Description:

After upgrading to EnvoyGateway 1.8.0, we discovered a breaking change that was introduced once it was decided to reuse the cached controller-runtime client from the controller manager for infrastructure reconciliation.
Gateways in existing namespaces (e.g., envoy-gateway-system-test) fail with AddressNotAssigned errors when using label selectors for namespace watching instead of explicit namespace lists.

Environment:

• EnvoyGateway version: 1.8.0
• Kubernetes version: 1.32
• Deployment method: Helm
• Watch configuration: namespaceSelector with label matching

Logs:

• No relevant logs in pod, also in debug.

Gateway resource status:
  status:
    conditions:
    - type: Programmed
      status: "False"
      reason: AddressNotAssigned
      message: "No addresses have been assigned to the Gateway"