diff --git a/public/app/features/dashboard-scene/scene/DashboardGridItem.tsx b/public/app/features/dashboard-scene/scene/DashboardGridItem.tsx
index 753a504de5c..66cde096744 100644
--- a/public/app/features/dashboard-scene/scene/DashboardGridItem.tsx
+++ b/public/app/features/dashboard-scene/scene/DashboardGridItem.tsx
@@ -1,5 +1,6 @@
 import { css } from '@emotion/css';
 import React, { useMemo } from 'react';
+import { Unsubscribable } from 'rxjs';
 
 import { config } from '@grafana/runtime';
 import {
@@ -39,6 +40,7 @@ interface DashboardGridItemState extends SceneGridItemStateLike {
 export type RepeatDirection = 'v' | 'h';
 
 export class DashboardGridItem extends SceneObjectBase<DashboardGridItemState> implements SceneGridItemLike {
+  private _libPanelSubscription: Unsubscribable | undefined;
   protected _variableDependency = new VariableDependencyConfig(this, {
     variableNames: this.state.variableName ? [this.state.variableName] : [],
     onVariableUpdateCompleted: this._onVariableUpdateCompleted.bind(this),
@@ -55,6 +57,46 @@ export class DashboardGridItem extends SceneObjectBase<DashboardGridItemState> i
       this._subs.add(this.subscribeToState((newState, prevState) => this._handleGridResize(newState, prevState)));
       this._performRepeat();
     }
+
+    // Subscriptions that handles body updates, i.e. VizPanel -> LibraryVizPanel, AddLibPanelWidget -> LibraryVizPanel
+    this._subs.add(
+      this.subscribeToState((newState, prevState) => {
+        if (newState.body !== prevState.body) {
+          if (newState.body instanceof LibraryVizPanel) {
+            this.setupLibraryPanelChangeSubscription(newState.body);
+          }
+        }
+      })
+    );
+
+    // Initial setup of the lbrary panel subscription. Lib panels are lazy laded, so only then we can subscribe to the repeat config changes
+    if (this.state.body instanceof LibraryVizPanel) {
+      this.setupLibraryPanelChangeSubscription(this.state.body);
+    }
+
+    return () => {
+      this._libPanelSubscription?.unsubscribe();
+      this._libPanelSubscription = undefined;
+    };
+  }
+
+  private setupLibraryPanelChangeSubscription(panel: LibraryVizPanel) {
+    if (this._libPanelSubscription) {
+      this._libPanelSubscription.unsubscribe();
+      this._libPanelSubscription = undefined;
+    }
+
+    this._libPanelSubscription = panel.subscribeToState((newState) => {
+      if (newState._loadedPanel?.model.repeat) {
+        this._variableDependency.setVariableNames([newState._loadedPanel.model.repeat]);
+        this.setState({
+          variableName: newState._loadedPanel.model.repeat,
+          repeatDirection: newState._loadedPanel.model.repeatDirection,
+          maxPerRow: newState._loadedPanel.model.maxPerRow,
+        });
+        this._performRepeat();
+      }
+    });
   }
 
   private _onVariableUpdateCompleted(): void {
diff --git a/public/app/features/dashboard-scene/scene/LibraryVizPanel.tsx b/public/app/features/dashboard-scene/scene/LibraryVizPanel.tsx
index 53b9c2ddc42..76e70db37cc 100644
--- a/public/app/features/dashboard-scene/scene/LibraryVizPanel.tsx
+++ b/public/app/features/dashboard-scene/scene/LibraryVizPanel.tsx
@@ -2,7 +2,6 @@ import React from 'react';
 
 import {
   SceneComponentProps,
-  SceneGridLayout,
   SceneObjectBase,
   SceneObjectState,
   VizPanel,
@@ -78,29 +77,6 @@ export class LibraryVizPanel extends SceneObjectBase<LibraryVizPanelState> {
     };
 
     const panel = new VizPanel(vizPanelState);
-    const gridItem = this.parent;
-
-    if (libPanelModel.repeat && gridItem instanceof DashboardGridItem && gridItem.parent instanceof SceneGridLayout) {
-      this._parent = undefined;
-      const repeater = new DashboardGridItem({
-        key: gridItem.state.key,
-        x: gridItem.state.x,
-        y: gridItem.state.y,
-        width: libPanelModel.repeatDirection === 'h' ? 24 : gridItem.state.width,
-        height: gridItem.state.height,
-        itemHeight: gridItem.state.height,
-        body: this,
-        variableName: libPanelModel.repeat,
-        repeatedPanels: [],
-        repeatDirection: libPanelModel.repeatDirection === 'h' ? 'h' : 'v',
-        maxPerRow: libPanelModel.maxPerRow,
-      });
-      gridItem.parent.setState({
-        children: gridItem.parent.state.children.map((child) =>
-          child.state.key === gridItem.state.key ? repeater : child
-        ),
-      });
-    }
 
     this.setState({ panel, _loadedPanel: libPanel, isLoaded: true, name: libPanel.name });
   }