diff --git a/manifest-verifier/action.yml b/manifest-verifier/action.yml
index f718a8be..3221b76d 100644
--- a/manifest-verifier/action.yml
+++ b/manifest-verifier/action.yml
@@ -9,6 +9,10 @@ inputs:
     description: 'List of comma-separated relative path to submodules that should not be present in manifest.yml. Eg libraries/thirdparty/tinycbor,libraries/thirdparty/mbedtls'
     required: false
     default: ''
+  fail-on-incorrect-version: 
+    description: 'Boolean flag to indicate if verification should fail if any submodule version in manifest.yml file is incorrect or stale.'
+    required: false
+    default: 'false'
 runs:
   using: "composite"
   steps: 
@@ -17,5 +21,10 @@ runs:
         shell: bash
       - name: Run verifier script
         working-directory: ${{ inputs.path }}
-        run: python3 $GITHUB_ACTION_PATH/verify_manifest.py --ignore-submodule-path=${{ inputs.exclude-submodules }}
+        run: |
+          if [[ "${{ inputs.fail-on-incorrect-version }}" == "true" ]]
+            python3 $GITHUB_ACTION_PATH/verify_manifest.py --ignore-submodule-path=${{ inputs.exclude-submodules }} --fail-on-incorrect-version
+          else
+            python3 $GITHUB_ACTION_PATH/verify_manifest.py --ignore-submodule-path=${{ inputs.exclude-submodules }}
+          fi
         shell: bash
diff --git a/manifest-verifier/verify_manifest.py b/manifest-verifier/verify_manifest.py
index 7f1481eb..5ffbd0e0 100644
--- a/manifest-verifier/verify_manifest.py
+++ b/manifest-verifier/verify_manifest.py
@@ -63,8 +63,10 @@ def get_all_submodules():
     parser.add_argument('--ignore-submodule-path',
                         type=str,
                         required=None,
-                        default=os.getcwd(),
                         help='Comma-separated list of submodules path to ignore.')
+    parser.add_argument('--fail-on-incorrect-versions',
+                        action='store_true',
+                        help='Flag to indicate script to fail for incorrect submodules versions in manifest.yml')
 
     args = parser.parse_args()
 
@@ -107,7 +109,7 @@ def get_all_submodules():
             print('manifest.yml does not have correct commit ID for', submodule_name,'manifest Commit=(',manifest_commit, submodule.head.commit,') Actual Commit=',submodules_info_from_git[relative_path])
             mismatch_flag = True
         
-    if mismatch_flag:
+    if mismatch_flag and args.fail_on_incorrect_versions:
         sys.exit(1)
 
     print('\nmanifest.yml file has been verified!')