diff --git a/.betterer.results b/.betterer.results
index 160b522a8c2..06a027a4207 100644
--- a/.betterer.results
+++ b/.betterer.results
@@ -538,8 +538,7 @@ exports[`better eslint`] = {
       [0, 0, 0, "No untranslated strings in text props. Wrap text with <Trans /> or use t()", "1"]
     ],
     "packages/grafana-ui/src/components/Combobox/Combobox.tsx:5381": [
-      [0, 0, 0, "Do not use any type assertions.", "0"],
-      [0, 0, 0, "Do not use any type assertions.", "1"]
+      [0, 0, 0, "Do not use any type assertions.", "0"]
     ],
     "packages/grafana-ui/src/components/Combobox/MultiCombobox.tsx:5381": [
       [0, 0, 0, "Do not use any type assertions.", "0"]
@@ -547,6 +546,9 @@ exports[`better eslint`] = {
     "packages/grafana-ui/src/components/Combobox/ValuePill.tsx:5381": [
       [0, 0, 0, "No untranslated strings in text props. Wrap text with <Trans /> or use t()", "0"]
     ],
+    "packages/grafana-ui/src/components/Combobox/useOptions.ts:5381": [
+      [0, 0, 0, "Do not use any type assertions.", "0"]
+    ],
     "packages/grafana-ui/src/components/ConfirmModal/ConfirmContent.tsx:5381": [
       [0, 0, 0, "No untranslated strings in text props. Wrap text with <Trans /> or use t()", "0"]
     ],
diff --git a/packages/grafana-ui/src/components/Combobox/Combobox.test.tsx b/packages/grafana-ui/src/components/Combobox/Combobox.test.tsx
index 7787e38d00c..7ae3f1c5ec5 100644
--- a/packages/grafana-ui/src/components/Combobox/Combobox.test.tsx
+++ b/packages/grafana-ui/src/components/Combobox/Combobox.test.tsx
@@ -237,11 +237,11 @@ describe('Combobox', () => {
       const onChangeHandler = jest.fn();
       render(<Combobox options={options} value={null} onChange={onChangeHandler} createCustomValue />);
       const input = screen.getByRole('combobox');
-      await userEvent.type(input, 'custom value');
+      await userEvent.type(input, 'Use custom value');
       await userEvent.keyboard('{Enter}');
 
-      expect(screen.getByDisplayValue('custom value')).toBeInTheDocument();
-      expect(onChangeHandler).toHaveBeenCalledWith(expect.objectContaining({ value: 'custom value' }));
+      expect(screen.getByDisplayValue('Use custom value')).toBeInTheDocument();
+      expect(onChangeHandler).toHaveBeenCalledWith(expect.objectContaining({ value: 'Use custom value' }));
     });
 
     it('should provide custom string when all options are numbers', async () => {
@@ -256,10 +256,10 @@ describe('Combobox', () => {
       render(<Combobox options={options} value={null} onChange={onChangeHandler} createCustomValue />);
       const input = screen.getByRole('combobox');
 
-      await userEvent.type(input, 'custom value');
+      await userEvent.type(input, 'Use custom value');
       await userEvent.keyboard('{Enter}');
 
-      expect(screen.getByDisplayValue('custom value')).toBeInTheDocument();
+      expect(screen.getByDisplayValue('Use custom value')).toBeInTheDocument();
       expect(typeof onChangeHandler.mock.calls[0][0].value === 'string').toBeTruthy();
       expect(typeof onChangeHandler.mock.calls[0][0].value === 'number').toBeFalsy();
 
@@ -411,9 +411,12 @@ describe('Combobox', () => {
         jest.advanceTimersByTime(500); // Custom value while typing
       });
 
-      const customItem = screen.queryByRole('option', { name: 'Custom value: fir' });
-
+      const customItem = screen.getByRole('option');
+      const customValue = customItem.getElementsByTagName('span')[0].textContent;
+      const customDescription = customItem.getElementsByTagName('span')[1].textContent;
       expect(customItem).toBeInTheDocument();
+      expect(customValue).toBe('fir');
+      expect(customDescription).toBe('Use custom value');
     });
 
     it('should display message when there is an error loading async options', async () => {
diff --git a/packages/grafana-ui/src/components/Combobox/Combobox.tsx b/packages/grafana-ui/src/components/Combobox/Combobox.tsx
index cf59c4910f8..4c2f6a97b63 100644
--- a/packages/grafana-ui/src/components/Combobox/Combobox.tsx
+++ b/packages/grafana-ui/src/components/Combobox/Combobox.tsx
@@ -135,12 +135,10 @@ export const Combobox = <T extends string | number>(props: ComboboxProps<T>) =>
 
         if (!optionMatchingInput) {
           const customValueOption = {
-            label: t('combobox.custom-value.label', 'Custom value: ') + inputValue,
+            label: inputValue,
             // Type casting needed to make this work when T is a number
-            value: inputValue as unknown as T,
-            /* TODO: Add this back when we do support descriptions and have need for it
-            description: t('combobox.custom-value.create', 'Create custom value'),
-            */
+            value: inputValue as T,
+            description: t('combobox.custom-value.description', 'Use custom value'),
           };
 
           itemsToSet = items.slice(0);
diff --git a/packages/grafana-ui/src/components/Combobox/MultiCombobox.test.tsx b/packages/grafana-ui/src/components/Combobox/MultiCombobox.test.tsx
index fa1274b5666..bee10de6783 100644
--- a/packages/grafana-ui/src/components/Combobox/MultiCombobox.test.tsx
+++ b/packages/grafana-ui/src/components/Combobox/MultiCombobox.test.tsx
@@ -128,6 +128,40 @@ describe('MultiCombobox', () => {
     expect(await screen.findByText('d')).toBeInTheDocument();
   });
 
+  it('should be able to set custom value', async () => {
+    const options = [
+      { label: 'A', value: 'a' },
+      { label: 'B', value: 'b' },
+      { label: 'C', value: 'c' },
+    ];
+    const onChange = jest.fn();
+    render(<MultiCombobox options={options} value={[]} onChange={onChange} createCustomValue />);
+    const input = screen.getByRole('combobox');
+    await user.click(input);
+    await user.type(input, 'D');
+    await user.keyboard('{arrowdown}{enter}');
+    expect(onChange).toHaveBeenCalledWith([{ label: 'D', value: 'D', description: 'Use custom value' }]);
+  });
+
+  it('should be able to add custom value to the selected options', async () => {
+    const options = [
+      { label: 'A', value: 'a' },
+      { label: 'B', value: 'b' },
+      { label: 'C', value: 'c' },
+    ];
+    const onChange = jest.fn();
+    render(<MultiCombobox options={options} value={['a', 'c']} onChange={onChange} createCustomValue />);
+    const input = screen.getByRole('combobox');
+    await user.click(input);
+    await user.type(input, 'D');
+    await user.keyboard('{arrowdown}{enter}');
+    expect(onChange).toHaveBeenCalledWith([
+      { value: 'a' },
+      { value: 'c' },
+      { label: 'D', value: 'D', description: 'Use custom value' },
+    ]);
+  });
+
   it('should remove value when clicking on the close icon of the pill', async () => {
     const options = [
       { label: 'A', value: 'a' },
diff --git a/packages/grafana-ui/src/components/Combobox/MultiCombobox.tsx b/packages/grafana-ui/src/components/Combobox/MultiCombobox.tsx
index a2d5063b096..849e2a26271 100644
--- a/packages/grafana-ui/src/components/Combobox/MultiCombobox.tsx
+++ b/packages/grafana-ui/src/components/Combobox/MultiCombobox.tsx
@@ -37,8 +37,19 @@ interface MultiComboboxBaseProps<T extends string | number> extends Omit<Combobo
 export type MultiComboboxProps<T extends string | number> = MultiComboboxBaseProps<T> & AutoSizeConditionals;
 
 export const MultiCombobox = <T extends string | number>(props: MultiComboboxProps<T>) => {
-  const { placeholder, onChange, value, width, enableAllOption, invalid, disabled, minWidth, maxWidth, isClearable } =
-    props;
+  const {
+    placeholder,
+    onChange,
+    value,
+    width,
+    enableAllOption,
+    invalid,
+    disabled,
+    minWidth,
+    maxWidth,
+    isClearable,
+    createCustomValue = false,
+  } = props;
 
   const styles = useStyles2(getComboboxStyles);
   const [inputValue, setInputValue] = useState('');
@@ -55,7 +66,7 @@ export const MultiCombobox = <T extends string | number>(props: MultiComboboxPro
   }, [inputValue]);
 
   // Handle async options and the 'All' option
-  const { options: baseOptions, updateOptions, asyncLoading } = useOptions(props.options);
+  const { options: baseOptions, updateOptions, asyncLoading } = useOptions(props.options, createCustomValue);
   const options = useMemo(() => {
     // Only add the 'All' option if there's more than 1 option
     const addAllOption = enableAllOption && baseOptions.length > 1;
@@ -202,14 +213,12 @@ export const MultiCombobox = <T extends string | number>(props: MultiComboboxPro
               const filteredSet = new Set(realOptions.map((item) => item.value));
               newSelectedItems = selectedItems.filter((item) => !filteredSet.has(item.value));
             }
-
             setSelectedItems(newSelectedItems);
           } else if (newSelectedItem && isOptionSelected(newSelectedItem)) {
             removeSelectedItem(newSelectedItem);
           } else if (newSelectedItem) {
             addSelectedItem(newSelectedItem);
           }
-
           break;
         case useCombobox.stateChangeTypes.InputChange:
           setInputValue(newInputValue ?? '');
diff --git a/packages/grafana-ui/src/components/Combobox/filter.ts b/packages/grafana-ui/src/components/Combobox/filter.ts
index cb7a14d86fe..a03cbec475c 100644
--- a/packages/grafana-ui/src/components/Combobox/filter.ts
+++ b/packages/grafana-ui/src/components/Combobox/filter.ts
@@ -20,9 +20,6 @@ export function itemToString<T extends string | number>(item?: ComboboxOption<T>
   if (item == null) {
     return '';
   }
-  if (item.label?.startsWith('Custom value: ')) {
-    return item.value.toString();
-  }
   return item.label ?? item.value.toString();
 }
 
diff --git a/packages/grafana-ui/src/components/Combobox/useOptions.ts b/packages/grafana-ui/src/components/Combobox/useOptions.ts
index 504f3584e1d..a66e60a2747 100644
--- a/packages/grafana-ui/src/components/Combobox/useOptions.ts
+++ b/packages/grafana-ui/src/components/Combobox/useOptions.ts
@@ -1,6 +1,8 @@
 import { debounce } from 'lodash';
 import { useState, useCallback, useMemo } from 'react';
 
+import { t } from '../../utils/i18n';
+
 import { itemFilter } from './filter';
 import { ComboboxOption } from './types';
 import { StaleResultError, useLatestAsyncCall } from './useLatestAsyncCall';
@@ -20,7 +22,7 @@ const asyncNoop = () => Promise.resolve([]);
  *  - function to call when user types (to filter, or call async fn)
  *  - loading and error states
  */
-export function useOptions<T extends string | number>(rawOptions: AsyncOptions<T>) {
+export function useOptions<T extends string | number>(rawOptions: AsyncOptions<T>, createCustomValue: boolean) {
   const isAsync = typeof rawOptions === 'function';
 
   const loadOptions = useLatestAsyncCall(isAsync ? rawOptions : asyncNoop);
@@ -56,6 +58,27 @@ export function useOptions<T extends string | number>(rawOptions: AsyncOptions<T
   // told it for async options loading anyway.
   const [userTypedSearch, setUserTypedSearch] = useState('');
 
+  const addCustomValue = useCallback(
+    (opts: Array<ComboboxOption<T>>) => {
+      let currentOptions: Array<ComboboxOption<T>> = opts;
+      if (createCustomValue && userTypedSearch) {
+        const customValueExists = opts.some((opt) => opt.value === userTypedSearch);
+        if (!customValueExists) {
+          currentOptions = [
+            {
+              label: userTypedSearch,
+              value: userTypedSearch as T,
+              description: t('combobox.custom-value.description', 'Use custom value'),
+            },
+            ...currentOptions,
+          ];
+        }
+      }
+      return currentOptions;
+    },
+    [createCustomValue, userTypedSearch]
+  );
+
   const updateOptions = useCallback(
     (inputValue: string) => {
       if (!isAsync) {
@@ -71,12 +94,15 @@ export function useOptions<T extends string | number>(rawOptions: AsyncOptions<T
   );
 
   const finalOptions = useMemo(() => {
+    let currentOptions = [];
     if (isAsync) {
-      return asyncOptions;
+      currentOptions = addCustomValue(asyncOptions);
     } else {
-      return rawOptions.filter(itemFilter(userTypedSearch));
+      currentOptions = addCustomValue(rawOptions.filter(itemFilter(userTypedSearch)));
     }
-  }, [rawOptions, asyncOptions, isAsync, userTypedSearch]);
+
+    return currentOptions;
+  }, [isAsync, addCustomValue, asyncOptions, rawOptions, userTypedSearch]);
 
   return { options: finalOptions, updateOptions, asyncLoading, asyncError };
 }
diff --git a/public/locales/en-US/grafana.json b/public/locales/en-US/grafana.json
index 9f7da371ab5..92612e85853 100644
--- a/public/locales/en-US/grafana.json
+++ b/public/locales/en-US/grafana.json
@@ -709,7 +709,7 @@
       "title": "Clear value"
     },
     "custom-value": {
-      "label": "Custom value: "
+      "description": "Use custom value"
     },
     "options": {
       "no-found": "No options found."
diff --git a/public/locales/pseudo-LOCALE/grafana.json b/public/locales/pseudo-LOCALE/grafana.json
index b2558bd0edb..b64424a9734 100644
--- a/public/locales/pseudo-LOCALE/grafana.json
+++ b/public/locales/pseudo-LOCALE/grafana.json
@@ -709,7 +709,7 @@
       "title": "Cľęäř väľūę"
     },
     "custom-value": {
-      "label": "Cūşŧőm väľūę: "
+      "description": "Ůşę čūşŧőm väľūę"
     },
     "options": {
       "no-found": "Ńő őpŧįőʼnş ƒőūʼnđ."