diff --git a/dracut-initramfs-restore.sh b/dracut-initramfs-restore.sh
index ff6c3869..1feec108 100644
--- a/dracut-initramfs-restore.sh
+++ b/dracut-initramfs-restore.sh
@@ -48,9 +48,9 @@ else
 fi
 
 if [[ -d squash ]]; then
-    unsquashfs -no-xattrs -f -d . squash/root.img >/dev/null
+    unsquashfs -no-xattrs -f -d . squash-root.img >/dev/null
     if [ $? -ne 0 ]; then
-        echo "Squash module is enabled for this initramfs but failed to unpack squash/root.img" >&2
+        echo "Squash module is enabled for this initramfs but failed to unpack squash-root.img" >&2
         rm -f -- /run/initramfs/shutdown
         exit 1
     fi
diff --git a/dracut.sh b/dracut.sh
index 184e4769..421fc1b1 100755
--- a/dracut.sh
+++ b/dracut.sh
@@ -2057,8 +2057,8 @@ fi
 
 if dracut_module_included "squash"; then
     readonly squash_dir="$initdir/squash/root"
-    readonly squash_img="$initdir/squash/root.img"
-
+    readonly squash_img="$initdir/squash-root.img"
+    mkdir -p "$squash_dir"
     dinfo "*** Install squash loader ***"
     DRACUT_SQUASH_POST_INST=1 module_install "squash"
 fi
diff --git a/lsinitrd.sh b/lsinitrd.sh
index ffdb4a4f..66cfa9bc 100755
--- a/lsinitrd.sh
+++ b/lsinitrd.sh
@@ -169,7 +169,7 @@ list_files()
 
 list_squash_content()
 {
-    SQUASH_IMG="squash/root.img"
+    SQUASH_IMG="squash-root.img"
     SQUASH_TMPFILE="$TMPDIR/initrd.root.sqsh"
 
     $CAT "$image" 2>/dev/null | cpio --extract --verbose --quiet --to-stdout -- \
diff --git a/modules.d/99squash/clear-squash.sh b/modules.d/99squash/clear-squash.sh
deleted file mode 100755
index 4f357817..00000000
--- a/modules.d/99squash/clear-squash.sh
+++ /dev/null
@@ -1,6 +0,0 @@
-#!/bin/bash
-mnt="/squash/root"
-for dir in jsquash/root/*; do
-	mnt="$mnt ${dir#$SQUASH_MNT}"
-done
-umount --lazy -- $mnt
diff --git a/modules.d/99squash/init-squash.sh b/modules.d/99squash/init-squash.sh
index fee0105e..3de6f819 100755
--- a/modules.d/99squash/init-squash.sh
+++ b/modules.d/99squash/init-squash.sh
@@ -1,61 +1,29 @@
-#!/bin/bash
+#!/bin/sh
 PATH=/bin:/sbin
 
-SQUASH_IMG=/squash/root.img
-SQUASH_MNT=/squash/root
+# Basic mounts for mounting a squash image
+mkdir /proc /sys /dev /run
+mount -t proc -o nosuid,noexec,nodev proc /proc
+mount -t sysfs -o nosuid,noexec,nodev sysfs /sys
+mount -t devtmpfs -o mode=755,noexec,nosuid,strictatime devtmpfs /dev
+mount -t tmpfs -o mode=755,nodev,nosuid,strictatime tmpfs /run
 
-# Following mount points are neccessary for mounting a squash image
-
-[ ! -d /proc/self ] && \
-    mount -t proc -o nosuid,noexec,nodev proc /proc
-
-[ ! -d /sys/kernel ] && \
-    mount -t sysfs -o nosuid,noexec,nodev sysfs /sys
-
-[ ! -e /dev/loop-control ] && \
-    mount -t devtmpfs -o mode=0755,noexec,nosuid,strictatime devtmpfs /dev
-
-# Need a loop device backend, overlayfs, and squashfs module
+# Load required modules
 modprobe loop
-if [ $? != 0 ]; then
-    echo "Unable to setup loop module"
-fi
-
 modprobe squashfs
-if [ $? != 0 ]; then
-    echo "Unable to setup squashfs module"
-fi
-
 modprobe overlay
-if [ $? != 0 ]; then
-    echo "Unable to setup overlay module"
-fi
 
-[ ! -d "$SQUASH_MNT" ] && \
-	mkdir -m 0755 -p $SQUASH_MNT
+# Mount the squash image
+mount -t ramfs ramfs /squash
+mkdir -p /squash/root /squash/overlay/upper /squash/overlay/work
+mount -t squashfs -o ro,loop /squash-root.img /squash/root
 
-# Mount the squashfs image
-mount -t squashfs -o ro,loop $SQUASH_IMG $SQUASH_MNT
+# Setup new root overlay
+mkdir /newroot
+mount -t overlay overlay -o lowerdir=/squash/root,upperdir=/squash/overlay/upper,workdir=/squash/overlay/work/ /newroot/
 
-if [ $? != 0 ]; then
-    echo "Unable to mount squashed initramfs image"
-fi
+# Move all mount points to new root to prepare chroot
+mount --move /squash /newroot/squash
 
-for file in $SQUASH_MNT/*; do
-	file=${file#$SQUASH_MNT/}
-	lowerdir=$SQUASH_MNT/$file
-	workdir=/squash/overlay-work/$file
-	upperdir=/$file
-	mntdir=/$file
-
-	mkdir -m 0755 -p $workdir
-	mkdir -m 0755 -p $mntdir
-
-	mount -t overlay overlay -o\
-		lowerdir=$lowerdir,upperdir=$upperdir,workdir=$workdir $mntdir
-done
-
-exec /init.orig
-
-echo "Something went wrong when trying to exec original init!"
-exit 1
+# Jump to new root and clean setup files
+SYSTEMD_IN_INITRD=lenient exec switch_root /newroot /init
diff --git a/modules.d/99squash/module-setup.sh b/modules.d/99squash/module-setup.sh
index 59933447..50c92c31 100644
--- a/modules.d/99squash/module-setup.sh
+++ b/modules.d/99squash/module-setup.sh
@@ -19,56 +19,36 @@ depends() {
 }
 
 installpost() {
-    local squash_candidate=( "usr" "etc" )
-
-    # shellcheck disable=SC2174
-    mkdir -m 0755 -p "$squash_dir"
-    for folder in "${squash_candidate[@]}"; do
-        mv "$initdir/$folder" "$squash_dir/$folder"
+    # Move everything under $initdir except $squash_dir
+    # itself into squash image
+    for i in "$initdir"/*; do
+        [[ "$squash_dir" == "$i"/* ]] || mv "$i" "$squash_dir"/
     done
 
-    # Move some files out side of the squash image, including:
-    # - Files required to boot and mount the squashfs image
-    # - Files need to be accessible without mounting the squash image
-    # - Initramfs marker
-    for file in \
-        "$squash_dir"/usr/lib/dracut/* \
-        "$squash_dir"/etc/initrd-release
-    do
+    # Create mount points for squash loader
+    mkdir -p "$initdir"/squash/
+    mkdir -p "$squash_dir"/squash/
+
+    # Copy dracut spec files out side of the squash image
+    # so dracut rebuild and lsinitrd can work
+    for file in "$squash_dir"/usr/lib/dracut/*; do
         [[ -f $file ]] || continue
         DRACUT_RESOLVE_DEPS=1 dracutsysrootdir="$squash_dir" inst "${file#$squash_dir}"
-        rm "$file"
     done
 
-    # Install required files for the squash image setup script.
-    inst_multiple modprobe mount mkdir ln echo rm
-
-    mv "$initdir"/init "$initdir"/init.orig
-    inst "$moddir"/init-squash.sh /init
-    inst "$moddir"/clear-squash.sh /squash/clear-squash.sh
-
-    # Keep systemctl outsite if we need switch root
-    if [[ ! -f "$initdir/lib/dracut/no-switch-root" ]]; then
-      inst "systemctl"
-    fi
-
-    # Remove duplicated files
-    for folder in "${squash_candidate[@]}"; do
-        find "$initdir/$folder/" -not -type d \
-            -exec bash -c 'mv -f "$squash_dir${1#$initdir}" "$1"' -- "{}" \;
-    done
-
-    # Install required modules for the squash image init script.
+    # Install required modules and binaries for the squash image init script.
+    DRACUT_RESOLVE_DEPS=1 inst_multiple sh mount modprobe mkdir switch_root
     hostonly="" instmods "loop" "squashfs" "overlay"
     dracut_kernel_post
+
+    # Install squash image init script.
+    ln -sfn /usr/bin "$initdir/bin"
+    ln -sfn /usr/sbin "$initdir/sbin"
+    inst_simple "$moddir"/init-squash.sh /init
 }
 
 install() {
     if [[ $DRACUT_SQUASH_POST_INST ]]; then
         installpost
-        return
     fi
-
-    inst "$moddir/squash-mnt-clear.service" "$systemdsystemunitdir/squash-mnt-clear.service"
-    $SYSTEMCTL -q --root "$initdir" add-wants initrd-switch-root.target squash-mnt-clear.service
 }
diff --git a/modules.d/99squash/squash-mnt-clear.service b/modules.d/99squash/squash-mnt-clear.service
deleted file mode 100644
index 9d94c524..00000000
--- a/modules.d/99squash/squash-mnt-clear.service
+++ /dev/null
@@ -1,17 +0,0 @@
-#  This file is part of dracut.
-#
-
-[Unit]
-Description=Cleanup squashfs mounts when switch root
-DefaultDependencies=no
-Before=initrd-switch-root.service
-After=initrd-switch-root.target
-ConditionPathExists=/squash/root
-
-[Service]
-Type=oneshot
-RemainAfterExit=no
-StandardInput=null
-StandardOutput=journal+console
-StandardError=journal+console
-ExecStart=/squash/clear-squash.sh