diff --git a/cypress/e2e/presence/presence.spec.ts b/cypress/e2e/presence/presence.spec.ts
new file mode 100644
index 00000000000..12a3228b4cd
--- /dev/null
+++ b/cypress/e2e/presence/presence.spec.ts
@@ -0,0 +1,64 @@
+/*
+Copyright 2023 The Matrix.org Foundation C.I.C.
+
+Licensed under the Apache License, Version 2.0 (the "License");
+you may not use this file except in compliance with the License.
+You may obtain a copy of the License at
+
+    http://www.apache.org/licenses/LICENSE-2.0
+
+Unless required by applicable law or agreed to in writing, software
+distributed under the License is distributed on an "AS IS" BASIS,
+WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+See the License for the specific language governing permissions and
+limitations under the License.
+*/
+
+/// <reference types="cypress" />
+import { HomeserverInstance } from "../../plugins/utils/homeserver";
+
+describe("Presence tests", () => {
+    let homeserver: HomeserverInstance;
+
+    beforeEach(() => {
+        cy.startHomeserver("default").then((data) => {
+            homeserver = data;
+        });
+    });
+
+    afterEach(() => {
+        cy.stopHomeserver(homeserver);
+    });
+
+    it("renders unreachable presence state correctly", () => {
+        cy.initTestUser(homeserver, "Janet");
+        cy.getBot(homeserver, { displayName: "Bob" }).then((bob) => {
+            cy.intercept("GET", "**/sync*", (req) => {
+                req.continue((res) => {
+                    res.body.presence = {
+                        events: [
+                            {
+                                type: "m.presence",
+                                sender: bob.getUserId(),
+                                content: {
+                                    presence: "io.element.unreachable",
+                                    currently_active: false,
+                                },
+                            },
+                        ],
+                    };
+                });
+            });
+            cy.createRoom({ name: "My Room", invite: [bob.getUserId()] }).then((roomId) => {
+                cy.viewRoomById(roomId);
+            });
+            cy.findByRole("button", { name: "Room info" }).click();
+            cy.get(".mx_RightPanel").within(() => {
+                cy.contains("People").click();
+            });
+            cy.get(".mx_EntityTile_unreachable")
+                .should("contain.text", "Bob")
+                .should("contain.text", "User's server unreachable");
+        });
+    });
+});
diff --git a/res/css/views/rooms/_EntityTile.pcss b/res/css/views/rooms/_EntityTile.pcss
index 9632946bd59..1df4ff3dcca 100644
--- a/res/css/views/rooms/_EntityTile.pcss
+++ b/res/css/views/rooms/_EntityTile.pcss
@@ -46,11 +46,11 @@ limitations under the License.
     background-color: $header-panel-text-primary-color;
 }
 
-.mx_EntityTile .mx_PresenceLabel {
+.mx_EntityTile:not(.mx_EntityTile_unreachable) .mx_PresenceLabel {
     display: none;
 }
 
-.mx_EntityTile:not(.mx_EntityTile_noHover):hover .mx_PresenceLabel {
+.mx_EntityTile:hover .mx_PresenceLabel {
     display: block;
 }
 
@@ -106,7 +106,9 @@ limitations under the License.
 }
 
 .mx_EntityTile_unknown .mx_EntityTile_avatar,
-.mx_EntityTile_unknown .mx_EntityTile_name {
+.mx_EntityTile_unknown .mx_EntityTile_name,
+.mx_EntityTile_unreachable .mx_EntityTile_avatar,
+.mx_EntityTile_unreachable .mx_EntityTile_name {
     opacity: 0.25;
 }
 
diff --git a/src/components/views/dialogs/ForwardDialog.tsx b/src/components/views/dialogs/ForwardDialog.tsx
index 2ed75714ecd..a21acd7b717 100644
--- a/src/components/views/dialogs/ForwardDialog.tsx
+++ b/src/components/views/dialogs/ForwardDialog.tsx
@@ -264,8 +264,7 @@ const ForwardDialog: React.FC<IProps> = ({ matrixClient: cli, event, permalinkCr
                     <BaseAvatar url={require("../../../../res/img/ellipsis.svg").default} name="..." size="36px" />
                 }
                 name={text}
-                presenceState="online"
-                suppressOnHover={true}
+                showPresence={false}
                 onClick={() => setTruncateAt(totalCount)}
             />
         );
diff --git a/src/components/views/rooms/EntityTile.tsx b/src/components/views/rooms/EntityTile.tsx
index f20df88c320..cfb579b11cb 100644
--- a/src/components/views/rooms/EntityTile.tsx
+++ b/src/components/views/rooms/EntityTile.tsx
@@ -35,12 +35,13 @@ const PowerLabel: Record<PowerStatus, TranslationKey> = {
     [PowerStatus.Moderator]: _td("power_level|mod"),
 };
 
-export type PresenceState = "offline" | "online" | "unavailable";
+export type PresenceState = "offline" | "online" | "unavailable" | "io.element.unreachable";
 
 const PRESENCE_CLASS: Record<PresenceState, string> = {
-    offline: "mx_EntityTile_offline",
-    online: "mx_EntityTile_online",
-    unavailable: "mx_EntityTile_unavailable",
+    "offline": "mx_EntityTile_offline",
+    "online": "mx_EntityTile_online",
+    "unavailable": "mx_EntityTile_unavailable",
+    "io.element.unreachable": "mx_EntityTile_unreachable",
 };
 
 function presenceClassForMember(presenceState?: PresenceState, lastActiveAgo?: number, showPresence?: boolean): string {
@@ -75,7 +76,6 @@ interface IProps {
     presenceCurrentlyActive?: boolean;
     showInviteButton: boolean;
     onClick(): void;
-    suppressOnHover: boolean;
     showPresence: boolean;
     subtextLabel?: string;
     e2eStatus?: E2EState;
@@ -93,7 +93,6 @@ export default class EntityTile extends React.PureComponent<IProps, IState> {
         presenceLastActiveAgo: 0,
         presenceLastTs: 0,
         showInviteButton: false,
-        suppressOnHover: false,
         showPresence: true,
     };
 
@@ -105,10 +104,27 @@ export default class EntityTile extends React.PureComponent<IProps, IState> {
         };
     }
 
+    /**
+     * Creates the PresenceLabel component if needed
+     * @returns The PresenceLabel component if we need to render it, undefined otherwise
+     */
+    private getPresenceLabel(): JSX.Element | undefined {
+        if (!this.props.showPresence) return;
+        const activeAgo = this.props.presenceLastActiveAgo
+            ? Date.now() - (this.props.presenceLastTs - this.props.presenceLastActiveAgo)
+            : -1;
+        return (
+            <PresenceLabel
+                activeAgo={activeAgo}
+                currentlyActive={this.props.presenceCurrentlyActive}
+                presenceState={this.props.presenceState}
+            />
+        );
+    }
+
     public render(): React.ReactNode {
         const mainClassNames: Record<string, boolean> = {
             mx_EntityTile: true,
-            mx_EntityTile_noHover: !!this.props.suppressOnHover,
         };
         if (this.props.className) mainClassNames[this.props.className] = true;
 
@@ -119,43 +135,13 @@ export default class EntityTile extends React.PureComponent<IProps, IState> {
         );
         mainClassNames[presenceClass] = true;
 
-        let nameEl;
         const name = this.props.nameJSX || this.props.name;
-
-        if (!this.props.suppressOnHover) {
-            const activeAgo = this.props.presenceLastActiveAgo
-                ? Date.now() - (this.props.presenceLastTs - this.props.presenceLastActiveAgo)
-                : -1;
-
-            let presenceLabel: JSX.Element | undefined;
-            if (this.props.showPresence) {
-                presenceLabel = (
-                    <PresenceLabel
-                        activeAgo={activeAgo}
-                        currentlyActive={this.props.presenceCurrentlyActive}
-                        presenceState={this.props.presenceState}
-                    />
-                );
-            }
-            if (this.props.subtextLabel) {
-                presenceLabel = <span className="mx_EntityTile_subtext">{this.props.subtextLabel}</span>;
-            }
-            nameEl = (
-                <div className="mx_EntityTile_details">
-                    <div className="mx_EntityTile_name">{name}</div>
-                    {presenceLabel}
-                </div>
-            );
-        } else if (this.props.subtextLabel) {
-            nameEl = (
-                <div className="mx_EntityTile_details">
-                    <div className="mx_EntityTile_name">{name}</div>
-                    <span className="mx_EntityTile_subtext">{this.props.subtextLabel}</span>
-                </div>
-            );
-        } else {
-            nameEl = <div className="mx_EntityTile_name">{name}</div>;
-        }
+        const nameAndPresence = (
+            <div className="mx_EntityTile_details">
+                <div className="mx_EntityTile_name">{name}</div>
+                {this.getPresenceLabel()}
+            </div>
+        );
 
         let inviteButton;
         if (this.props.showInviteButton) {
@@ -198,7 +184,7 @@ export default class EntityTile extends React.PureComponent<IProps, IState> {
                         {av}
                         {e2eIcon}
                     </div>
-                    {nameEl}
+                    {nameAndPresence}
                     {powerLabel}
                     {inviteButton}
                 </AccessibleButton>
diff --git a/src/components/views/rooms/MemberList.tsx b/src/components/views/rooms/MemberList.tsx
index 0eb6f49c060..a0b9cc0f705 100644
--- a/src/components/views/rooms/MemberList.tsx
+++ b/src/components/views/rooms/MemberList.tsx
@@ -81,6 +81,7 @@ export default class MemberList extends React.Component<IProps, IState> {
 
     public static contextType = SDKContext;
     public context!: React.ContextType<typeof SDKContext>;
+    private tiles: Map<string, MemberTile> = new Map();
 
     public constructor(props: IProps, context: React.ContextType<typeof SDKContext>) {
         super(props);
@@ -154,7 +155,7 @@ export default class MemberList extends React.Component<IProps, IState> {
         // Attach a SINGLE listener for global presence changes then locate the
         // member tile and re-render it. This is more efficient than every tile
         // ever attaching their own listener.
-        const tile = this.refs[user.userId];
+        const tile = this.tiles.get(user.userId);
         if (tile) {
             this.updateList(); // reorder the membership list
         }
@@ -245,8 +246,7 @@ export default class MemberList extends React.Component<IProps, IState> {
                     <BaseAvatar url={require("../../../../res/img/ellipsis.svg").default} name="..." size="36px" />
                 }
                 name={text}
-                presenceState="online"
-                suppressOnHover={true}
+                showPresence={false}
                 onClick={onClick}
             />
         );
@@ -307,14 +307,24 @@ export default class MemberList extends React.Component<IProps, IState> {
         return members.map((m) => {
             if (m instanceof RoomMember) {
                 // Is a Matrix invite
-                return <MemberTile key={m.userId} member={m} ref={m.userId} showPresence={this.showPresence} />;
+                return (
+                    <MemberTile
+                        key={m.userId}
+                        member={m}
+                        ref={(tile) => {
+                            if (tile) this.tiles.set(m.userId, tile);
+                            else this.tiles.delete(m.userId);
+                        }}
+                        showPresence={this.showPresence}
+                    />
+                );
             } else {
                 // Is a 3pid invite
                 return (
                     <EntityTile
                         key={m.getStateKey()}
                         name={m.getContent().display_name}
-                        suppressOnHover={true}
+                        showPresence={false}
                         onClick={() => this.onPending3pidInviteClick(m)}
                     />
                 );
diff --git a/src/components/views/rooms/PresenceLabel.tsx b/src/components/views/rooms/PresenceLabel.tsx
index db5d0519abc..24e144c8ef0 100644
--- a/src/components/views/rooms/PresenceLabel.tsx
+++ b/src/components/views/rooms/PresenceLabel.tsx
@@ -44,6 +44,8 @@ export default class PresenceLabel extends React.Component<IProps> {
         // the 'active ago' ends up being 0.
         if (presence && BUSY_PRESENCE_NAME.matches(presence)) return _t("presence|busy");
 
+        if (presence === "io.element.unreachable") return _t("presence|unreachable");
+
         if (!currentlyActive && activeAgo !== undefined && activeAgo > 0) {
             const duration = formatDuration(activeAgo);
             if (presence === "online") return _t("presence|online_for", { duration: duration });
diff --git a/src/i18n/strings/en_EN.json b/src/i18n/strings/en_EN.json
index 2ff6dd3bd6b..7ae2f7a70f2 100644
--- a/src/i18n/strings/en_EN.json
+++ b/src/i18n/strings/en_EN.json
@@ -1740,7 +1740,8 @@
         "online": "Online",
         "online_for": "Online for %(duration)s",
         "unknown": "Unknown",
-        "unknown_for": "Unknown for %(duration)s"
+        "unknown_for": "Unknown for %(duration)s",
+        "unreachable": "User's server unreachable"
     },
     "quick_settings": {
         "all_settings": "All settings",
diff --git a/test/components/views/rooms/MemberList-test.tsx b/test/components/views/rooms/MemberList-test.tsx
index 7b9ae19f4ea..f9f591b3733 100644
--- a/test/components/views/rooms/MemberList-test.tsx
+++ b/test/components/views/rooms/MemberList-test.tsx
@@ -16,8 +16,8 @@ limitations under the License.
 */
 
 import React from "react";
-import { act, render, RenderResult } from "@testing-library/react";
-import { Room, MatrixClient, RoomState, RoomMember, User } from "matrix-js-sdk/src/matrix";
+import { act, render, RenderResult, screen } from "@testing-library/react";
+import { Room, MatrixClient, RoomState, RoomMember, User, MatrixEvent } from "matrix-js-sdk/src/matrix";
 import { compare } from "matrix-js-sdk/src/utils";
 
 import { MatrixClientPeg } from "../../../../src/MatrixClientPeg";
@@ -137,84 +137,88 @@ describe("MemberList", () => {
         }
     }
 
-    describe.each([false, true])("does order members correctly (presence %s)", (enablePresence) => {
-        beforeEach(function () {
-            TestUtils.stubClient();
-            client = MatrixClientPeg.safeGet();
-            client.hasLazyLoadMembersEnabled = () => false;
-
-            // Make room
-            memberListRoom = createRoom();
-            expect(memberListRoom.roomId).toBeTruthy();
-
-            // Make users
-            adminUsers = [];
-            moderatorUsers = [];
-            defaultUsers = [];
-            const usersPerLevel = 2;
-            for (let i = 0; i < usersPerLevel; i++) {
-                const adminUser = new RoomMember(memberListRoom.roomId, `@admin${i}:localhost`);
-                adminUser.membership = "join";
-                adminUser.powerLevel = 100;
-                adminUser.user = new User(adminUser.userId);
-                adminUser.user.currentlyActive = true;
-                adminUser.user.presence = "online";
-                adminUser.user.lastPresenceTs = 1000;
-                adminUser.user.lastActiveAgo = 10;
-                adminUsers.push(adminUser);
-
-                const moderatorUser = new RoomMember(memberListRoom.roomId, `@moderator${i}:localhost`);
-                moderatorUser.membership = "join";
-                moderatorUser.powerLevel = 50;
-                moderatorUser.user = new User(moderatorUser.userId);
-                moderatorUser.user.currentlyActive = true;
-                moderatorUser.user.presence = "online";
-                moderatorUser.user.lastPresenceTs = 1000;
-                moderatorUser.user.lastActiveAgo = 10;
-                moderatorUsers.push(moderatorUser);
-
-                const defaultUser = new RoomMember(memberListRoom.roomId, `@default${i}:localhost`);
-                defaultUser.membership = "join";
-                defaultUser.powerLevel = 0;
-                defaultUser.user = new User(defaultUser.userId);
-                defaultUser.user.currentlyActive = true;
-                defaultUser.user.presence = "online";
-                defaultUser.user.lastPresenceTs = 1000;
-                defaultUser.user.lastActiveAgo = 10;
-                defaultUsers.push(defaultUser);
-            }
+    function renderMemberList(enablePresence: boolean): void {
+        TestUtils.stubClient();
+        client = MatrixClientPeg.safeGet();
+        client.hasLazyLoadMembersEnabled = () => false;
+
+        // Make room
+        memberListRoom = createRoom();
+        expect(memberListRoom.roomId).toBeTruthy();
+
+        // Make users
+        adminUsers = [];
+        moderatorUsers = [];
+        defaultUsers = [];
+        const usersPerLevel = 2;
+        for (let i = 0; i < usersPerLevel; i++) {
+            const adminUser = new RoomMember(memberListRoom.roomId, `@admin${i}:localhost`);
+            adminUser.membership = "join";
+            adminUser.powerLevel = 100;
+            adminUser.user = User.createUser(adminUser.userId, client);
+            adminUser.user.currentlyActive = true;
+            adminUser.user.presence = "online";
+            adminUser.user.lastPresenceTs = 1000;
+            adminUser.user.lastActiveAgo = 10;
+            adminUsers.push(adminUser);
+
+            const moderatorUser = new RoomMember(memberListRoom.roomId, `@moderator${i}:localhost`);
+            moderatorUser.membership = "join";
+            moderatorUser.powerLevel = 50;
+            moderatorUser.user = User.createUser(moderatorUser.userId, client);
+            moderatorUser.user.currentlyActive = true;
+            moderatorUser.user.presence = "online";
+            moderatorUser.user.lastPresenceTs = 1000;
+            moderatorUser.user.lastActiveAgo = 10;
+            moderatorUsers.push(moderatorUser);
+
+            const defaultUser = new RoomMember(memberListRoom.roomId, `@default${i}:localhost`);
+            defaultUser.membership = "join";
+            defaultUser.powerLevel = 0;
+            defaultUser.user = User.createUser(defaultUser.userId, client);
+            defaultUser.user.currentlyActive = true;
+            defaultUser.user.presence = "online";
+            defaultUser.user.lastPresenceTs = 1000;
+            defaultUser.user.lastActiveAgo = 10;
+            defaultUsers.push(defaultUser);
+        }
 
-            client.getRoom = (roomId) => {
-                if (roomId === memberListRoom.roomId) return memberListRoom;
-                else return null;
-            };
-            memberListRoom.currentState = {
-                members: {},
-                getMember: jest.fn(),
-                getStateEvents: ((eventType, stateKey) =>
-                    stateKey === undefined ? [] : null) as RoomState["getStateEvents"], // ignore 3pid invites
-            } as unknown as RoomState;
-            for (const member of [...adminUsers, ...moderatorUsers, ...defaultUsers]) {
-                memberListRoom.currentState.members[member.userId] = member;
-            }
+        client.getRoom = (roomId) => {
+            if (roomId === memberListRoom.roomId) return memberListRoom;
+            else return null;
+        };
+        memberListRoom.currentState = {
+            members: {},
+            getMember: jest.fn(),
+            getStateEvents: ((eventType, stateKey) =>
+                stateKey === undefined ? [] : null) as RoomState["getStateEvents"], // ignore 3pid invites
+        } as unknown as RoomState;
+        for (const member of [...adminUsers, ...moderatorUsers, ...defaultUsers]) {
+            memberListRoom.currentState.members[member.userId] = member;
+        }
 
-            const gatherWrappedRef = (r: MemberList) => {
-                memberList = r;
-            };
-            const context = new TestSdkContext();
-            context.client = client;
-            context.memberListStore.isPresenceEnabled = jest.fn().mockReturnValue(enablePresence);
-            root = render(
-                <SDKContext.Provider value={context}>
-                    <MemberList
-                        searchQuery=""
-                        onClose={jest.fn()}
-                        onSearchQueryChanged={jest.fn()}
-                        roomId={memberListRoom.roomId}
-                        ref={gatherWrappedRef}
-                    />
-                </SDKContext.Provider>,
-            );
+        const gatherWrappedRef = (r: MemberList) => {
+            memberList = r;
+        };
+        const context = new TestSdkContext();
+        context.client = client;
+        context.memberListStore.isPresenceEnabled = jest.fn().mockReturnValue(enablePresence);
+        root = render(
+            <SDKContext.Provider value={context}>
+                <MemberList
+                    searchQuery=""
+                    onClose={jest.fn()}
+                    onSearchQueryChanged={jest.fn()}
+                    roomId={memberListRoom.roomId}
+                    ref={gatherWrappedRef}
+                />
+            </SDKContext.Provider>,
+        );
+    }
+
+    describe.each([false, true])("does order members correctly (presence %s)", (enablePresence) => {
+        beforeEach(function () {
+            renderMemberList(enablePresence);
         });
 
         describe("does order members correctly", () => {
@@ -308,4 +312,24 @@ describe("MemberList", () => {
             });
         });
     });
+
+    describe("memberlist is rendered correctly", () => {
+        beforeEach(function () {
+            renderMemberList(true);
+        });
+
+        it("memberlist is re-rendered on unreachable presence event", async () => {
+            defaultUsers[0].user?.setPresenceEvent(
+                new MatrixEvent({
+                    type: "m.presence",
+                    sender: defaultUsers[0].userId,
+                    content: {
+                        presence: "io.element.unreachable",
+                        currently_active: false,
+                    },
+                }),
+            );
+            expect(await screen.findByText(/User's server unreachable/)).toBeInTheDocument();
+        });
+    });
 });
diff --git a/test/components/views/rooms/PresenceLabel-test.tsx b/test/components/views/rooms/PresenceLabel-test.tsx
index 78ccb234c0f..f080c6e05d2 100644
--- a/test/components/views/rooms/PresenceLabel-test.tsx
+++ b/test/components/views/rooms/PresenceLabel-test.tsx
@@ -32,4 +32,17 @@ describe("<PresenceLabel/>", () => {
             </DocumentFragment>
         `);
     });
+
+    it("should render 'Unreachable' for presence=unreachable", () => {
+        const { asFragment } = render(<PresenceLabel presenceState="io.element.unreachable" />);
+        expect(asFragment()).toMatchInlineSnapshot(`
+            <DocumentFragment>
+              <div
+                class="mx_PresenceLabel"
+              >
+                User's server unreachable
+              </div>
+            </DocumentFragment>
+        `);
+    });
 });