Best approach for managing Proxmox VPS templates with Cloud-Init: build a base template, update it when needed, and roll changes to existing VMs. The wiki shows you how to create one, but not how to maintain it. Here’s the workflow that actually works.

Create the Template Once
Start with a clean VM. Install the OS, set up your SSH keys, install qemu-guest-agent, and enable Cloud-Init. Then convert to template. That’s the easy part. The important part is keeping it lean: no extra packages, no custom config that’ll bite you later.
qm create 9000 --name ubuntu-22.04-template --memory 2048 --cores 2 --net0 virtio,bridge=vmbr0
qm importdisk 9000 /path/to/ubuntu-22.04-cloudimg.img local-lvm
qm set 9000 --scsihw virtio-scsi-pci --scsi0 local-lvm:vm-9000-disk-0
qm set 9000 --ide2 local-lvm:cloudinit
qm set 9000 --boot c --bootdisk scsi0
qm set 9000 --serial0 socket --vga serial0
qm set 9000 --agent enabled=1
qm template 9000
That’s the base. Now clone it for each VPS. Use full clone if you want independent disks; linked clone saves space but ties you to the template.
Update the Template
When you need to patch the OS or change a default setting, don’t edit each VM. Update the template. Convert it back to a VM, boot it, make changes, shut down, convert back to template.
qm set 9000 --template 0
qm start 9000
# do your updates inside
qm shutdown 9000
qm set 9000 --template 1
But here’s the catch: existing VMs cloned from the old template won’t get those changes. You have to roll them out yourself.

Roll Changes to Existing VMs
For a handful of VMs, just SSH in and run updates. For many, use Ansible or a simple for loop. Cloud-Init only runs on first boot, so it won’t help here. You need a config management tool or a script that iterates over VMIDs.
for vmid in 100 101 102; do
ssh root@10.0.0.$vmid 'apt update && apt upgrade -y'
done
If you need to change Cloud-Init settings on existing VMs, you can update the VM config directly. But that only affects future boots, not the running system.
My Take
Don’t overcomplicate it. One template, updated quarterly or when a major security patch drops. Use Ansible for the rollout if you have more than five VMs. And keep the template minimal—you can always add packages later.
If you’re also running LXC containers, check out Proxmox LXC Desktop: Run a Full Linux Desktop in a Container, Not a VM for a different approach.