diff --git a/build-common/src/org/jetbrains/kotlin/incremental/IncrementalCompilationContext.kt b/build-common/src/org/jetbrains/kotlin/incremental/IncrementalCompilationContext.kt
index 9450e675638..3b3ccda69cd 100644
--- a/build-common/src/org/jetbrains/kotlin/incremental/IncrementalCompilationContext.kt
+++ b/build-common/src/org/jetbrains/kotlin/incremental/IncrementalCompilationContext.kt
@@ -18,7 +18,16 @@ class IncrementalCompilationContext(
     val storeFullFqNamesInLookupCache: Boolean = false,
     val transaction: CompilationTransaction = DummyCompilationTransaction(),
     val reporter: ICReporter = DoNothingICReporter,
+    /**
+     * Controls whether changes in lookup cache should be tracked. Required for the classpath snapshots based IC approach
+     */
     val trackChangesInLookupCache: Boolean = false,
+    /**
+     * Controls whether any changes should be propagated to FS until we decide that the compilation is successful or not
+     *
+     * Required for optimizing Gradle side outputs backup
+     */
+    val keepIncrementalCompilationCachesInMemory: Boolean = false,
 ) {
     constructor(
         rootProjectDir: File?,
diff --git a/build-common/src/org/jetbrains/kotlin/incremental/storage/BasicMap.kt b/build-common/src/org/jetbrains/kotlin/incremental/storage/BasicMap.kt
index cc0ab9b8a0f..6289f7078a6 100644
--- a/build-common/src/org/jetbrains/kotlin/incremental/storage/BasicMap.kt
+++ b/build-common/src/org/jetbrains/kotlin/incremental/storage/BasicMap.kt
@@ -30,7 +30,13 @@ abstract class BasicMap<K : Comparable<K>, V>(
     valueExternalizer: DataExternalizer<V>,
     protected val icContext: IncrementalCompilationContext,
 ) {
-    protected val storage: LazyStorage<K, V> = CachingLazyStorage(storageFile, keyDescriptor, valueExternalizer)
+    protected val storage: LazyStorage<K, V> = CachingLazyStorage(storageFile, keyDescriptor, valueExternalizer).let {
+        if (icContext.keepIncrementalCompilationCachesInMemory) {
+            InMemoryStorageWrapper(it)
+        } else {
+            it
+        }
+    }
 
     protected val pathConverter
         get() = icContext.pathConverter
diff --git a/build-common/src/org/jetbrains/kotlin/incremental/storage/InMemoryStorageWrapper.kt b/build-common/src/org/jetbrains/kotlin/incremental/storage/InMemoryStorageWrapper.kt
new file mode 100644
index 00000000000..b35cd4c7c74
--- /dev/null
+++ b/build-common/src/org/jetbrains/kotlin/incremental/storage/InMemoryStorageWrapper.kt
@@ -0,0 +1,117 @@
+/*
+ * Copyright 2010-2023 JetBrains s.r.o. and Kotlin Programming Language contributors.
+ * Use of this source code is governed by the Apache 2.0 license that can be found in the license/LICENSE.txt file.
+ */
+
+package org.jetbrains.kotlin.incremental.storage
+
+import java.util.*
+import kotlin.collections.LinkedHashMap
+
+/**
+ * An in-memory wrapper for [origin] that keeps all the write operations in-memory.
+ * Flushes all the changes to the [origin] on [flush] invocation.
+ * [resetInMemoryChanges] should be called to reset in-memory changes of this wrapper.
+ */
+class InMemoryStorageWrapper<K, V>(val origin: LazyStorage<K, V>) : LazyStorage<K, V> {
+    private val inMemoryStorage = LinkedHashMap<K, ValueWrapper<V>>()
+    private val removedKeys = hashSetOf<K>()
+    private var isCleanRequested = false
+
+    override val keys: Collection<K>
+        get() = if (isCleanRequested) inMemoryStorage.keys else (origin.keys - removedKeys) + inMemoryStorage.keys
+
+    fun resetInMemoryChanges() {
+        isCleanRequested = false
+        inMemoryStorage.clear()
+        removedKeys.clear()
+    }
+
+    override fun clean() {
+        inMemoryStorage.clear()
+        removedKeys.clear()
+        isCleanRequested = true
+    }
+
+    override fun flush(memoryCachesOnly: Boolean) {
+        if (isCleanRequested) {
+            origin.clean()
+        } else {
+            for (key in removedKeys) {
+                origin.remove(key)
+            }
+        }
+        for ((key, valueWrapper) in inMemoryStorage) {
+            if (valueWrapper.isAppend) {
+                origin.append(key, valueWrapper.value)
+                origin[key] // trigger chunks compaction
+            } else {
+                origin[key] = valueWrapper.value
+            }
+        }
+
+        clean()
+        isCleanRequested = false
+
+        origin.flush(memoryCachesOnly)
+    }
+
+    override fun close() {
+        origin.close()
+    }
+
+    override fun append(key: K, value: V) {
+        @Suppress("UNCHECKED_CAST")
+        when (value) {
+            is Collection<*> -> {
+                when {
+                    key in inMemoryStorage -> {
+                        // the key's value was set in-memory, so we keep changing it without additional marking as append
+                        (inMemoryStorage.getValue(key).value as MutableCollection<Any?>).addAll(value)
+                    }
+                    key !in removedKeys && key in origin -> {
+                        val collection = copyCollection(origin[key] as Collection<*>)
+                        collection.addAll(value)
+                        inMemoryStorage[key] = ValueWrapper(collection as V, isAppend = true)
+                    }
+                    else -> {
+                        set(key, value)
+                    }
+                }
+            }
+            else -> error("The value is expected to implement the Collection interface")
+        }
+    }
+
+    override fun remove(key: K) {
+        removedKeys.add(key)
+        inMemoryStorage.remove(key)
+    }
+
+    override fun set(key: K, value: V) {
+        @Suppress("UNCHECKED_CAST")
+        inMemoryStorage[key] = ValueWrapper(if (value is Collection<*>) copyCollection(value) as V else value)
+    }
+
+    private fun copyCollection(collection: Collection<*>): MutableCollection<Any?> {
+        val newCollection = when (collection) {
+            is Set<*> -> TreeSet<Any?>()
+            else -> ArrayList<Any?>(collection.size)
+        }
+        newCollection.addAll(collection)
+        return newCollection
+    }
+
+    override fun get(key: K): V? = when (key) {
+        in inMemoryStorage -> inMemoryStorage.getValue(key).value
+        !in removedKeys -> origin[key]
+        else -> null
+    }
+
+    override fun contains(key: K) = key in inMemoryStorage || (key !in removedKeys && key in origin)
+
+    private fun <K, V> Map<K, V>.getValue(key: K) =
+        this[key] ?: error("$key was unexpectedly removed from in-memory storage. Seems to be a multithreading issue")
+
+    private class ValueWrapper<V>(val value: V, val isAppend: Boolean = false)
+}
\ No newline at end of file