diff --git a/app/services/application_settings/update_service.rb b/app/services/application_settings/update_service.rb
index 471df6e2d0c..8115585b7a8 100644
--- a/app/services/application_settings/update_service.rb
+++ b/app/services/application_settings/update_service.rb
@@ -7,7 +7,7 @@ module ApplicationSettings
     attr_reader :params, :application_setting
 
     def execute
-      validate_classification_label(application_setting, :external_authorization_service_default_label)
+      validate_classification_label(application_setting, :external_authorization_service_default_label) unless bypass_external_auth?
 
       if application_setting.errors.any?
         return false
@@ -59,5 +59,9 @@ module ApplicationSettings
 
       Group.find_by_full_path(group_full_path)&.id if group_full_path.present?
     end
+
+    def bypass_external_auth?
+      params.key?(:external_authorization_service_enabled) && !Gitlab::Utils.to_boolean(params[:external_authorization_service_enabled])
+    end
   end
 end
diff --git a/changelogs/unreleased/66443-unrecoverable-configuration-loop-in-external-auth-control.yml b/changelogs/unreleased/66443-unrecoverable-configuration-loop-in-external-auth-control.yml
new file mode 100644
index 00000000000..ab52e3e5a2c
--- /dev/null
+++ b/changelogs/unreleased/66443-unrecoverable-configuration-loop-in-external-auth-control.yml
@@ -0,0 +1,5 @@
+---
+title: Don't check external authorization when disabling the service
+merge_request: 32102
+author: Robert Schilling
+type: fixed
diff --git a/spec/services/application_settings/update_service_spec.rb b/spec/services/application_settings/update_service_spec.rb
index adb5219d691..ab06c1a1209 100644
--- a/spec/services/application_settings/update_service_spec.rb
+++ b/spec/services/application_settings/update_service_spec.rb
@@ -201,6 +201,24 @@ describe ApplicationSettings::UpdateService do
       enable_external_authorization_service_check
     end
 
+    it 'does not validate labels if external authorization gets disabled' do
+      expect_any_instance_of(described_class).not_to receive(:validate_classification_label)
+
+      described_class.new(application_settings, admin, { external_authorization_service_enabled: false }).execute
+    end
+
+    it 'does validate labels if external authorization gets enabled ' do
+      expect_any_instance_of(described_class).to receive(:validate_classification_label)
+
+      described_class.new(application_settings, admin, { external_authorization_service_enabled: true }).execute
+    end
+
+    it 'does validate labels if external authorization is left unchanged' do
+      expect_any_instance_of(described_class).to receive(:validate_classification_label)
+
+      described_class.new(application_settings, admin, { external_authorization_service_default_label: 'new-label' }).execute
+    end
+
     it 'does not save the settings with an error if the service denies access' do
       expect(::Gitlab::ExternalAuthorization)
         .to receive(:access_allowed?).with(admin, 'new-label') { false }