diff --git a/builders/ubuntu-python-builder.psm1 b/builders/ubuntu-python-builder.psm1
index 35b159c5..e7a6eb3c 100644
--- a/builders/ubuntu-python-builder.psm1
+++ b/builders/ubuntu-python-builder.psm1
@@ -30,8 +30,8 @@ class UbuntuPythonBuilder : NixPythonBuilder {
 
         $pythonBinariesLocation = $this.GetFullPythonToolcacheLocation()
 
-        ### To build Python with SO we must pass full path to lib folder to the linker
-        $env:LDFLAGS="-Wl,--rpath=${pythonBinariesLocation}/lib"
+        ### To build Python with SO, passing relative path W.r.t to the binary location.
+        $env:LDFLAGS="-Wl,-rpath='`$`$ORIGIN/../lib'"
         $configureString = "./configure"
         $configureString += " --prefix=$pythonBinariesLocation"
         $configureString += " --enable-shared"
@@ -43,6 +43,7 @@ class UbuntuPythonBuilder : NixPythonBuilder {
 
         Write-Host "The passed configure options are: "
         Write-Host $configureString
+        Write-Host "LDFLAGS: $env:LDFLAGS"
 
         Execute-Command -Command $configureString
     }
diff --git a/tests/python-tests.ps1 b/tests/python-tests.ps1
index 706a3b42..8acbd9c2 100644
--- a/tests/python-tests.ps1
+++ b/tests/python-tests.ps1
@@ -36,6 +36,12 @@ BeforeAll {
 
         return 0
     }
+
+    function moveAssets([string] $source, [string] $destination) {
+        $parentDestDir = Split-Path -Path $destination -Parent
+        New-Item -Path $parentDestDir -ItemType Directory -Force
+        Move-Item -Path $source -Destination $parentDestDir -Force
+    }
 }
 
 Describe "Tests" {
@@ -88,6 +94,30 @@ Describe "Tests" {
         It "Check if shared libraries are linked correctly" {
             "bash ./sources/psutil-install-test.sh" | Should -ReturnZeroExitCode
         }
+
+        It "Relocatable Python" {
+            $semversion = [semver] $Version
+            $pyfilename = "python$($semversion.Major).$($semversion.Minor)"
+            $artifactPath = Join-Path "Python" $Version | Join-Path -ChildPath $Architecture
+
+            $relocatedPython = Join-Path $HOME "relocated_python"
+            $relocatedPythonTool = Join-Path -Path $relocatedPython -ChildPath $artifactPath
+            $relocatedFullPath = Join-Path $relocatedPythonTool "bin" | Join-Path -ChildPath $pyfilename
+
+            # copy the current build to relocated_python
+            $toolCacheArtifact = Join-Path $env:RUNNER_TOOL_CACHE $artifactPath
+            moveAssets -source $toolCacheArtifact -destination $relocatedPythonTool
+            try {
+                # Verify that relocated Python works
+                $relocatedFullPath | Should -Exist
+                "$relocatedFullPath --version" | Should -ReturnZeroExitCode
+                "sudo $relocatedFullPath --version" | Should -ReturnZeroExitCode
+            }
+            finally {
+                # Revert the changes for other tests
+                moveAssets -source $relocatedPythonTool -destination $toolCacheArtifact
+            }
+        }
     }
 
     # Pyinstaller 3.5 does not support Python 3.8.0. Check issue https://github.com/pyinstaller/pyinstaller/issues/4311