diff --git a/p2p/host/basic/basic_host.go b/p2p/host/basic/basic_host.go
index 61e113850a..8c608afa58 100644
--- a/p2p/host/basic/basic_host.go
+++ b/p2p/host/basic/basic_host.go
@@ -717,7 +717,7 @@ func (h *BasicHost) NewStream(ctx context.Context, p peer.ID, pids ...protocol.I
 	}
 	defer func() {
 		if strErr != nil && s != nil {
-			s.Reset()
+			s.ResetWithError(network.StreamProtocolNegotiationFailed)
 		}
 	}()
 
@@ -761,13 +761,13 @@ func (h *BasicHost) NewStream(ctx context.Context, p peer.ID, pids ...protocol.I
 			return nil, fmt.Errorf("failed to negotiate protocol: %w", err)
 		}
 	case <-ctx.Done():
-		s.ResetWithError(network.StreamProtocolNegotiationFailed)
 		// wait for `SelectOneOf` to error out because of resetting the stream.
 		<-errCh
 		return nil, fmt.Errorf("failed to negotiate protocol: %w", ctx.Err())
 	}
 
 	if err := s.SetProtocol(selected); err != nil {
+		s.ResetWithError(network.StreamResourceLimitExceeded)
 		return nil, err
 	}
 	_ = h.Peerstore().AddProtocols(p, selected) // adding the protocol to the peerstore isn't critical
diff --git a/p2p/host/basic/basic_host_test.go b/p2p/host/basic/basic_host_test.go
index dac280731b..2a7a772976 100644
--- a/p2p/host/basic/basic_host_test.go
+++ b/p2p/host/basic/basic_host_test.go
@@ -995,35 +995,3 @@ func TestHostTimeoutNewStream(t *testing.T) {
 	require.Error(t, err)
 	require.ErrorContains(t, err, "context deadline exceeded")
 }
-
-func TestMultistreamFailure(t *testing.T) {
-	h1, err := NewHost(swarmt.GenSwarm(t), nil)
-	require.NoError(t, err)
-	h1.Start()
-	defer h1.Close()
-
-	h2, err := NewHost(swarmt.GenSwarm(t), nil)
-	require.NoError(t, err)
-	h2.Start()
-	defer h2.Close()
-
-	h2.Peerstore().AddProtocols(h1.ID(), "/test")
-
-	err = h2.Connect(context.Background(), h1.Peerstore().PeerInfo(h1.ID()))
-	require.NoError(t, err)
-	h2.Peerstore().AddProtocols(h1.ID(), "/test")
-	s, err := h2.NewStream(context.Background(), h1.ID(), "/test")
-	require.NoError(t, err)
-	// Special string to make the other side fail multistream and reset
-	buf := make([]byte, 1024)
-	for i := 0; i < len(buf); i++ {
-		buf[i] = 0xff
-	}
-	_, err = s.Write(buf)
-	require.NoError(t, err)
-	_, err = s.Read(buf)
-	var se *network.StreamError
-	require.ErrorAs(t, err, &se)
-	require.True(t, se.Remote)
-	require.Equal(t, network.StreamProtocolNegotiationFailed, se.ErrorCode)
-}
diff --git a/p2p/net/connmgr/connmgr_test.go b/p2p/net/connmgr/connmgr_test.go
index 76e70db5f2..4772837fe1 100644
--- a/p2p/net/connmgr/connmgr_test.go
+++ b/p2p/net/connmgr/connmgr_test.go
@@ -1024,7 +1024,7 @@ func TestErrorCode(t *testing.T) {
 		}
 		c21 = conns[0]
 		return true
-	}, 5*time.Second, 100*time.Millisecond)
+	}, 10*time.Second, 100*time.Millisecond)
 
 	c13, err := sw1.DialPeer(context.Background(), sw3.LocalPeer())
 	require.NoError(t, err)
@@ -1037,7 +1037,7 @@ func TestErrorCode(t *testing.T) {
 		}
 		c31 = conns[0]
 		return true
-	}, 5*time.Second, 100*time.Millisecond)
+	}, 10*time.Second, 100*time.Millisecond)
 
 	cm.TrimOpenConns(context.Background())