diff --git a/packages/cli/src/auth/auth.service.ts b/packages/cli/src/auth/auth.service.ts
index 6e5ddd4be5..ebd3f98031 100644
--- a/packages/cli/src/auth/auth.service.ts
+++ b/packages/cli/src/auth/auth.service.ts
@@ -1,7 +1,7 @@
 import { Service } from 'typedi';
 import type { NextFunction, Response } from 'express';
 import { createHash } from 'crypto';
-import { JsonWebTokenError, TokenExpiredError, type JwtPayload } from 'jsonwebtoken';
+import { JsonWebTokenError, TokenExpiredError } from 'jsonwebtoken';
 
 import config from '@/config';
 import { AUTH_COOKIE_NAME, RESPONSE_ERROR_MESSAGES, Time } from '@/constants';
@@ -18,16 +18,19 @@ import { UrlService } from '@/services/url.service';
 interface AuthJwtPayload {
 	/** User Id */
 	id: string;
-	/** User's email */
-	email: string | null;
-	/** SHA-256 hash of bcrypt hash of the user's password */
-	password: string | null;
+	/** This hash is derived from email and bcrypt of password */
+	hash: string;
 }
 
 interface IssuedJWT extends AuthJwtPayload {
 	exp: number;
 }
 
+interface PasswordResetToken {
+	sub: string;
+	hash: string;
+}
+
 @Service()
 export class AuthService {
 	constructor(
@@ -83,11 +86,9 @@ export class AuthService {
 	}
 
 	issueJWT(user: User) {
-		const { id, email, password } = user;
 		const payload: AuthJwtPayload = {
-			id,
-			email,
-			password: password ? this.createPasswordSha(user) : null,
+			id: user.id,
+			hash: this.createJWTHash(user),
 		};
 		return this.jwtService.sign(payload, {
 			expiresIn: this.jwtExpiration,
@@ -104,18 +105,13 @@ export class AuthService {
 			where: { id: jwtPayload.id },
 		});
 
-		// TODO: include these checks in the cache, to avoid computed this over and over again
-		const passwordHash = user?.password ? this.createPasswordSha(user) : null;
-
 		if (
 			// If not user is found
 			!user ||
 			// or, If the user has been deactivated (i.e. LDAP users)
 			user.disabled ||
-			// or, If the password has been updated
-			jwtPayload.password !== passwordHash ||
-			// or, If the email has been updated
-			user.email !== jwtPayload.email
+			// or, If the email or password has been updated
+			jwtPayload.hash !== this.createJWTHash(user)
 		) {
 			throw new AuthError('Unauthorized');
 		}
@@ -129,10 +125,8 @@ export class AuthService {
 	}
 
 	generatePasswordResetToken(user: User, expiresIn = '20m') {
-		return this.jwtService.sign(
-			{ sub: user.id, passwordSha: this.createPasswordSha(user) },
-			{ expiresIn },
-		);
+		const payload: PasswordResetToken = { sub: user.id, hash: this.createJWTHash(user) };
+		return this.jwtService.sign(payload, { expiresIn });
 	}
 
 	generatePasswordResetUrl(user: User) {
@@ -146,7 +140,7 @@ export class AuthService {
 	}
 
 	async resolvePasswordResetToken(token: string): Promise<User | undefined> {
-		let decodedToken: JwtPayload & { passwordSha: string };
+		let decodedToken: PasswordResetToken;
 		try {
 			decodedToken = this.jwtService.verify(token);
 		} catch (e) {
@@ -171,7 +165,7 @@ export class AuthService {
 			return;
 		}
 
-		if (this.createPasswordSha(user) !== decodedToken.passwordSha) {
+		if (decodedToken.hash !== this.createJWTHash(user)) {
 			this.logger.debug('Password updated since this token was generated');
 			return;
 		}
@@ -179,10 +173,11 @@ export class AuthService {
 		return user;
 	}
 
-	private createPasswordSha({ password }: User) {
-		return createHash('sha256')
-			.update(password.slice(password.length / 2))
-			.digest('hex');
+	createJWTHash({ email, password }: User) {
+		const hash = createHash('sha256')
+			.update(email + ':' + password)
+			.digest('base64');
+		return hash.substring(0, 10);
 	}
 
 	/** How many **milliseconds** before expiration should a JWT be renewed */
diff --git a/packages/cli/test/unit/auth/auth.service.test.ts b/packages/cli/test/unit/auth/auth.service.test.ts
index 3d432ebb64..6084eecfea 100644
--- a/packages/cli/test/unit/auth/auth.service.test.ts
+++ b/packages/cli/test/unit/auth/auth.service.test.ts
@@ -22,7 +22,7 @@ describe('AuthService', () => {
 		mfaEnabled: false,
 	};
 	const validToken =
-		'eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpZCI6IjEyMyIsImVtYWlsIjoidGVzdEBleGFtcGxlLmNvbSIsInBhc3N3b3JkIjoiMzE1MTNjNWE5ZTNjNWFmZTVjMDZkNTY3NWFjZTc0ZThiYzNmYWRkOTc0NGFiNWQ4OWMzMTFmMmE2MmNjYmQzOSIsImlhdCI6MTcwNjc1MDYyNSwiZXhwIjoxNzA3MzU1NDI1fQ.mtXKUwQDHOhiHn0YNuCeybmxevtNG6LXTAv_sQL63Zc';
+		'eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpZCI6IjEyMyIsImhhc2giOiJtSkFZeDRXYjdrIiwiaWF0IjoxNzA2NzUwNjI1LCJleHAiOjE3MDczNTU0MjV9.JwY3doH0YrxHdX4nTOlTN4-QMaXsAu5OFOaFcIHSHBI';
 
 	const user = mock<User>(userData);
 	const jwtService = new JwtService(mock());
@@ -39,6 +39,20 @@ describe('AuthService', () => {
 		config.set('userManagement.jwtRefreshTimeoutHours', 0);
 	});
 
+	describe('createJWTHash', () => {
+		it('should generate unique hashes', () => {
+			expect(authService.createJWTHash(user)).toEqual('mJAYx4Wb7k');
+			expect(
+				authService.createJWTHash(mock<User>({ email: user.email, password: 'newPasswordHash' })),
+			).toEqual('FVALtU7AE0');
+			expect(
+				authService.createJWTHash(
+					mock<User>({ email: 'test1@example.com', password: user.password }),
+				),
+			).toEqual('y8ha6X01jd');
+		});
+	});
+
 	describe('authMiddleware', () => {
 		const req = mock<AuthenticatedRequest>({ cookies: {}, user: undefined });
 		const res = mock<Response>();
@@ -198,7 +212,7 @@ describe('AuthService', () => {
 			urlService.getInstanceBaseUrl.mockReturnValue('https://n8n.instance');
 			const url = authService.generatePasswordResetUrl(user);
 			expect(url).toEqual(
-				'https://n8n.instance/change-password?token=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzdWIiOiIxMjMiLCJwYXNzd29yZFNoYSI6IjMxNTEzYzVhOWUzYzVhZmU1YzA2ZDU2NzVhY2U3NGU4YmMzZmFkZDk3NDRhYjVkODljMzExZjJhNjJjY2JkMzkiLCJpYXQiOjE3MDY3NTA2MjUsImV4cCI6MTcwNjc1MTgyNX0.wsdEpbK2zhFucaPwga7f8EOcwiJcv0iW23HcnvJs-s8&mfaEnabled=false',
+				'https://n8n.instance/change-password?token=eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJzdWIiOiIxMjMiLCJoYXNoIjoibUpBWXg0V2I3ayIsImlhdCI6MTcwNjc1MDYyNSwiZXhwIjoxNzA2NzUxODI1fQ.rg90I7MKjc_KC77mov59XYAeRc-CoW9ka4mt1dCfrnk&mfaEnabled=false',
 			);
 		});
 	});
@@ -214,9 +228,7 @@ describe('AuthService', () => {
 
 			expect(decoded.sub).toEqual(user.id);
 			expect(decoded.exp - decoded.iat).toEqual(1200); // Expires in 20 minutes
-			expect(decoded.passwordSha).toEqual(
-				'31513c5a9e3c5afe5c06d5675ace74e8bc3fadd9744ab5d89c311f2a62ccbd39',
-			);
+			expect(decoded.hash).toEqual('mJAYx4Wb7k');
 		});
 	});