args: args{
+				a: &appsv1.Deployment{
+					Spec: appsv1.DeploymentSpec{
+						Template: corev1.PodTemplateSpec{
+							Spec: corev1.PodSpec{
+								InitContainers: []corev1.Container{{
+									Image: "vibrant-booth",
+								}},
+								Containers: []corev1.Container{{}}}}}},
+				b: &appsv1.Deployment{
+					Spec: appsv1.DeploymentSpec{
+						Template: corev1.PodTemplateSpec{
+							Spec: corev1.PodSpec{
+								InitContainers: []corev1.Container{},
+								Containers:     []corev1.Container{{}}}}}},
+			},
+			want: true,
+		},
+		{
+			name: "when init container commands are different should return true",
+			args: args{
+				a: &appsv1.Deployment{
+					Spec: appsv1.DeploymentSpec{
+						Template: corev1.PodTemplateSpec{
+							Spec: corev1.PodSpec{
+								InitContainers: []corev1.Container{{
+									Image:   "gracious-mclaren",
+									Command: []string{"nice-mahavira"},
+								}},
+								Containers: []corev1.Container{{}}}}}},
+				b: &appsv1.Deployment{
+					Spec: appsv1.DeploymentSpec{
+						Template: corev1.PodTemplateSpec{
+							Spec: corev1.PodSpec{
+								InitContainers: []corev1.Container{{
+									Image:   "gracious-mclaren",
+									Command: []string{"modest-kepler"},
+								}},
+								Containers: []corev1.Container{{}}}}}},
+			},
+			want: true,
+		},
+		{
+			name: "when init container volume mounts are different should return true",
+			args: args{
+				a: &appsv1.Deployment{
+					Spec: appsv1.DeploymentSpec{
+						Template: corev1.PodTemplateSpec{
+							Spec: corev1.PodSpec{
+								InitContainers: []corev1.Container{{
+									Image: "thirsty-matsumoto",
+									VolumeMounts: []corev1.VolumeMount{{
+										Name:      "name",
+										MountPath: "/sweet/carver",
+									}}}},
+								Containers: []corev1.Container{{}}}}}},
+				b: &appsv1.Deployment{
+					Spec: appsv1.DeploymentSpec{
+						Template: corev1.PodTemplateSpec{
+							Spec: corev1.PodSpec{
+								InitContainers: []corev1.Container{{
+									Image: "thirsty-matsumoto",
+									VolumeMounts: []corev1.VolumeMount{{
+										Name:      "name",
+										MountPath: "/focused/thompson",
+									}}}},
+								Containers: []corev1.Container{{}}}}}},
+			},
+			want: true,
+		},
 	}
 	for _, tt := range tests {
 		t.Run(tt.name, func(t *testing.T) {
diff --git a/config/buildless-serverless/templates/crds.yaml b/config/buildless-serverless/templates/crds.yaml
index 015d46d42..65ad77e1c 100644
--- a/config/buildless-serverless/templates/crds.yaml
+++ b/config/buildless-serverless/templates/crds.yaml
@@ -299,10 +299,37 @@ spec:
                   type: object
                 type: array
               source:
-                description: |-
-                  Contains the Function's source code configuration.
-                  // +kubebuilder:validation:XValidation:message="Use GitRepository or Inline source",rule="has(self.gitRepository) && !has(self.inline) || !has(self.gitRepository) && has(self.inline)"
+                description: Contains the Function's source code configuration.
                 properties:
+                  gitRepository:
+                    description: Defines the Function as git-sourced. Can't be used
+                      together with **Inline**.
+                    properties:
+                      baseDir:
+                        description: |-
+                          Specifies the relative path to the Git directory that contains the source code
+                          from which the Function is built.
+                        type: string
+                      reference:
+                        description: |-
+                          Specifies either the branch name, tag or commit revision from which the Function Controller
+                          automatically fetches the changes in the Function's code and dependencies.
+                        type: string
+                      url:
+                        description: |-
+                          Specifies the URL of the Git repository with the Function's code and dependencies.
+                          Depending on whether the repository is public or private and what authentication method is used to access it,
+                          the URL must start with the `http(s)`, `git`, or `ssh` prefix.
+                        type: string
+                    required:
+                    - url
+                    type: object
+                    x-kubernetes-validations:
+                    - message: BaseDir is required and cannot be empty
+                      rule: has(self.baseDir) && (self.baseDir.trim().size() != 0)
+                    - message: Reference is required and cannot be empty
+                      rule: has(self.reference) && (self.reference.trim().size() !=
+                        0)
                   inline:
                     description: Defines the Function as the inline Function. Can't
                       be used together with **GitRepository**.
@@ -318,6 +345,10 @@ spec:
                     - source
                     type: object
                 type: object
+                x-kubernetes-validations:
+                - message: Use GitRepository or Inline source
+                  rule: has(self.gitRepository) && !has(self.inline) || !has(self.gitRepository)
+                    && has(self.inline)
             required:
             - runtime
             - source