diff --git a/packages/bee-q/src/components.d.ts b/packages/bee-q/src/components.d.ts
index b30493da3..1f08e8a2e 100644
--- a/packages/bee-q/src/components.d.ts
+++ b/packages/bee-q/src/components.d.ts
@@ -73,7 +73,7 @@ export namespace Components {
          */
         "backgroundColor"?: string;
         /**
-          * The size of the badge
+          * The size of the badge. Relevant if badge has no content.
          */
         "size"?: TBadgeSize;
         /**
@@ -912,7 +912,7 @@ declare namespace LocalJSX {
          */
         "backgroundColor"?: string;
         /**
-          * The size of the badge
+          * The size of the badge. Relevant if badge has no content.
          */
         "size"?: TBadgeSize;
         /**
diff --git a/packages/bee-q/src/components/avatar/__tests__/bq-avatar.e2e.ts b/packages/bee-q/src/components/avatar/__tests__/bq-avatar.e2e.ts
index e834ff2d6..0a4605233 100644
--- a/packages/bee-q/src/components/avatar/__tests__/bq-avatar.e2e.ts
+++ b/packages/bee-q/src/components/avatar/__tests__/bq-avatar.e2e.ts
@@ -83,4 +83,24 @@ describe('bq-avatar', () => {
     expect(mediumSquareStyle).toEqual({ borderRadius: '12px', height: '48px', width: '48px' });
     expect(largeSquareStyle).toEqual({ borderRadius: '12px', height: '64px', width: '64px' });
   });
+
+  it('should render <bq-badge> component', async () => {
+    const page = await newE2EPage();
+    await page.setContent(`
+      <bq-avatar
+        alt-text="User profile"
+        label="Label"
+        initials="JS"
+        shape="circle"
+        size="medium"
+      >
+        <bq-badge slot="badge" text-color="#fff">9</bq-badge>
+      </bq-avatar>
+    `);
+
+    const avatarElem = await page.find('bq-avatar');
+    const sideMenuItems = await avatarElem.findAll('bq-badge');
+
+    expect(sideMenuItems).toHaveLength(1);
+  });
 });
diff --git a/packages/bee-q/src/components/avatar/_storybook/bq-avatar.stories.tsx b/packages/bee-q/src/components/avatar/_storybook/bq-avatar.stories.tsx
index 37f6d1f2a..d0df8d3df 100644
--- a/packages/bee-q/src/components/avatar/_storybook/bq-avatar.stories.tsx
+++ b/packages/bee-q/src/components/avatar/_storybook/bq-avatar.stories.tsx
@@ -23,6 +23,7 @@ const meta: Meta = {
     label: 'Avatar component label',
     shape: 'circle',
     size: 'medium',
+    'badge-content': '9',
   },
 };
 export default meta;
@@ -55,3 +56,21 @@ export const Initials: Story = {
     initials: 'JS',
   },
 };
+
+export const WithBadge: Story = {
+  render: (args: Args) =>
+    html`<bq-avatar
+      alt-text=${args['alt-text']}
+      image=${args.image}
+      label=${args.label}
+      initials=${args.initials}
+      shape=${args.shape}
+      size=${args.size}
+    >
+      <bq-badge slot="badge" text-color="#fff">${args['badge-content']}</bq-badge>
+    </bq-avatar>`,
+  args: {
+    image:
+      'https://images.unsplash.com/photo-1524593689594-aae2f26b75ab?ixlib=rb-1.2.1&ixid=eyJhcHBfaWQiOjEyMDd9&auto=format&fit=crop&w=1000&q=80',
+  },
+};
diff --git a/packages/bee-q/src/components/avatar/bq-avatar.tsx b/packages/bee-q/src/components/avatar/bq-avatar.tsx
index 214aebda9..ee56521d0 100644
--- a/packages/bee-q/src/components/avatar/bq-avatar.tsx
+++ b/packages/bee-q/src/components/avatar/bq-avatar.tsx
@@ -1,4 +1,4 @@
-import { h, Component, Prop, Watch, State, Element } from '@stencil/core';
+import { h, Component, Prop, Watch, State, Element, Host } from '@stencil/core';
 
 import { TAvatarShape, TAvatarSize, AVATAR_SHAPE, AVATAR_SIZE } from './bq-avatar.types';
 import { validatePropValue } from '../../shared/utils';
@@ -19,6 +19,8 @@ export class BqAvatar {
   // Own Properties
   // ====================
 
+  trimmedInitials: string;
+
   // Reference to host HTML element
   // ===================================
 
@@ -67,6 +69,12 @@ export class BqAvatar {
     validatePropValue(AVATAR_SIZE, 'medium', this.el, 'size');
   }
 
+  @Watch('initials')
+  @Watch('size')
+  onInitialsChnage() {
+    this.trimInitialsBasedOnSize();
+  }
+
   // Events section
   // Requires JSDocs for public API documentation
   // ==============================================
@@ -76,6 +84,7 @@ export class BqAvatar {
   // =====================================
 
   componentWillLoad() {
+    this.trimInitialsBasedOnSize();
     this.checkPropValues();
   }
 
@@ -98,43 +107,79 @@ export class BqAvatar {
     this.hasError = true;
   };
 
+  private trimInitialsBasedOnSize = (): void => {
+    AVATAR_SIZE.forEach((size: TAvatarSize) => {
+      if (this.size === size) {
+        this.trimmedInitials = this.initials.substring(0, this.getIndex(size));
+      }
+    });
+  };
+
+  private getIndex = (size: TAvatarSize): number => {
+    switch (size) {
+      case 'small':
+        return 2;
+      case 'medium':
+        return 3;
+      case 'large':
+        return 4;
+      default:
+        // also if size === xsmall
+        return 1;
+    }
+  };
+
   // render() function
   // Always the last one in the class.
   // ===================================
 
   render() {
     return (
-      <div
-        class={{
-          'relative overflow-hidden bg-ui-secondary-light': true,
-          [`size--${this.size}`]: true,
-          'rounded-full': this.shape === 'circle',
-          'rounded-xs': this.shape === 'square' && this.size === 'xsmall',
-          'rounded-s': this.shape === 'square' && this.size === 'small',
-          'rounded-m': this.shape === 'square' && (this.size === 'medium' || this.size === 'large'),
-        }}
-        aria-label={this.label}
-        role="img"
-        part="base"
-      >
-        {this.initials && (
-          <span
-            class="absolute left-0 top-0 inline-flex h-full w-full items-center justify-center font-bold"
-            part="text"
-          >
-            {this.initials}
-          </span>
-        )}
-        {this.image && !this.hasError && (
-          <img
-            class="absolute left-0 top-0 h-full w-full object-cover"
-            alt={this.altText ?? undefined}
-            src={this.image}
-            onError={this.onImageError}
-            part="img"
-          />
-        )}
-      </div>
+      <Host>
+        <div
+          class={{
+            'bq-avatar': true,
+            [`size--${this.size}`]: true,
+            'rounded-[var(--bq-avatar--border-radius-circle)]': this.shape === 'circle',
+            'rounded-[var(--bq-avatar--border-radius-squareXs)]': this.shape === 'square' && this.size === 'xsmall',
+            'rounded-[var(--bq-avatar--border-radius-squareS)]': this.shape === 'square' && this.size === 'small',
+            'rounded-[var(--bq-avatar--border-radius-squareM)]':
+              this.shape === 'square' && (this.size === 'medium' || this.size === 'large'),
+          }}
+          aria-label={this.label}
+          role="img"
+          part="base"
+        >
+          {this.initials && (
+            <span
+              class="absolute left-0 top-0 inline-flex h-full w-full items-center justify-center font-bold"
+              part="text"
+            >
+              {this.trimmedInitials}
+            </span>
+          )}
+          {this.image && !this.hasError && (
+            <img
+              class="absolute left-0 top-0 h-full w-full object-cover"
+              alt={this.altText ?? undefined}
+              src={this.image}
+              onError={this.onImageError}
+              part="img"
+            />
+          )}
+        </div>
+        <div
+          class={{
+            'absolute flex items-center justify-center': true,
+            'left-[var(--bq-avatar--badge-left-square)] top-[var(--bq-avatar--badge-top-square)]':
+              this.shape === 'square',
+            'left-[var(--bq-avatar--badge-left-circle)] top-[var(--bq-avatar--badge-top-circle)]':
+              this.shape === 'circle',
+          }}
+        >
+          <slot name="badge"></slot>
+        </div>
+      </Host>
     );
   }
 }
diff --git a/packages/bee-q/src/components/avatar/scss/bq-avatar.scss b/packages/bee-q/src/components/avatar/scss/bq-avatar.scss
index 66ed0772d..16f0206fe 100644
--- a/packages/bee-q/src/components/avatar/scss/bq-avatar.scss
+++ b/packages/bee-q/src/components/avatar/scss/bq-avatar.scss
@@ -5,23 +5,30 @@
 @import './bq-avatar.variables';
 
 :host {
-  @apply inline-block;
+  @apply relative inline-block;
+}
+
+.bq-avatar {
+  @apply relative overflow-hidden bg-[var(--bq-avatar-background)];
+  @apply border-[length:var(--bq-avatar--border-width)] border-[color:var(--bq-avatar--border-color)];
+
+  border-style: var(--bq-avatar--border-style);
 }
 
 .size {
   &--xsmall {
-    @apply h-[var(--bq-avatar--size-xsmall)] w-[var(--bq-avatar--size-xsmall)] text-xs;
+    @apply h-[var(--bq-avatar--size-xsmall)] w-[var(--bq-avatar--size-xsmall)] text-[length:var(--bq-avatar--font-size-xsmall)];
   }
 
   &--small {
-    @apply h-[var(--bq-avatar--size-small)] w-[var(--bq-avatar--size-small)] text-xs;
+    @apply h-[var(--bq-avatar--size-small)] w-[var(--bq-avatar--size-small)] text-[length:var(--bq-avatar--font-size-small)];
   }
 
   &--medium {
-    @apply h-[var(--bq-avatar--size-medium)] w-[var(--bq-avatar--size-medium)] text-m;
+    @apply h-[var(--bq-avatar--size-medium)] w-[var(--bq-avatar--size-medium)] text-[length:var(--bq-avatar--font-size-medium)];
   }
 
   &--large {
-    @apply h-[var(--bq-avatar--size-large)] w-[var(--bq-avatar--size-large)] text-m;
+    @apply h-[var(--bq-avatar--size-large)] w-[var(--bq-avatar--size-large)] text-[length:var(--bq-avatar--font-size-large)];
   }
 }
diff --git a/packages/bee-q/src/components/avatar/scss/bq-avatar.variables.scss b/packages/bee-q/src/components/avatar/scss/bq-avatar.variables.scss
index f4cd17584..60fd941a4 100644
--- a/packages/bee-q/src/components/avatar/scss/bq-avatar.variables.scss
+++ b/packages/bee-q/src/components/avatar/scss/bq-avatar.variables.scss
@@ -3,8 +3,52 @@
 /* -------------------------------------------------------------------------- */
 
 :host {
+  /**
+  * @prop --bq-avatar--background: Avatar background color
+
+  * @prop --bq-avatar--border-color: Avatar border color
+  * @prop --bq-avatar--border-style: Avatar border style
+  * @prop --bq-avatar--border-width: Avatar border width
+
+  * @prop --bq-avatar--border-radius-circle: Avatar border radius for circle & any size
+  * @prop --bq-avatar--border-radius-squareXs: Avatar border radius for square & size xsmall
+  * @prop --bq-avatar--border-radius-squareS: Avatar border radius for square & size small
+  * @prop --bq-avatar--border-radius-squareM: Avatar border radius for square & size medium/large
+
+  * @prop --bq-avatar--size-xsmall: Avatar xsmall size
+  * @prop --bq-avatar--size-small: Avatar small size
+  * @prop --bq-avatar--size-medium: Avatar medium size
+  * @prop --bq-avatar--size-large: Avatar large size
+
+  * @prop --bq-avatar--badge-top-square: Badge top position shape square
+  * @prop --bq-avatar--badge-left-square: Badge left position shape square
+  * @prop --bq-avatar--badge-top-circle: Badge top position shape circle
+  * @prop --bq-avatar--badge-left-circle: Badge left position shape circle
+  */
+
+  --bq-avatar-background: theme('colors.ui.secondary-light');
+
+  --bq-avatar--border-color: theme('colors.stroke.tiertary');
+  --bq-avatar--border-style: solid;
+  --bq-avatar--border-width: 2px;
+
+  --bq-avatar--border-radius-circle: theme('borderRadius.full');
+  --bq-avatar--border-radius-squareXs: theme('borderRadius.xs');
+  --bq-avatar--border-radius-squareS: theme('borderRadius.s');
+  --bq-avatar--border-radius-squareM: theme('borderRadius.m');
+
   --bq-avatar--size-xsmall: 24px;
   --bq-avatar--size-small: 32px;
   --bq-avatar--size-medium: 48px;
   --bq-avatar--size-large: 64px;
+
+  --bq-avatar--font-size-xsmall: theme('fontSize.xs');
+  --bq-avatar--font-size-small: theme('fontSize.xs');
+  --bq-avatar--font-size-medium: theme('fontSize.m');
+  --bq-avatar--font-size-large: theme('fontSize.m');
+
+  --bq-avatar--badge-top-square: -5px;
+  --bq-avatar--badge-left-square: 80%;
+  --bq-avatar--badge-top-circle: 0;
+  --bq-avatar--badge-left-circle: 75%;
 }
diff --git a/packages/bee-q/src/components/badge/bq-badge.tsx b/packages/bee-q/src/components/badge/bq-badge.tsx
index 2b56e4d41..d1ad15492 100644
--- a/packages/bee-q/src/components/badge/bq-badge.tsx
+++ b/packages/bee-q/src/components/badge/bq-badge.tsx
@@ -43,7 +43,7 @@ export class BqBadge {
   /** Badge number color. The value should be a valid value of the palette color */
   @Prop({ mutable: true, reflect: true }) textColor? = 'text--inverse';
 
-  /** The size of the badge */
+  /** The size of the badge. Relevant if badge has no content. */
   @Prop({ reflect: true, mutable: true }) size?: TBadgeSize = 'small';
 
   // Prop lifecycle events
diff --git a/packages/bee-q/src/components/badge/readme.md b/packages/bee-q/src/components/badge/readme.md
index 60d7e5845..523d50dc8 100644
--- a/packages/bee-q/src/components/badge/readme.md
+++ b/packages/bee-q/src/components/badge/readme.md
@@ -10,7 +10,7 @@
 | Property          | Attribute          | Description                                                                    | Type                  | Default           |
 | ----------------- | ------------------ | ------------------------------------------------------------------------------ | --------------------- | ----------------- |
 | `backgroundColor` | `background-color` | Badge background color. The value should be a valid value of the palette color | `string`              | `'ui--danger'`    |
-| `size`            | `size`             | The size of the badge                                                          | `"medium" \| "small"` | `'small'`         |
+| `size`            | `size`             | The size of the badge. Relevant if badge has no content.                       | `"medium" \| "small"` | `'small'`         |
 | `textColor`       | `text-color`       | Badge number color. The value should be a valid value of the palette color     | `string`              | `'text--inverse'` |