diff --git a/.github/workflows/cache-windows-test.yml b/.github/workflows/cache-windows-test.yml
new file mode 100644
index 00000000..3868f296
--- /dev/null
+++ b/.github/workflows/cache-windows-test.yml
@@ -0,0 +1,90 @@
+name: cache-windows-bsd-unit-tests
+on:
+  push:
+    branches:
+      - main
+    paths-ignore:
+      - '**.md'
+  pull_request:
+    paths-ignore:
+      - '**.md'
+
+jobs:
+  build:
+    name: Build
+
+    runs-on: windows-latest
+
+    steps:
+    - name: Checkout
+      uses: actions/checkout@v2
+
+    - shell: bash
+      run: |
+        rm "C:\Program Files\Git\usr\bin\tar.exe"
+
+    - name: Set Node.js 12.x
+      uses: actions/setup-node@v1
+      with:
+        node-version: 12.x
+
+    # In order to save & restore cache from a shell script, certain env variables need to be set that are only available in the
+    # node context. This runs a local action that gets and sets the necessary env variables that are needed
+    - name: Set env variables
+      uses: ./packages/cache/__tests__/__fixtures__/
+
+    # Need root node_modules because certain npm packages like jest are configured for the entire repository and it won't be possible
+    # without these to just compile the cache package
+    - name: Install root npm packages
+      run: npm ci
+
+    - name: Compile cache package
+      run: |
+        npm ci
+        npm run tsc
+      working-directory: packages/cache
+    
+    - name: Generate files in working directory
+      shell: bash
+      run: packages/cache/__tests__/create-cache-files.sh ${{ runner.os }} test-cache
+
+    - name: Generate files outside working directory
+      shell: bash
+      run: packages/cache/__tests__/create-cache-files.sh ${{ runner.os }} ~/test-cache
+
+    # We're using node -e to call the functions directly available in the @actions/cache package
+    - name: Save cache using saveCache()
+      run: |
+        node -e "Promise.resolve(require('./packages/cache/lib/cache').saveCache(['test-cache','~/test-cache'],'test-${{ runner.os }}-${{ github.run_id }}'))"
+
+    - name: Delete cache folders before restoring
+      shell: bash
+      run: |
+        rm -rf test-cache
+        rm -rf ~/test-cache
+
+    - name: Restore cache using restoreCache() with http-client
+      run: |
+        node -e "Promise.resolve(require('./packages/cache/lib/cache').restoreCache(['test-cache','~/test-cache'],'test-${{ runner.os }}-${{ github.run_id }}',[],{useAzureSdk: false}))"
+
+    - name: Verify cache restored with http-client
+      shell: bash
+      run: |
+        packages/cache/__tests__/verify-cache-files.sh ${{ runner.os }} test-cache
+        packages/cache/__tests__/verify-cache-files.sh ${{ runner.os }} ~/test-cache
+
+    - name: Delete cache folders before restoring
+      shell: bash
+      run: |
+        rm -rf test-cache
+        rm -rf ~/test-cache
+
+    - name: Restore cache using restoreCache() with Azure SDK
+      run: |
+        node -e "Promise.resolve(require('./packages/cache/lib/cache').restoreCache(['test-cache','~/test-cache'],'test-${{ runner.os }}-${{ github.run_id }}'))"
+
+    - name: Verify cache restored with Azure SDK
+      shell: bash
+      run: |
+        packages/cache/__tests__/verify-cache-files.sh ${{ runner.os }} test-cache
+        packages/cache/__tests__/verify-cache-files.sh ${{ runner.os }} ~/test-cache
diff --git a/packages/cache/RELEASES.md b/packages/cache/RELEASES.md
index 73518e1c..4a415486 100644
--- a/packages/cache/RELEASES.md
+++ b/packages/cache/RELEASES.md
@@ -91,3 +91,17 @@
 
 ### 3.0.6
 - Added `@azure/abort-controller` to dependencies to fix compatibility issue with ESM [#1208](https://github.com/actions/toolkit/issues/1208)
+
+### 3.1.0-beta.1
+- Update actions/cache on windows to use gnu tar and zstd by default and fallback to bsdtar and zstd if gnu tar is not available. ([issue](https://github.com/actions/cache/issues/984))
+
+### 3.1.0-beta.2
+- Added support for fallback to gzip to restore old caches on windows.
+
+### 3.1.0-beta.3
+- Bug Fixes for fallback to gzip to restore old caches on windows and bsdtar if gnutar is not available.
+
+### 3.1.0
+- Update actions/cache on windows to use gnu tar and zstd by default
+- Update actions/cache on windows to fallback to bsdtar and zstd if gnu tar is not available.
+- Added support for fallback to gzip to restore old caches on windows.
diff --git a/packages/cache/__tests__/restoreCache.test.ts b/packages/cache/__tests__/restoreCache.test.ts
index 36ec8801..9cf45799 100644
--- a/packages/cache/__tests__/restoreCache.test.ts
+++ b/packages/cache/__tests__/restoreCache.test.ts
@@ -161,6 +161,81 @@ test('restore with gzip compressed cache found', async () => {
   expect(getCompressionMock).toHaveBeenCalledTimes(1)
 })
 
+test('restore with zstd as default but gzip compressed cache found on windows', async () => {
+  if (process.platform === 'win32') {
+    const paths = ['node_modules']
+    const key = 'node-test'
+
+    const cacheEntry: ArtifactCacheEntry = {
+      cacheKey: key,
+      scope: 'refs/heads/main',
+      archiveLocation: 'www.actionscache.test/download'
+    }
+    const getCacheMock = jest.spyOn(cacheHttpClient, 'getCacheEntry')
+    getCacheMock
+      .mockImplementationOnce(async () => {
+        return Promise.resolve(null)
+      })
+      .mockImplementationOnce(async () => {
+        return Promise.resolve(cacheEntry)
+      })
+
+    const tempPath = '/foo/bar'
+
+    const createTempDirectoryMock = jest.spyOn(
+      cacheUtils,
+      'createTempDirectory'
+    )
+    createTempDirectoryMock.mockImplementation(async () => {
+      return Promise.resolve(tempPath)
+    })
+
+    const archivePath = path.join(tempPath, CacheFilename.Gzip)
+    const downloadCacheMock = jest.spyOn(cacheHttpClient, 'downloadCache')
+
+    const fileSize = 142
+    const getArchiveFileSizeInBytesMock = jest
+      .spyOn(cacheUtils, 'getArchiveFileSizeInBytes')
+      .mockReturnValue(fileSize)
+
+    const extractTarMock = jest.spyOn(tar, 'extractTar')
+    const unlinkFileMock = jest.spyOn(cacheUtils, 'unlinkFile')
+
+    const compression = CompressionMethod.Zstd
+    const getCompressionMock = jest
+      .spyOn(cacheUtils, 'getCompressionMethod')
+      .mockReturnValue(Promise.resolve(compression))
+
+    const cacheKey = await restoreCache(paths, key)
+
+    expect(cacheKey).toBe(key)
+    expect(getCacheMock).toHaveBeenNthCalledWith(1, [key], paths, {
+      compressionMethod: compression
+    })
+    expect(getCacheMock).toHaveBeenNthCalledWith(2, [key], paths, {
+      compressionMethod: CompressionMethod.Gzip
+    })
+    expect(createTempDirectoryMock).toHaveBeenCalledTimes(1)
+    expect(downloadCacheMock).toHaveBeenCalledWith(
+      cacheEntry.archiveLocation,
+      archivePath,
+      undefined
+    )
+    expect(getArchiveFileSizeInBytesMock).toHaveBeenCalledWith(archivePath)
+
+    expect(extractTarMock).toHaveBeenCalledTimes(1)
+    expect(extractTarMock).toHaveBeenCalledWith(
+      archivePath,
+      CompressionMethod.Gzip
+    )
+
+    expect(unlinkFileMock).toHaveBeenCalledTimes(1)
+    expect(unlinkFileMock).toHaveBeenCalledWith(archivePath)
+
+    expect(getCompressionMock).toHaveBeenCalledTimes(1)
+  }
+})
+
 test('restore with zstd compressed cache found', async () => {
   const paths = ['node_modules']
   const key = 'node-test'
diff --git a/packages/cache/__tests__/tar.test.ts b/packages/cache/__tests__/tar.test.ts
index e4233bc9..a33f4fab 100644
--- a/packages/cache/__tests__/tar.test.ts
+++ b/packages/cache/__tests__/tar.test.ts
@@ -1,7 +1,14 @@
 import * as exec from '@actions/exec'
 import * as io from '@actions/io'
 import * as path from 'path'
-import {CacheFilename, CompressionMethod} from '../src/internal/constants'
+import {
+  CacheFilename,
+  CompressionMethod,
+  GnuTarPathOnWindows,
+  ManifestFilename,
+  SystemTarPathOnWindows,
+  TarFilename
+} from '../src/internal/constants'
 import * as tar from '../src/internal/tar'
 import * as utils from '../src/internal/cacheUtils'
 // eslint-disable-next-line @typescript-eslint/no-require-imports
@@ -13,7 +20,7 @@ jest.mock('@actions/io')
 const IS_WINDOWS = process.platform === 'win32'
 const IS_MAC = process.platform === 'darwin'
 
-const defaultTarPath = process.platform === 'darwin' ? 'gtar' : 'tar'
+const defaultTarPath = IS_MAC ? 'gtar' : 'tar'
 
 function getTempDir(): string {
   return path.join(__dirname, '_temp', 'tar')
@@ -28,6 +35,10 @@ beforeAll(async () => {
   await jest.requireActual('@actions/io').rmRF(getTempDir())
 })
 
+beforeEach(async () => {
+  jest.restoreAllMocks()
+})
+
 afterAll(async () => {
   delete process.env['GITHUB_WORKSPACE']
   await jest.requireActual('@actions/io').rmRF(getTempDir())
@@ -41,16 +52,15 @@ test('zstd extract tar', async () => {
     ? `${process.env['windir']}\\fakepath\\cache.tar`
     : 'cache.tar'
   const workspace = process.env['GITHUB_WORKSPACE']
+  const tarPath = IS_WINDOWS ? GnuTarPathOnWindows : defaultTarPath
 
   await tar.extractTar(archivePath, CompressionMethod.Zstd)
 
   expect(mkdirMock).toHaveBeenCalledWith(workspace)
   expect(execMock).toHaveBeenCalledTimes(1)
   expect(execMock).toHaveBeenCalledWith(
-    `"${defaultTarPath}"`,
     [
-      '--use-compress-program',
-      IS_WINDOWS ? 'zstd -d --long=30' : 'unzstd --long=30',
+      `"${tarPath}"`,
       '-xf',
       IS_WINDOWS ? archivePath.replace(/\\/g, '/') : archivePath,
       '-P',
@@ -58,11 +68,61 @@ test('zstd extract tar', async () => {
       IS_WINDOWS ? workspace?.replace(/\\/g, '/') : workspace
     ]
       .concat(IS_WINDOWS ? ['--force-local'] : [])
-      .concat(IS_MAC ? ['--delay-directory-restore'] : []),
+      .concat(IS_MAC ? ['--delay-directory-restore'] : [])
+      .concat([
+        '--use-compress-program',
+        IS_WINDOWS ? '"zstd -d --long=30"' : 'unzstd --long=30'
+      ])
+      .join(' '),
+    undefined,
     {cwd: undefined}
   )
 })
 
+test('zstd extract tar with windows BSDtar', async () => {
+  if (IS_WINDOWS) {
+    const mkdirMock = jest.spyOn(io, 'mkdirP')
+    const execMock = jest.spyOn(exec, 'exec')
+    jest
+      .spyOn(utils, 'getGnuTarPathOnWindows')
+      .mockReturnValue(Promise.resolve(''))
+
+    const archivePath = `${process.env['windir']}\\fakepath\\cache.tar`
+    const workspace = process.env['GITHUB_WORKSPACE']
+    const tarPath = SystemTarPathOnWindows
+
+    await tar.extractTar(archivePath, CompressionMethod.Zstd)
+
+    expect(mkdirMock).toHaveBeenCalledWith(workspace)
+    expect(execMock).toHaveBeenCalledTimes(2)
+
+    expect(execMock).toHaveBeenNthCalledWith(
+      1,
+      [
+        'zstd -d --long=30 --force -o',
+        TarFilename.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
+        archivePath.replace(new RegExp(`\\${path.sep}`, 'g'), '/')
+      ].join(' '),
+      undefined,
+      {cwd: undefined}
+    )
+
+    expect(execMock).toHaveBeenNthCalledWith(
+      2,
+      [
+        `"${tarPath}"`,
+        '-xf',
+        TarFilename.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
+        '-P',
+        '-C',
+        workspace?.replace(/\\/g, '/')
+      ].join(' '),
+      undefined,
+      {cwd: undefined}
+    )
+  }
+})
+
 test('gzip extract tar', async () => {
   const mkdirMock = jest.spyOn(io, 'mkdirP')
   const execMock = jest.spyOn(exec, 'exec')
@@ -74,50 +134,51 @@ test('gzip extract tar', async () => {
   await tar.extractTar(archivePath, CompressionMethod.Gzip)
 
   expect(mkdirMock).toHaveBeenCalledWith(workspace)
-  const tarPath = IS_WINDOWS
-    ? `${process.env['windir']}\\System32\\tar.exe`
-    : defaultTarPath
+  const tarPath = IS_WINDOWS ? GnuTarPathOnWindows : defaultTarPath
   expect(execMock).toHaveBeenCalledTimes(1)
   expect(execMock).toHaveBeenCalledWith(
-    `"${tarPath}"`,
     [
-      '-z',
+      `"${tarPath}"`,
       '-xf',
       IS_WINDOWS ? archivePath.replace(/\\/g, '/') : archivePath,
       '-P',
       '-C',
       IS_WINDOWS ? workspace?.replace(/\\/g, '/') : workspace
-    ].concat(IS_MAC ? ['--delay-directory-restore'] : []),
+    ]
+      .concat(IS_WINDOWS ? ['--force-local'] : [])
+      .concat(IS_MAC ? ['--delay-directory-restore'] : [])
+      .concat(['-z'])
+      .join(' '),
+    undefined,
     {cwd: undefined}
   )
 })
 
-test('gzip extract GNU tar on windows', async () => {
+test('gzip extract GNU tar on windows with GNUtar in path', async () => {
   if (IS_WINDOWS) {
-    jest.spyOn(fs, 'existsSync').mockReturnValueOnce(false)
-
-    const isGnuMock = jest
-      .spyOn(utils, 'isGnuTarInstalled')
-      .mockReturnValue(Promise.resolve(true))
+    // GNU tar present in path but not at default location
+    jest
+      .spyOn(utils, 'getGnuTarPathOnWindows')
+      .mockReturnValue(Promise.resolve('tar'))
     const execMock = jest.spyOn(exec, 'exec')
     const archivePath = `${process.env['windir']}\\fakepath\\cache.tar`
     const workspace = process.env['GITHUB_WORKSPACE']
 
     await tar.extractTar(archivePath, CompressionMethod.Gzip)
 
-    expect(isGnuMock).toHaveBeenCalledTimes(1)
     expect(execMock).toHaveBeenCalledTimes(1)
     expect(execMock).toHaveBeenCalledWith(
-      `"tar"`,
       [
-        '-z',
+        `"tar"`,
         '-xf',
         archivePath.replace(/\\/g, '/'),
         '-P',
         '-C',
         workspace?.replace(/\\/g, '/'),
-        '--force-local'
-      ],
+        '--force-local',
+        '-z'
+      ].join(' '),
+      undefined,
       {cwd: undefined}
     )
   }
@@ -134,13 +195,13 @@ test('zstd create tar', async () => {
 
   await tar.createTar(archiveFolder, sourceDirectories, CompressionMethod.Zstd)
 
+  const tarPath = IS_WINDOWS ? GnuTarPathOnWindows : defaultTarPath
+
   expect(execMock).toHaveBeenCalledTimes(1)
   expect(execMock).toHaveBeenCalledWith(
-    `"${defaultTarPath}"`,
     [
+      `"${tarPath}"`,
       '--posix',
-      '--use-compress-program',
-      IS_WINDOWS ? 'zstd -T0 --long=30' : 'zstdmt --long=30',
       '-cf',
       IS_WINDOWS ? CacheFilename.Zstd.replace(/\\/g, '/') : CacheFilename.Zstd,
       '--exclude',
@@ -149,16 +210,81 @@ test('zstd create tar', async () => {
       '-C',
       IS_WINDOWS ? workspace?.replace(/\\/g, '/') : workspace,
       '--files-from',
-      'manifest.txt'
+      ManifestFilename
     ]
       .concat(IS_WINDOWS ? ['--force-local'] : [])
-      .concat(IS_MAC ? ['--delay-directory-restore'] : []),
+      .concat(IS_MAC ? ['--delay-directory-restore'] : [])
+      .concat([
+        '--use-compress-program',
+        IS_WINDOWS ? '"zstd -T0 --long=30"' : 'zstdmt --long=30'
+      ])
+      .join(' '),
+    undefined, // args
     {
       cwd: archiveFolder
     }
   )
 })
 
+test('zstd create tar with windows BSDtar', async () => {
+  if (IS_WINDOWS) {
+    const execMock = jest.spyOn(exec, 'exec')
+    jest
+      .spyOn(utils, 'getGnuTarPathOnWindows')
+      .mockReturnValue(Promise.resolve(''))
+
+    const archiveFolder = getTempDir()
+    const workspace = process.env['GITHUB_WORKSPACE']
+    const sourceDirectories = ['~/.npm/cache', `${workspace}/dist`]
+
+    await fs.promises.mkdir(archiveFolder, {recursive: true})
+
+    await tar.createTar(
+      archiveFolder,
+      sourceDirectories,
+      CompressionMethod.Zstd
+    )
+
+    const tarPath = SystemTarPathOnWindows
+
+    expect(execMock).toHaveBeenCalledTimes(2)
+
+    expect(execMock).toHaveBeenNthCalledWith(
+      1,
+      [
+        `"${tarPath}"`,
+        '--posix',
+        '-cf',
+        TarFilename.replace(/\\/g, '/'),
+        '--exclude',
+        TarFilename.replace(/\\/g, '/'),
+        '-P',
+        '-C',
+        workspace?.replace(/\\/g, '/'),
+        '--files-from',
+        ManifestFilename
+      ].join(' '),
+      undefined, // args
+      {
+        cwd: archiveFolder
+      }
+    )
+
+    expect(execMock).toHaveBeenNthCalledWith(
+      2,
+      [
+        'zstd -T0 --long=30 --force -o',
+        CacheFilename.Zstd.replace(/\\/g, '/'),
+        TarFilename.replace(/\\/g, '/')
+      ].join(' '),
+      undefined, // args
+      {
+        cwd: archiveFolder
+      }
+    )
+  }
+})
+
 test('gzip create tar', async () => {
   const execMock = jest.spyOn(exec, 'exec')
 
@@ -170,16 +296,13 @@ test('gzip create tar', async () => {
 
   await tar.createTar(archiveFolder, sourceDirectories, CompressionMethod.Gzip)
 
-  const tarPath = IS_WINDOWS
-    ? `${process.env['windir']}\\System32\\tar.exe`
-    : defaultTarPath
+  const tarPath = IS_WINDOWS ? GnuTarPathOnWindows : defaultTarPath
 
   expect(execMock).toHaveBeenCalledTimes(1)
   expect(execMock).toHaveBeenCalledWith(
-    `"${tarPath}"`,
     [
+      `"${tarPath}"`,
       '--posix',
-      '-z',
       '-cf',
       IS_WINDOWS ? CacheFilename.Gzip.replace(/\\/g, '/') : CacheFilename.Gzip,
       '--exclude',
@@ -188,8 +311,13 @@ test('gzip create tar', async () => {
       '-C',
       IS_WINDOWS ? workspace?.replace(/\\/g, '/') : workspace,
       '--files-from',
-      'manifest.txt'
-    ].concat(IS_MAC ? ['--delay-directory-restore'] : []),
+      ManifestFilename
+    ]
+      .concat(IS_WINDOWS ? ['--force-local'] : [])
+      .concat(IS_MAC ? ['--delay-directory-restore'] : [])
+      .concat(['-z'])
+      .join(' '),
+    undefined, // args
     {
       cwd: archiveFolder
     }
@@ -205,22 +333,65 @@ test('zstd list tar', async () => {
 
   await tar.listTar(archivePath, CompressionMethod.Zstd)
 
+  const tarPath = IS_WINDOWS ? GnuTarPathOnWindows : defaultTarPath
   expect(execMock).toHaveBeenCalledTimes(1)
   expect(execMock).toHaveBeenCalledWith(
-    `"${defaultTarPath}"`,
     [
-      '--use-compress-program',
-      IS_WINDOWS ? 'zstd -d --long=30' : 'unzstd --long=30',
+      `"${tarPath}"`,
       '-tf',
       IS_WINDOWS ? archivePath.replace(/\\/g, '/') : archivePath,
       '-P'
     ]
       .concat(IS_WINDOWS ? ['--force-local'] : [])
-      .concat(IS_MAC ? ['--delay-directory-restore'] : []),
+      .concat(IS_MAC ? ['--delay-directory-restore'] : [])
+      .concat([
+        '--use-compress-program',
+        IS_WINDOWS ? '"zstd -d --long=30"' : 'unzstd --long=30'
+      ])
+      .join(' '),
+    undefined,
     {cwd: undefined}
   )
 })
 
+test('zstd list tar with windows BSDtar', async () => {
+  if (IS_WINDOWS) {
+    const execMock = jest.spyOn(exec, 'exec')
+    jest
+      .spyOn(utils, 'getGnuTarPathOnWindows')
+      .mockReturnValue(Promise.resolve(''))
+    const archivePath = `${process.env['windir']}\\fakepath\\cache.tar`
+
+    await tar.listTar(archivePath, CompressionMethod.Zstd)
+
+    const tarPath = SystemTarPathOnWindows
+    expect(execMock).toHaveBeenCalledTimes(2)
+
+    expect(execMock).toHaveBeenNthCalledWith(
+      1,
+      [
+        'zstd -d --long=30 --force -o',
+        TarFilename.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
+        archivePath.replace(new RegExp(`\\${path.sep}`, 'g'), '/')
+      ].join(' '),
+      undefined,
+      {cwd: undefined}
+    )
+
+    expect(execMock).toHaveBeenNthCalledWith(
+      2,
+      [
+        `"${tarPath}"`,
+        '-tf',
+        TarFilename.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
+        '-P'
+      ].join(' '),
+      undefined,
+      {cwd: undefined}
+    )
+  }
+})
+
 test('zstdWithoutLong list tar', async () => {
   const execMock = jest.spyOn(exec, 'exec')
 
@@ -230,18 +401,20 @@ test('zstdWithoutLong list tar', async () => {
 
   await tar.listTar(archivePath, CompressionMethod.ZstdWithoutLong)
 
+  const tarPath = IS_WINDOWS ? GnuTarPathOnWindows : defaultTarPath
   expect(execMock).toHaveBeenCalledTimes(1)
   expect(execMock).toHaveBeenCalledWith(
-    `"${defaultTarPath}"`,
     [
-      '--use-compress-program',
-      IS_WINDOWS ? 'zstd -d' : 'unzstd',
+      `"${tarPath}"`,
       '-tf',
       IS_WINDOWS ? archivePath.replace(/\\/g, '/') : archivePath,
       '-P'
     ]
       .concat(IS_WINDOWS ? ['--force-local'] : [])
-      .concat(IS_MAC ? ['--delay-directory-restore'] : []),
+      .concat(IS_MAC ? ['--delay-directory-restore'] : [])
+      .concat(['--use-compress-program', IS_WINDOWS ? '"zstd -d"' : 'unzstd'])
+      .join(' '),
+    undefined,
     {cwd: undefined}
   )
 })
@@ -254,18 +427,20 @@ test('gzip list tar', async () => {
 
   await tar.listTar(archivePath, CompressionMethod.Gzip)
 
-  const tarPath = IS_WINDOWS
-    ? `${process.env['windir']}\\System32\\tar.exe`
-    : defaultTarPath
+  const tarPath = IS_WINDOWS ? GnuTarPathOnWindows : defaultTarPath
   expect(execMock).toHaveBeenCalledTimes(1)
   expect(execMock).toHaveBeenCalledWith(
-    `"${tarPath}"`,
     [
-      '-z',
+      `"${tarPath}"`,
       '-tf',
       IS_WINDOWS ? archivePath.replace(/\\/g, '/') : archivePath,
       '-P'
-    ].concat(IS_MAC ? ['--delay-directory-restore'] : []),
+    ]
+      .concat(IS_WINDOWS ? ['--force-local'] : [])
+      .concat(IS_MAC ? ['--delay-directory-restore'] : [])
+      .concat(['-z'])
+      .join(' '),
+    undefined,
     {cwd: undefined}
   )
 })
diff --git a/packages/cache/package-lock.json b/packages/cache/package-lock.json
index 52afe053..a34c4e3a 100644
--- a/packages/cache/package-lock.json
+++ b/packages/cache/package-lock.json
@@ -1,12 +1,12 @@
 {
   "name": "@actions/cache",
-  "version": "3.1.1",
+  "version": "3.1.0",
   "lockfileVersion": 2,
   "requires": true,
   "packages": {
     "": {
       "name": "@actions/cache",
-      "version": "3.1.1",
+      "version": "3.1.0",
       "license": "MIT",
       "dependencies": {
         "@actions/core": "^1.10.0",
diff --git a/packages/cache/package.json b/packages/cache/package.json
index ccd37fa1..44c677f8 100644
--- a/packages/cache/package.json
+++ b/packages/cache/package.json
@@ -1,6 +1,6 @@
 {
   "name": "@actions/cache",
-  "version": "3.1.1",
+  "version": "3.1.0",
   "preview": true,
   "description": "Actions cache lib",
   "keywords": [
diff --git a/packages/cache/src/cache.ts b/packages/cache/src/cache.ts
index 609c7f94..f928a2b9 100644
--- a/packages/cache/src/cache.ts
+++ b/packages/cache/src/cache.ts
@@ -4,6 +4,8 @@ import * as utils from './internal/cacheUtils'
 import * as cacheHttpClient from './internal/cacheHttpClient'
 import {createTar, extractTar, listTar} from './internal/tar'
 import {DownloadOptions, UploadOptions} from './options'
+import {CompressionMethod} from './internal/constants'
+import {ArtifactCacheEntry} from './internal/contracts'
 
 export class ValidationError extends Error {
   constructor(message: string) {
@@ -85,17 +87,35 @@ export async function restoreCache(
     checkKey(key)
   }
 
-  const compressionMethod = await utils.getCompressionMethod()
+  let cacheEntry: ArtifactCacheEntry | null
+  let compressionMethod = await utils.getCompressionMethod()
   let archivePath = ''
   try {
     // path are needed to compute version
-    const cacheEntry = await cacheHttpClient.getCacheEntry(keys, paths, {
+    cacheEntry = await cacheHttpClient.getCacheEntry(keys, paths, {
       compressionMethod
     })
-
     if (!cacheEntry?.archiveLocation) {
-      // Cache not found
-      return undefined
+      // This is to support the old cache entry created by gzip on windows.
+      if (
+        process.platform === 'win32' &&
+        compressionMethod !== CompressionMethod.Gzip
+      ) {
+        compressionMethod = CompressionMethod.Gzip
+        cacheEntry = await cacheHttpClient.getCacheEntry(keys, paths, {
+          compressionMethod
+        })
+        if (!cacheEntry?.archiveLocation) {
+          return undefined
+        }
+
+        core.info(
+          "Couldn't find cache entry with zstd compression, falling back to gzip compression."
+        )
+      } else {
+        // Cache not found
+        return undefined
+      }
     }
 
     archivePath = path.join(
diff --git a/packages/cache/src/internal/cacheHttpClient.ts b/packages/cache/src/internal/cacheHttpClient.ts
index d5ecd9a8..8982b8de 100644
--- a/packages/cache/src/internal/cacheHttpClient.ts
+++ b/packages/cache/src/internal/cacheHttpClient.ts
@@ -104,6 +104,7 @@ export async function getCacheEntry(
   const response = await retryTypedResponse('getCacheEntry', async () =>
     httpClient.getJson<ArtifactCacheEntry>(getCacheApiUrl(resource))
   )
+  // Cache not found
   if (response.statusCode === 204) {
     // List cache for primary key only if cache miss occurs
     if (core.isDebug()) {
@@ -118,6 +119,7 @@ export async function getCacheEntry(
   const cacheResult = response.result
   const cacheDownloadUrl = cacheResult?.archiveLocation
   if (!cacheDownloadUrl) {
+    // Cache achiveLocation not found. This should never happen, and hence bail out.
     throw new Error('Cache not found.')
   }
   core.setSecret(cacheDownloadUrl)
diff --git a/packages/cache/src/internal/cacheUtils.ts b/packages/cache/src/internal/cacheUtils.ts
index c2ace526..ea1e7de6 100644
--- a/packages/cache/src/internal/cacheUtils.ts
+++ b/packages/cache/src/internal/cacheUtils.ts
@@ -7,7 +7,11 @@ import * as path from 'path'
 import * as semver from 'semver'
 import * as util from 'util'
 import {v4 as uuidV4} from 'uuid'
-import {CacheFilename, CompressionMethod} from './constants'
+import {
+  CacheFilename,
+  CompressionMethod,
+  GnuTarPathOnWindows
+} from './constants'
 
 // From https://github.com/actions/toolkit/blob/main/packages/tool-cache/src/tool-cache.ts#L23
 export async function createTempDirectory(): Promise<string> {
@@ -90,11 +94,6 @@ async function getVersion(app: string): Promise<string> {
 
 // Use zstandard if possible to maximize cache performance
 export async function getCompressionMethod(): Promise<CompressionMethod> {
-  if (process.platform === 'win32' && !(await isGnuTarInstalled())) {
-    // Disable zstd due to bug https://github.com/actions/cache/issues/301
-    return CompressionMethod.Gzip
-  }
-
   const versionOutput = await getVersion('zstd')
   const version = semver.clean(versionOutput)
 
@@ -116,9 +115,12 @@ export function getCacheFileName(compressionMethod: CompressionMethod): string {
     : CacheFilename.Zstd
 }
 
-export async function isGnuTarInstalled(): Promise<boolean> {
+export async function getGnuTarPathOnWindows(): Promise<string> {
+  if (fs.existsSync(GnuTarPathOnWindows)) {
+    return GnuTarPathOnWindows
+  }
   const versionOutput = await getVersion('tar')
-  return versionOutput.toLowerCase().includes('gnu tar')
+  return versionOutput.toLowerCase().includes('gnu tar') ? io.which('tar') : ''
 }
 
 export function assertDefined<T>(name: string, value?: T): T {
diff --git a/packages/cache/src/internal/constants.ts b/packages/cache/src/internal/constants.ts
index 2f78d326..4dbff574 100644
--- a/packages/cache/src/internal/constants.ts
+++ b/packages/cache/src/internal/constants.ts
@@ -11,6 +11,11 @@ export enum CompressionMethod {
   Zstd = 'zstd'
 }
 
+export enum ArchiveToolType {
+  GNU = 'gnu',
+  BSD = 'bsd'
+}
+
 // The default number of retry attempts.
 export const DefaultRetryAttempts = 2
 
@@ -21,3 +26,13 @@ export const DefaultRetryDelay = 5000
 // over the socket during this period, the socket is destroyed and the download
 // is aborted.
 export const SocketTimeout = 5000
+
+// The default path of GNUtar on hosted Windows runners
+export const GnuTarPathOnWindows = `${process.env['PROGRAMFILES']}\\Git\\usr\\bin\\tar.exe`
+
+// The default path of BSDtar on hosted Windows runners
+export const SystemTarPathOnWindows = `${process.env['SYSTEMDRIVE']}\\Windows\\System32\\tar.exe`
+
+export const TarFilename = 'cache.tar'
+
+export const ManifestFilename = 'manifest.txt'
diff --git a/packages/cache/src/internal/contracts.d.ts b/packages/cache/src/internal/contracts.d.ts
index b5f53bdc..0519ff0a 100644
--- a/packages/cache/src/internal/contracts.d.ts
+++ b/packages/cache/src/internal/contracts.d.ts
@@ -37,3 +37,8 @@ export interface InternalCacheOptions {
   compressionMethod?: CompressionMethod
   cacheSize?: number
 }
+
+export interface ArchiveTool {
+  path: string
+  type: string
+}
diff --git a/packages/cache/src/internal/tar.ts b/packages/cache/src/internal/tar.ts
index 2e28ca1a..0af6a87a 100644
--- a/packages/cache/src/internal/tar.ts
+++ b/packages/cache/src/internal/tar.ts
@@ -3,25 +3,28 @@ import * as io from '@actions/io'
 import {existsSync, writeFileSync} from 'fs'
 import * as path from 'path'
 import * as utils from './cacheUtils'
-import {CompressionMethod} from './constants'
+import {ArchiveTool} from './contracts'
+import {
+  CompressionMethod,
+  SystemTarPathOnWindows,
+  ArchiveToolType,
+  TarFilename,
+  ManifestFilename
+} from './constants'
 
 const IS_WINDOWS = process.platform === 'win32'
 
-async function getTarPath(
-  args: string[],
-  compressionMethod: CompressionMethod
-): Promise<string> {
+// Returns tar path and type: BSD or GNU
+async function getTarPath(): Promise<ArchiveTool> {
   switch (process.platform) {
     case 'win32': {
-      const systemTar = `${process.env['windir']}\\System32\\tar.exe`
-      if (compressionMethod !== CompressionMethod.Gzip) {
-        // We only use zstandard compression on windows when gnu tar is installed due to
-        // a bug with compressing large files with bsdtar + zstd
-        args.push('--force-local')
+      const gnuTar = await utils.getGnuTarPathOnWindows()
+      const systemTar = SystemTarPathOnWindows
+      if (gnuTar) {
+        // Use GNUtar as default on windows
+        return <ArchiveTool>{path: gnuTar, type: ArchiveToolType.GNU}
       } else if (existsSync(systemTar)) {
-        return systemTar
-      } else if (await utils.isGnuTarInstalled()) {
-        args.push('--force-local')
+        return <ArchiveTool>{path: systemTar, type: ArchiveToolType.BSD}
       }
       break
     }
@@ -29,27 +32,133 @@ async function getTarPath(
       const gnuTar = await io.which('gtar', false)
       if (gnuTar) {
         // fix permission denied errors when extracting BSD tar archive with GNU tar - https://github.com/actions/cache/issues/527
-        args.push('--delay-directory-restore')
-        return gnuTar
+        return <ArchiveTool>{path: gnuTar, type: ArchiveToolType.GNU}
+      } else {
+        return <ArchiveTool>{
+          path: await io.which('tar', true),
+          type: ArchiveToolType.BSD
+        }
       }
-      break
     }
     default:
       break
   }
-  return await io.which('tar', true)
+  // Default assumption is GNU tar is present in path
+  return <ArchiveTool>{
+    path: await io.which('tar', true),
+    type: ArchiveToolType.GNU
+  }
 }
 
-async function execTar(
-  args: string[],
+// Return arguments for tar as per tarPath, compressionMethod, method type and os
+async function getTarArgs(
+  tarPath: ArchiveTool,
   compressionMethod: CompressionMethod,
-  cwd?: string
-): Promise<void> {
-  try {
-    await exec(`"${await getTarPath(args, compressionMethod)}"`, args, {cwd})
-  } catch (error) {
-    throw new Error(`Tar failed with error: ${error?.message}`)
+  type: string,
+  archivePath = ''
+): Promise<string[]> {
+  const args = [`"${tarPath.path}"`]
+  const cacheFileName = utils.getCacheFileName(compressionMethod)
+  const tarFile = 'cache.tar'
+  const workingDirectory = getWorkingDirectory()
+  // Speficic args for BSD tar on windows for workaround
+  const BSD_TAR_ZSTD =
+    tarPath.type === ArchiveToolType.BSD &&
+    compressionMethod !== CompressionMethod.Gzip &&
+    IS_WINDOWS
+
+  // Method specific args
+  switch (type) {
+    case 'create':
+      args.push(
+        '--posix',
+        '-cf',
+        BSD_TAR_ZSTD
+          ? tarFile
+          : cacheFileName.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
+        '--exclude',
+        BSD_TAR_ZSTD
+          ? tarFile
+          : cacheFileName.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
+        '-P',
+        '-C',
+        workingDirectory.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
+        '--files-from',
+        ManifestFilename
+      )
+      break
+    case 'extract':
+      args.push(
+        '-xf',
+        BSD_TAR_ZSTD
+          ? tarFile
+          : archivePath.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
+        '-P',
+        '-C',
+        workingDirectory.replace(new RegExp(`\\${path.sep}`, 'g'), '/')
+      )
+      break
+    case 'list':
+      args.push(
+        '-tf',
+        BSD_TAR_ZSTD
+          ? tarFile
+          : archivePath.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
+        '-P'
+      )
+      break
   }
+
+  // Platform specific args
+  if (tarPath.type === ArchiveToolType.GNU) {
+    switch (process.platform) {
+      case 'win32':
+        args.push('--force-local')
+        break
+      case 'darwin':
+        args.push('--delay-directory-restore')
+        break
+    }
+  }
+
+  return args
+}
+
+// Returns commands to run tar and compression program
+async function getCommands(
+  compressionMethod: CompressionMethod,
+  type: string,
+  archivePath = ''
+): Promise<string[]> {
+  let args
+
+  const tarPath = await getTarPath()
+  const tarArgs = await getTarArgs(
+    tarPath,
+    compressionMethod,
+    type,
+    archivePath
+  )
+  const compressionArgs =
+    type !== 'create'
+      ? await getDecompressionProgram(tarPath, compressionMethod, archivePath)
+      : await getCompressionProgram(tarPath, compressionMethod)
+  const BSD_TAR_ZSTD =
+    tarPath.type === ArchiveToolType.BSD &&
+    compressionMethod !== CompressionMethod.Gzip &&
+    IS_WINDOWS
+
+  if (BSD_TAR_ZSTD && type !== 'create') {
+    args = [[...compressionArgs].join(' '), [...tarArgs].join(' ')]
+  } else {
+    args = [[...tarArgs].join(' '), [...compressionArgs].join(' ')]
+  }
+
+  if (BSD_TAR_ZSTD) {
+    return args
+  }
+
+  return [args.join(' ')]
 }
 
 function getWorkingDirectory(): string {
@@ -57,37 +166,107 @@ function getWorkingDirectory(): string {
 }
 
 // Common function for extractTar and listTar to get the compression method
-function getCompressionProgram(compressionMethod: CompressionMethod): string[] {
+async function getDecompressionProgram(
+  tarPath: ArchiveTool,
+  compressionMethod: CompressionMethod,
+  archivePath: string
+): Promise<string[]> {
   // -d: Decompress.
   // unzstd is equivalent to 'zstd -d'
   // --long=#: Enables long distance matching with # bits. Maximum is 30 (1GB) on 32-bit OS and 31 (2GB) on 64-bit.
   // Using 30 here because we also support 32-bit self-hosted runners.
+  const BSD_TAR_ZSTD =
+    tarPath.type === ArchiveToolType.BSD &&
+    compressionMethod !== CompressionMethod.Gzip &&
+    IS_WINDOWS
   switch (compressionMethod) {
     case CompressionMethod.Zstd:
-      return [
-        '--use-compress-program',
-        IS_WINDOWS ? 'zstd -d --long=30' : 'unzstd --long=30'
-      ]
+      return BSD_TAR_ZSTD
+        ? [
+            'zstd -d --long=30 --force -o',
+            TarFilename,
+            archivePath.replace(new RegExp(`\\${path.sep}`, 'g'), '/')
+          ]
+        : [
+            '--use-compress-program',
+            IS_WINDOWS ? '"zstd -d --long=30"' : 'unzstd --long=30'
+          ]
     case CompressionMethod.ZstdWithoutLong:
-      return ['--use-compress-program', IS_WINDOWS ? 'zstd -d' : 'unzstd']
+      return BSD_TAR_ZSTD
+        ? [
+            'zstd -d --force -o',
+            TarFilename,
+            archivePath.replace(new RegExp(`\\${path.sep}`, 'g'), '/')
+          ]
+        : ['--use-compress-program', IS_WINDOWS ? '"zstd -d"' : 'unzstd']
     default:
       return ['-z']
   }
 }
 
+// Used for creating the archive
+// -T#: Compress using # working thread. If # is 0, attempt to detect and use the number of physical CPU cores.
+// zstdmt is equivalent to 'zstd -T0'
+// --long=#: Enables long distance matching with # bits. Maximum is 30 (1GB) on 32-bit OS and 31 (2GB) on 64-bit.
+// Using 30 here because we also support 32-bit self-hosted runners.
+// Long range mode is added to zstd in v1.3.2 release, so we will not use --long in older version of zstd.
+async function getCompressionProgram(
+  tarPath: ArchiveTool,
+  compressionMethod: CompressionMethod
+): Promise<string[]> {
+  const cacheFileName = utils.getCacheFileName(compressionMethod)
+  const BSD_TAR_ZSTD =
+    tarPath.type === ArchiveToolType.BSD &&
+    compressionMethod !== CompressionMethod.Gzip &&
+    IS_WINDOWS
+  switch (compressionMethod) {
+    case CompressionMethod.Zstd:
+      return BSD_TAR_ZSTD
+        ? [
+            'zstd -T0 --long=30 --force -o',
+            cacheFileName.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
+            TarFilename
+          ]
+        : [
+            '--use-compress-program',
+            IS_WINDOWS ? '"zstd -T0 --long=30"' : 'zstdmt --long=30'
+          ]
+    case CompressionMethod.ZstdWithoutLong:
+      return BSD_TAR_ZSTD
+        ? [
+            'zstd -T0 --force -o',
+            cacheFileName.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
+            TarFilename
+          ]
+        : ['--use-compress-program', IS_WINDOWS ? '"zstd -T0"' : 'zstdmt']
+    default:
+      return ['-z']
+  }
+}
+
+// Executes all commands as separate processes
+async function execCommands(commands: string[], cwd?: string): Promise<void> {
+  for (const command of commands) {
+    try {
+      await exec(command, undefined, {cwd})
+    } catch (error) {
+      throw new Error(
+        `${command.split(' ')[0]} failed with error: ${error?.message}`
+      )
+    }
+  }
+}
+
+// List the contents of a tar
 export async function listTar(
   archivePath: string,
   compressionMethod: CompressionMethod
 ): Promise<void> {
-  const args = [
-    ...getCompressionProgram(compressionMethod),
-    '-tf',
-    archivePath.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
-    '-P'
-  ]
-  await execTar(args, compressionMethod)
+  const commands = await getCommands(compressionMethod, 'list', archivePath)
+  await execCommands(commands)
 }
 
+// Extract a tar
 export async function extractTar(
   archivePath: string,
   compressionMethod: CompressionMethod
@@ -95,61 +274,21 @@ export async function extractTar(
   // Create directory to extract tar into
   const workingDirectory = getWorkingDirectory()
   await io.mkdirP(workingDirectory)
-  const args = [
-    ...getCompressionProgram(compressionMethod),
-    '-xf',
-    archivePath.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
-    '-P',
-    '-C',
-    workingDirectory.replace(new RegExp(`\\${path.sep}`, 'g'), '/')
-  ]
-  await execTar(args, compressionMethod)
+  const commands = await getCommands(compressionMethod, 'extract', archivePath)
+  await execCommands(commands)
 }
 
+// Create a tar
 export async function createTar(
   archiveFolder: string,
   sourceDirectories: string[],
   compressionMethod: CompressionMethod
 ): Promise<void> {
   // Write source directories to manifest.txt to avoid command length limits
-  const manifestFilename = 'manifest.txt'
-  const cacheFileName = utils.getCacheFileName(compressionMethod)
   writeFileSync(
-    path.join(archiveFolder, manifestFilename),
+    path.join(archiveFolder, ManifestFilename),
     sourceDirectories.join('\n')
   )
-  const workingDirectory = getWorkingDirectory()
-
-  // -T#: Compress using # working thread. If # is 0, attempt to detect and use the number of physical CPU cores.
-  // zstdmt is equivalent to 'zstd -T0'
-  // --long=#: Enables long distance matching with # bits. Maximum is 30 (1GB) on 32-bit OS and 31 (2GB) on 64-bit.
-  // Using 30 here because we also support 32-bit self-hosted runners.
-  // Long range mode is added to zstd in v1.3.2 release, so we will not use --long in older version of zstd.
-  function getCompressionProgram(): string[] {
-    switch (compressionMethod) {
-      case CompressionMethod.Zstd:
-        return [
-          '--use-compress-program',
-          IS_WINDOWS ? 'zstd -T0 --long=30' : 'zstdmt --long=30'
-        ]
-      case CompressionMethod.ZstdWithoutLong:
-        return ['--use-compress-program', IS_WINDOWS ? 'zstd -T0' : 'zstdmt']
-      default:
-        return ['-z']
-    }
-  }
-  const args = [
-    '--posix',
-    ...getCompressionProgram(),
-    '-cf',
-    cacheFileName.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
-    '--exclude',
-    cacheFileName.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
-    '-P',
-    '-C',
-    workingDirectory.replace(new RegExp(`\\${path.sep}`, 'g'), '/'),
-    '--files-from',
-    manifestFilename
-  ]
-  await execTar(args, compressionMethod, archiveFolder)
+  const commands = await getCommands(compressionMethod, 'create')
+  await execCommands(commands, archiveFolder)
 }