diff --git a/main.tf b/main.tf
index 56681177..4d14d75c 100644
--- a/main.tf
+++ b/main.tf
@@ -68,6 +68,7 @@ module "runners" {
   s3_location_runner_binaries = local.s3_action_runner_url
 
   instance_type         = var.instance_type
+  instance_types        = var.instance_types
   market_options        = var.market_options
   block_device_mappings = var.block_device_mappings
 
diff --git a/modules/runners/lambdas/runners/src/scale-runners/runners.test.ts b/modules/runners/lambdas/runners/src/scale-runners/runners.test.ts
index 0c3cab19..4436a1b6 100644
--- a/modules/runners/lambdas/runners/src/scale-runners/runners.test.ts
+++ b/modules/runners/lambdas/runners/src/scale-runners/runners.test.ts
@@ -7,6 +7,7 @@ jest.mock('aws-sdk', () => ({
   SSM: jest.fn().mockImplementation(() => mockSSM),
 }));
 
+const LAUNCH_TEMPLATE = 'lt-1';
 const ORG_NAME = 'SomeAwesomeCoder';
 const REPO_NAME = `${ORG_NAME}/some-amazing-library`;
 const ENVIRONMENT = 'unit-test-environment';
@@ -115,22 +116,20 @@ describe('create runner', () => {
       ],
     });
     mockSSM.putParameter.mockImplementation(() => mockPutParameter);
-    process.env.LAUNCH_TEMPLATE_NAME = 'launch-template-name';
-    process.env.LAUNCH_TEMPLATE_VERSION = '1';
     process.env.SUBNET_IDS = 'sub-1234';
   });
 
   it('calls run instances with the correct config for repo', async () => {
     await createRunner({
-      runnerConfig: 'bla',
+      runnerServiceConfig: 'bla',
       environment: ENVIRONMENT,
       runnerType: 'Repo',
       runnerOwner: REPO_NAME
-    });
+    }, LAUNCH_TEMPLATE);
     expect(mockEC2.runInstances).toBeCalledWith({
       MaxCount: 1,
       MinCount: 1,
-      LaunchTemplate: { LaunchTemplateName: 'launch-template-name', Version: '1' },
+      LaunchTemplate: { LaunchTemplateName: LAUNCH_TEMPLATE, Version: '$Default' },
       SubnetId: 'sub-1234',
       TagSpecifications: [
         {
@@ -146,15 +145,15 @@ describe('create runner', () => {
 
   it('calls run instances with the correct config for org', async () => {
     await createRunner({
-      runnerConfig: 'bla',
+      runnerServiceConfig: 'bla',
       environment: ENVIRONMENT,
       runnerType: 'Org',
       runnerOwner: ORG_NAME,
-    });
+    }, LAUNCH_TEMPLATE);
     expect(mockEC2.runInstances).toBeCalledWith({
       MaxCount: 1,
       MinCount: 1,
-      LaunchTemplate: { LaunchTemplateName: 'launch-template-name', Version: '1' },
+      LaunchTemplate: { LaunchTemplateName: LAUNCH_TEMPLATE, Version: '$Default' },
       SubnetId: 'sub-1234',
       TagSpecifications: [
         {
@@ -170,11 +169,11 @@ describe('create runner', () => {
 
   it('creates ssm parameters for each created instance', async () => {
     await createRunner({
-      runnerConfig: 'bla',
+      runnerServiceConfig: 'bla',
       environment: ENVIRONMENT,
       runnerType: 'Org',
       runnerOwner: ORG_NAME,
-    });
+    }, LAUNCH_TEMPLATE);
     expect(mockSSM.putParameter).toBeCalledWith({
       Name: `${ENVIRONMENT}-i-1234`,
       Value: 'bla',
@@ -187,11 +186,11 @@ describe('create runner', () => {
       Instances: [],
     });
     await createRunner({
-      runnerConfig: 'bla',
+      runnerServiceConfig: 'bla',
       environment: ENVIRONMENT,
       runnerType: 'Org',
       runnerOwner: ORG_NAME,
-    });
+    }, LAUNCH_TEMPLATE);
     expect(mockSSM.putParameter).not.toBeCalled();
   });
 });
diff --git a/modules/runners/lambdas/runners/src/scale-runners/runners.ts b/modules/runners/lambdas/runners/src/scale-runners/runners.ts
index e5e9b3f5..11b10589 100644
--- a/modules/runners/lambdas/runners/src/scale-runners/runners.ts
+++ b/modules/runners/lambdas/runners/src/scale-runners/runners.ts
@@ -13,6 +13,13 @@ export interface ListRunnerFilters {
   environment: string | undefined;
 }
 
+export interface RunnerInputParameters {
+  runnerServiceConfig: string;
+  environment: string;
+  runnerType: 'Org' | 'Repo';
+  runnerOwner: string;
+}
+
 export async function listRunners(filters: ListRunnerFilters | undefined = undefined): Promise<RunnerInfo[]> {
   const ec2 = new EC2();
   const ec2Filters = [
@@ -46,13 +53,6 @@ export async function listRunners(filters: ListRunnerFilters | undefined = undef
   return runners;
 }
 
-export interface RunnerInputParameters {
-  runnerConfig: string;
-  environment: string;
-  runnerType: 'Org' | 'Repo';
-  runnerOwner: string;
-}
-
 export async function terminateRunner(runner: RunnerInfo): Promise<void> {
   const ec2 = new EC2();
   await ec2
@@ -63,47 +63,53 @@ export async function terminateRunner(runner: RunnerInfo): Promise<void> {
   console.debug('Runner terminated.' + runner.instanceId);
 }
 
-export async function createRunner(runnerParameters: RunnerInputParameters): Promise<void> {
-  const launchTemplateName = process.env.LAUNCH_TEMPLATE_NAME as string;
-  const launchTemplateVersion = process.env.LAUNCH_TEMPLATE_VERSION as string;
-
-  const subnets = (process.env.SUBNET_IDS as string).split(',');
-  const randomSubnet = subnets[Math.floor(Math.random() * subnets.length)];
+export async function createRunner(runnerParameters: RunnerInputParameters, launchTemplateName: string): Promise<void> {
   console.debug('Runner configuration: ' + JSON.stringify(runnerParameters));
   const ec2 = new EC2();
   const runInstancesResponse = await ec2
-    .runInstances({
-      MaxCount: 1,
-      MinCount: 1,
-      LaunchTemplate: {
-        LaunchTemplateName: launchTemplateName,
-        Version: launchTemplateVersion,
-      },
-      SubnetId: randomSubnet,
-      TagSpecifications: [
-        {
-          ResourceType: 'instance',
-          Tags: [
-            { Key: 'Application', Value: 'github-action-runner' },
-            {
-              Key: runnerParameters.runnerType,
-              Value: runnerParameters.runnerOwner
-            },
-          ],
-        },
-      ],
-    })
+    .runInstances(getInstanceParams(launchTemplateName, runnerParameters))
     .promise();
   console.info('Created instance(s): ', runInstancesResponse.Instances?.map((i) => i.InstanceId).join(','));
-
   const ssm = new SSM();
   runInstancesResponse.Instances?.forEach(async (i: EC2.Instance) => {
     await ssm
       .putParameter({
         Name: runnerParameters.environment + '-' + (i.InstanceId as string),
-        Value: runnerParameters.runnerConfig,
+        Value: runnerParameters.runnerServiceConfig,
         Type: 'SecureString',
       })
       .promise();
   });
 }
+
+function getInstanceParams(
+  launchTemplateName: string,
+  runnerParameters: RunnerInputParameters
+): EC2.RunInstancesRequest {
+  return {
+    MaxCount: 1,
+    MinCount: 1,
+    LaunchTemplate: {
+      LaunchTemplateName: launchTemplateName,
+      Version: '$Default',
+    },
+    SubnetId: getSubnet(),
+    TagSpecifications: [
+      {
+        ResourceType: 'instance',
+        Tags: [
+          { Key: 'Application', Value: 'github-action-runner' },
+          {
+            Key: runnerParameters.runnerType,
+            Value: runnerParameters.runnerOwner
+          },
+        ],
+      },
+    ],
+  };
+}
+
+function getSubnet(): string {
+  const subnets = (process.env.SUBNET_IDS as string).split(',');
+  return subnets[Math.floor(Math.random() * subnets.length)];
+}
diff --git a/modules/runners/lambdas/runners/src/scale-runners/scale-up.test.ts b/modules/runners/lambdas/runners/src/scale-runners/scale-up.test.ts
index e2f6640a..8e157f90 100644
--- a/modules/runners/lambdas/runners/src/scale-runners/scale-up.test.ts
+++ b/modules/runners/lambdas/runners/src/scale-runners/scale-up.test.ts
@@ -1,6 +1,6 @@
 import { mocked } from 'ts-jest/utils';
-import { ActionRequestMessage, scaleUp } from './scale-up';
-import { listRunners, createRunner } from './runners';
+import * as scaleUpModule from './scale-up';
+import { listRunners, createRunner, RunnerInputParameters } from './runners';
 import * as ghAuth from './gh-auth';
 import nock from 'nock';
 
@@ -24,7 +24,7 @@ jest.mock('@octokit/rest', () => ({
 
 jest.mock('./runners');
 
-const TEST_DATA: ActionRequestMessage = {
+const TEST_DATA: scaleUpModule.ActionRequestMessage = {
   id: 1,
   eventType: 'check_run',
   repositoryName: 'hello-world',
@@ -32,7 +32,7 @@ const TEST_DATA: ActionRequestMessage = {
   installationId: 2,
 };
 
-const TEST_DATA_WITHOUT_INSTALL_ID: ActionRequestMessage = {
+const TEST_DATA_WITHOUT_INSTALL_ID: scaleUpModule.ActionRequestMessage = {
   id: 3,
   eventType: 'check_run',
   repositoryName: 'hello-world',
@@ -40,8 +40,18 @@ const TEST_DATA_WITHOUT_INSTALL_ID: ActionRequestMessage = {
   installationId: 0,
 };
 
+const LAUNCH_TEMPLATE = 'lt-1';
+
 const cleanEnv = process.env;
 
+const EXPECTED_RUNNER_PARAMS: RunnerInputParameters = {
+  environment: 'unit-test-environment',
+  runnerServiceConfig: `--url https://github.enterprise.something/${TEST_DATA.repositoryOwner} --token 1234abcd `,
+  runnerType: 'Org',
+  runnerOwner: TEST_DATA.repositoryOwner
+};
+let expectedRunnerParams: RunnerInputParameters;
+
 beforeEach(() => {
   nock.disableNetConnect();
   jest.resetModules();
@@ -53,6 +63,7 @@ beforeEach(() => {
   process.env.GITHUB_APP_CLIENT_SECRET = 'TEST_CLIENT_SECRET';
   process.env.RUNNERS_MAXIMUM_COUNT = '3';
   process.env.ENVIRONMENT = 'unit-test-environment';
+  process.env.LAUNCH_TEMPLATE_NAME = 'lt-1,lt-2';
 
   mockOctokit.checks.get.mockImplementation(() => ({
     data: {
@@ -97,11 +108,11 @@ describe('scaleUp with GHES', () => {
 
   it('ignores non-sqs events', async () => {
     expect.assertions(1);
-    expect(scaleUp('aws:s3', TEST_DATA)).rejects.toEqual(Error('Cannot handle non-SQS events!'));
+    expect(scaleUpModule.scaleUp('aws:s3', TEST_DATA)).rejects.toEqual(Error('Cannot handle non-SQS events!'));
   });
 
   it('checks queued workflows', async () => {
-    await scaleUp('aws:sqs', TEST_DATA);
+    await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
     expect(mockOctokit.checks.get).toBeCalledWith({
       check_run_id: TEST_DATA.id,
       owner: TEST_DATA.repositoryOwner,
@@ -113,17 +124,18 @@ describe('scaleUp with GHES', () => {
     mockOctokit.checks.get.mockImplementation(() => ({
       data: { total_count: 0, runners: [] },
     }));
-    await scaleUp('aws:sqs', TEST_DATA);
+    await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
     expect(listRunners).not.toBeCalled();
   });
 
   describe('on org level', () => {
     beforeEach(() => {
       process.env.ENABLE_ORGANIZATION_RUNNERS = 'true';
+      expectedRunnerParams = { ...EXPECTED_RUNNER_PARAMS };
     });
 
     it('gets the current org level runners', async () => {
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(listRunners).toBeCalledWith({
         environment: 'unit-test-environment',
         runnerType: 'Org',
@@ -133,12 +145,12 @@ describe('scaleUp with GHES', () => {
 
     it('does not create a token when maximum runners has been reached', async () => {
       process.env.RUNNERS_MAXIMUM_COUNT = '1';
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(mockOctokit.actions.createRegistrationTokenForOrg).not.toBeCalled();
     });
 
     it('creates a token when maximum runners has not been reached', async () => {
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(mockOctokit.actions.createRegistrationTokenForOrg).toBeCalled();
       expect(mockOctokit.actions.createRegistrationTokenForOrg).toBeCalledWith({
         org: TEST_DATA.repositoryOwner,
@@ -147,7 +159,7 @@ describe('scaleUp with GHES', () => {
 
     it('does not retrieve installation id if already set', async () => {
       const spy = jest.spyOn(ghAuth, 'createGithubAuth');
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(mockOctokit.apps.getOrgInstallation).not.toBeCalled();
       expect(mockOctokit.apps.getRepoInstallation).not.toBeCalled();
       expect(spy).toBeCalledWith(
@@ -159,7 +171,7 @@ describe('scaleUp with GHES', () => {
 
     it('retrieves installation id if not set', async () => {
       const spy = jest.spyOn(ghAuth, 'createGithubAuth');
-      await scaleUp('aws:sqs', TEST_DATA_WITHOUT_INSTALL_ID);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA_WITHOUT_INSTALL_ID);
       expect(mockOctokit.apps.getRepoInstallation).not.toBeCalled();
       expect(spy).toHaveBeenNthCalledWith(1, undefined, 'app', "https://github.enterprise.something/api/v3");
       expect(spy).toHaveBeenNthCalledWith(
@@ -171,36 +183,53 @@ describe('scaleUp with GHES', () => {
     });
 
     it('creates a runner with correct config', async () => {
-      await scaleUp('aws:sqs', TEST_DATA);
-      expect(createRunner).toBeCalledWith({
-        environment: 'unit-test-environment',
-        runnerConfig: `--url https://github.enterprise.something/${TEST_DATA.repositoryOwner} --token 1234abcd `,
-        runnerType: 'Org',
-        runnerOwner: TEST_DATA.repositoryOwner,
-      });
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
+      expect(createRunner).toBeCalledWith(expectedRunnerParams, 'lt-1');
     });
 
-    it('creates a runner with labels in s specific group', async () => {
+    it('creates a runner with labels in a specific group', async () => {
       process.env.RUNNER_EXTRA_LABELS = 'label1,label2';
       process.env.RUNNER_GROUP_NAME = 'TEST_GROUP';
-      await scaleUp('aws:sqs', TEST_DATA);
-      expect(createRunner).toBeCalledWith({
-        environment: 'unit-test-environment',
-        runnerConfig: `--url https://github.enterprise.something/${TEST_DATA.repositoryOwner} ` +
-          `--token 1234abcd --labels label1,label2 --runnergroup TEST_GROUP`,
-        runnerType: 'Org',
-        runnerOwner: TEST_DATA.repositoryOwner,
-      });
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
+      expectedRunnerParams.runnerServiceConfig = expectedRunnerParams.runnerServiceConfig +
+        `--labels label1,label2 --runnergroup TEST_GROUP`;
+      expect(createRunner).toBeCalledWith(expectedRunnerParams, 'lt-1');
+    });
+
+    it('attempts next launch template if first fails', async () => {
+      const mockCreateRunners = mocked(createRunner);
+      mockCreateRunners.mockRejectedValueOnce(new Error('no capactiy'));
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
+      expect(createRunner).toBeCalledTimes(2);
+      expect(createRunner).toHaveBeenNthCalledWith(1, expectedRunnerParams, 'lt-1');
+      expect(createRunner).toHaveBeenNthCalledWith(2, expectedRunnerParams, 'lt-2');
+      mockCreateRunners.mockReset();
+    });
+
+    it('all launch templates fail', async () => {
+      const mockCreateRunners = mocked(createRunner);
+      mockCreateRunners.mockRejectedValue(new Error('All launch templates failed'));
+      await expect(scaleUpModule.scaleUp('aws:sqs', TEST_DATA)).rejects.toThrow('All launch templates failed');
+      expect(createRunner).toBeCalledTimes(2);
+      expect(createRunner).toHaveBeenNthCalledWith(1, expectedRunnerParams, 'lt-1');
+      expect(createRunner).toHaveBeenNthCalledWith(2, expectedRunnerParams, 'lt-2');
+      mockCreateRunners.mockReset();
     });
   });
 
   describe('on repo level', () => {
     beforeEach(() => {
       process.env.ENABLE_ORGANIZATION_RUNNERS = 'false';
+      expectedRunnerParams = { ...EXPECTED_RUNNER_PARAMS };
+      expectedRunnerParams.runnerType = 'Repo';
+      expectedRunnerParams.runnerOwner = `${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName}`;
+      expectedRunnerParams.runnerServiceConfig = `--url ` +
+        `https://github.enterprise.something/${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName} ` +
+        `--token 1234abcd `;
     });
 
     it('gets the current repo level runners', async () => {
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(listRunners).toBeCalledWith({
         environment: 'unit-test-environment',
         runnerType: 'Repo',
@@ -210,12 +239,12 @@ describe('scaleUp with GHES', () => {
 
     it('does not create a token when maximum runners has been reached', async () => {
       process.env.RUNNERS_MAXIMUM_COUNT = '1';
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(mockOctokit.actions.createRegistrationTokenForRepo).not.toBeCalled();
     });
 
     it('creates a token when maximum runners has not been reached', async () => {
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(mockOctokit.actions.createRegistrationTokenForRepo).toBeCalledWith({
         owner: TEST_DATA.repositoryOwner,
         repo: TEST_DATA.repositoryName,
@@ -224,7 +253,7 @@ describe('scaleUp with GHES', () => {
 
     it('does not retrieve installation id if already set', async () => {
       const spy = jest.spyOn(ghAuth, 'createGithubAuth');
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(mockOctokit.apps.getOrgInstallation).not.toBeCalled();
       expect(mockOctokit.apps.getRepoInstallation).not.toBeCalled();
       expect(spy).toBeCalledWith(
@@ -236,7 +265,7 @@ describe('scaleUp with GHES', () => {
 
     it('retrieves installation id if not set', async () => {
       const spy = jest.spyOn(ghAuth, 'createGithubAuth');
-      await scaleUp('aws:sqs', TEST_DATA_WITHOUT_INSTALL_ID);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA_WITHOUT_INSTALL_ID);
       expect(mockOctokit.apps.getOrgInstallation).not.toBeCalled();
       expect(spy).toHaveBeenNthCalledWith(1, undefined, 'app', "https://github.enterprise.something/api/v3");
       expect(spy).toHaveBeenNthCalledWith(
@@ -249,29 +278,31 @@ describe('scaleUp with GHES', () => {
 
     it('creates a runner with correct config and labels', async () => {
       process.env.RUNNER_EXTRA_LABELS = 'label1,label2';
-      await scaleUp('aws:sqs', TEST_DATA);
-      expect(createRunner).toBeCalledWith({
-        environment: 'unit-test-environment',
-        runnerConfig: `--url ` +
-          `https://github.enterprise.something/${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName} ` +
-          `--token 1234abcd --labels label1,label2`,
-        runnerType: 'Repo',
-        runnerOwner: `${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName}`,
-      });
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
+      expectedRunnerParams.runnerServiceConfig = expectedRunnerParams.runnerServiceConfig + `--labels label1,label2`;
+      expectedRunnerParams.runnerType = 'Repo';
+      expectedRunnerParams.runnerOwner = `${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName}`;
+      expect(createRunner).toBeCalledWith(expectedRunnerParams, 'lt-1');
     });
 
     it('creates a runner and ensure the group argument is ignored', async () => {
       process.env.RUNNER_EXTRA_LABELS = 'label1,label2';
       process.env.RUNNER_GROUP_NAME = 'TEST_GROUP_IGNORED';
-      await scaleUp('aws:sqs', TEST_DATA);
-      expect(createRunner).toBeCalledWith({
-        environment: 'unit-test-environment',
-        runnerConfig: `--url ` +
-          `https://github.enterprise.something/${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName} ` +
-          `--token 1234abcd --labels label1,label2`,
-        runnerType: 'Repo',
-        runnerOwner: `${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName}`,
-      });
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
+      expectedRunnerParams.runnerServiceConfig = `--url ` +
+        `https://github.enterprise.something/${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName} ` +
+        `--token 1234abcd --labels label1,label2`;
+      expectedRunnerParams.runnerOwner = `${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName}`;
+      expect(createRunner).toBeCalledWith(expectedRunnerParams, 'lt-1');
+    });
+
+    it('attempts next launch template if first fails', async () => {
+      const mockCreateRunners = mocked(createRunner);
+      mockCreateRunners.mockRejectedValueOnce(new Error('no capactiy'));
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
+      expect(createRunner).toBeCalledTimes(2);
+      expect(createRunner).toHaveBeenNthCalledWith(1, expectedRunnerParams, 'lt-1');
+      expect(createRunner).toHaveBeenNthCalledWith(2, expectedRunnerParams, 'lt-2');
     });
   });
 });
@@ -279,11 +310,11 @@ describe('scaleUp with GHES', () => {
 describe('scaleUp with public GH', () => {
   it('ignores non-sqs events', async () => {
     expect.assertions(1);
-    expect(scaleUp('aws:s3', TEST_DATA)).rejects.toEqual(Error('Cannot handle non-SQS events!'));
+    expect(scaleUpModule.scaleUp('aws:s3', TEST_DATA)).rejects.toEqual(Error('Cannot handle non-SQS events!'));
   });
 
   it('checks queued workflows', async () => {
-    await scaleUp('aws:sqs', TEST_DATA);
+    await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
     expect(mockOctokit.checks.get).toBeCalledWith({
       check_run_id: TEST_DATA.id,
       owner: TEST_DATA.repositoryOwner,
@@ -293,7 +324,7 @@ describe('scaleUp with public GH', () => {
 
   it('does not retrieve installation id if already set', async () => {
     const spy = jest.spyOn(ghAuth, 'createGithubAuth');
-    await scaleUp('aws:sqs', TEST_DATA);
+    await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
     expect(mockOctokit.apps.getOrgInstallation).not.toBeCalled();
     expect(mockOctokit.apps.getRepoInstallation).not.toBeCalled();
     expect(spy).toBeCalledWith(TEST_DATA.installationId, 'installation', "");
@@ -301,7 +332,7 @@ describe('scaleUp with public GH', () => {
 
   it('retrieves installation id if not set', async () => {
     const spy = jest.spyOn(ghAuth, 'createGithubAuth');
-    await scaleUp('aws:sqs', TEST_DATA_WITHOUT_INSTALL_ID);
+    await scaleUpModule.scaleUp('aws:sqs', TEST_DATA_WITHOUT_INSTALL_ID);
     expect(mockOctokit.apps.getRepoInstallation).not.toBeCalled();
     expect(spy).toHaveBeenNthCalledWith(1, undefined, 'app', "");
     expect(spy).toHaveBeenNthCalledWith(2, TEST_DATA.installationId, 'installation', "");
@@ -311,17 +342,20 @@ describe('scaleUp with public GH', () => {
     mockOctokit.checks.get.mockImplementation(() => ({
       data: { status: 'completed' },
     }));
-    await scaleUp('aws:sqs', TEST_DATA);
+    await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
     expect(listRunners).not.toBeCalled();
   });
 
   describe('on org level', () => {
     beforeEach(() => {
       process.env.ENABLE_ORGANIZATION_RUNNERS = 'true';
+      expectedRunnerParams = { ...EXPECTED_RUNNER_PARAMS };
+      expectedRunnerParams.runnerServiceConfig =
+        `--url https://github.com/${TEST_DATA.repositoryOwner} --token 1234abcd `;
     });
 
     it('gets the current org level runners', async () => {
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(listRunners).toBeCalledWith({
         environment: 'unit-test-environment',
         runnerType: 'Org',
@@ -331,12 +365,12 @@ describe('scaleUp with public GH', () => {
 
     it('does not create a token when maximum runners has been reached', async () => {
       process.env.RUNNERS_MAXIMUM_COUNT = '1';
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(mockOctokit.actions.createRegistrationTokenForOrg).not.toBeCalled();
     });
 
     it('creates a token when maximum runners has not been reached', async () => {
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(mockOctokit.actions.createRegistrationTokenForOrg).toBeCalled();
       expect(mockOctokit.actions.createRegistrationTokenForOrg).toBeCalledWith({
         org: TEST_DATA.repositoryOwner,
@@ -344,36 +378,42 @@ describe('scaleUp with public GH', () => {
     });
 
     it('creates a runner with correct config', async () => {
-      await scaleUp('aws:sqs', TEST_DATA);
-      expect(createRunner).toBeCalledWith({
-        environment: 'unit-test-environment',
-        runnerConfig: `--url https://github.com/${TEST_DATA.repositoryOwner} --token 1234abcd `,
-        runnerType: 'Org',
-        runnerOwner: TEST_DATA.repositoryOwner
-      });
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
+      expect(createRunner).toBeCalledWith(expectedRunnerParams, LAUNCH_TEMPLATE);
     });
 
     it('creates a runner with labels in s specific group', async () => {
       process.env.RUNNER_EXTRA_LABELS = 'label1,label2';
       process.env.RUNNER_GROUP_NAME = 'TEST_GROUP';
-      await scaleUp('aws:sqs', TEST_DATA);
-      expect(createRunner).toBeCalledWith({
-        environment: 'unit-test-environment',
-        runnerConfig: `--url https://github.com/${TEST_DATA.repositoryOwner} ` +
-          `--token 1234abcd --labels label1,label2 --runnergroup TEST_GROUP`,
-        runnerType: 'Org',
-        runnerOwner: TEST_DATA.repositoryOwner
-      });
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
+      expectedRunnerParams.runnerServiceConfig =
+        expectedRunnerParams.runnerServiceConfig + `--labels label1,label2 --runnergroup TEST_GROUP`;
+      expect(createRunner).toBeCalledWith(expectedRunnerParams, LAUNCH_TEMPLATE);
+    });
+
+    it('attempts next launch template if first fails', async () => {
+      const mockCreateRunners = mocked(createRunner);
+      mockCreateRunners.mockRejectedValueOnce(new Error('no capactiy'));
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
+      expect(createRunner).toBeCalledTimes(2);
+      expect(createRunner).toHaveBeenNthCalledWith(1, expectedRunnerParams, 'lt-1');
+      expect(createRunner).toHaveBeenNthCalledWith(2, expectedRunnerParams, 'lt-2');
     });
   });
 
   describe('on repo level', () => {
     beforeEach(() => {
       process.env.ENABLE_ORGANIZATION_RUNNERS = 'false';
+      expectedRunnerParams = { ...EXPECTED_RUNNER_PARAMS };
+      expectedRunnerParams.runnerType = 'Repo';
+      expectedRunnerParams.runnerOwner = `${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName}`;
+      expectedRunnerParams.runnerServiceConfig = `--url ` +
+        `https://github.com/${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName} ` +
+        `--token 1234abcd `;
     });
 
     it('gets the current repo level runners', async () => {
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(listRunners).toBeCalledWith({
         environment: 'unit-test-environment',
         runnerType: 'Repo',
@@ -383,12 +423,12 @@ describe('scaleUp with public GH', () => {
 
     it('does not create a token when maximum runners has been reached', async () => {
       process.env.RUNNERS_MAXIMUM_COUNT = '1';
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(mockOctokit.actions.createRegistrationTokenForRepo).not.toBeCalled();
     });
 
     it('creates a token when maximum runners has not been reached', async () => {
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(mockOctokit.actions.createRegistrationTokenForRepo).toBeCalledWith({
         owner: TEST_DATA.repositoryOwner,
         repo: TEST_DATA.repositoryName,
@@ -397,7 +437,7 @@ describe('scaleUp with public GH', () => {
 
     it('does not retrieve installation id if already set', async () => {
       const spy = jest.spyOn(ghAuth, 'createGithubAuth');
-      await scaleUp('aws:sqs', TEST_DATA);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
       expect(mockOctokit.apps.getOrgInstallation).not.toBeCalled();
       expect(mockOctokit.apps.getRepoInstallation).not.toBeCalled();
       expect(spy).toBeCalledWith(TEST_DATA.installationId, 'installation', "");
@@ -405,7 +445,7 @@ describe('scaleUp with public GH', () => {
 
     it('retrieves installation id if not set', async () => {
       const spy = jest.spyOn(ghAuth, 'createGithubAuth');
-      await scaleUp('aws:sqs', TEST_DATA_WITHOUT_INSTALL_ID);
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA_WITHOUT_INSTALL_ID);
       expect(mockOctokit.apps.getOrgInstallation).not.toBeCalled();
       expect(spy).toHaveBeenNthCalledWith(1, undefined, 'app', "");
       expect(spy).toHaveBeenNthCalledWith(2, TEST_DATA.installationId, 'installation', "");
@@ -413,27 +453,26 @@ describe('scaleUp with public GH', () => {
 
     it('creates a runner with correct config and labels', async () => {
       process.env.RUNNER_EXTRA_LABELS = 'label1,label2';
-      await scaleUp('aws:sqs', TEST_DATA);
-      expect(createRunner).toBeCalledWith({
-        environment: 'unit-test-environment',
-        runnerConfig: `--url https://github.com/${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName} ` +
-          `--token 1234abcd --labels label1,label2`,
-        runnerType: 'Repo',
-        runnerOwner: `${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName}`,
-      });
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
+      expectedRunnerParams.runnerServiceConfig = expectedRunnerParams.runnerServiceConfig + `--labels label1,label2`;
+      expect(createRunner).toBeCalledWith(expectedRunnerParams, LAUNCH_TEMPLATE);
     });
 
     it('creates a runner and ensure the group argument is ignored', async () => {
       process.env.RUNNER_EXTRA_LABELS = 'label1,label2';
       process.env.RUNNER_GROUP_NAME = 'TEST_GROUP_IGNORED';
-      await scaleUp('aws:sqs', TEST_DATA);
-      expect(createRunner).toBeCalledWith({
-        environment: 'unit-test-environment',
-        runnerConfig: `--url https://github.com/${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName} ` +
-          `--token 1234abcd --labels label1,label2`,
-        runnerType: 'Repo',
-        runnerOwner: `${TEST_DATA.repositoryOwner}/${TEST_DATA.repositoryName}`,
-      });
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
+      expectedRunnerParams.runnerServiceConfig = expectedRunnerParams.runnerServiceConfig + `--labels label1,label2`;
+      expect(createRunner).toBeCalledWith(expectedRunnerParams, LAUNCH_TEMPLATE);
+    });
+
+    it('attempts next launch template if first fails', async () => {
+      const mockCreateRunners = mocked(createRunner);
+      mockCreateRunners.mockRejectedValueOnce(new Error('no capactiy'));
+      await scaleUpModule.scaleUp('aws:sqs', TEST_DATA);
+      expect(createRunner).toBeCalledTimes(2);
+      expect(createRunner).toHaveBeenNthCalledWith(1, expectedRunnerParams, 'lt-1');
+      expect(createRunner).toHaveBeenNthCalledWith(2, expectedRunnerParams, 'lt-2');
     });
   });
 });
diff --git a/modules/runners/lambdas/runners/src/scale-runners/scale-up.ts b/modules/runners/lambdas/runners/src/scale-runners/scale-up.ts
index dfbbf5d1..07f9f050 100644
--- a/modules/runners/lambdas/runners/src/scale-runners/scale-up.ts
+++ b/modules/runners/lambdas/runners/src/scale-runners/scale-up.ts
@@ -1,4 +1,4 @@
-import { listRunners, createRunner } from './runners';
+import { listRunners, createRunner, RunnerInputParameters } from './runners';
 import { createOctoClient, createGithubAuth } from './gh-auth';
 import yn from 'yn';
 
@@ -77,16 +77,37 @@ export const scaleUp = async (eventSource: string, payload: ActionRequestMessage
       const labelsArgument = runnerExtraLabels !== undefined ? `--labels ${runnerExtraLabels}` : '';
       const runnerGroupArgument = runnerGroup !== undefined ? ` --runnergroup ${runnerGroup}` : '';
       const configBaseUrl = ghesBaseUrl ? ghesBaseUrl : 'https://github.com';
-      await createRunner({
-        environment: environment,
-        runnerConfig: enableOrgLevel
-          ? `--url ${configBaseUrl}/${runnerOwner} --token ${token} ${labelsArgument}${runnerGroupArgument}`
-          : `--url ${configBaseUrl}/${runnerOwner} --token ${token} ${labelsArgument}`,
-        runnerType,
+
+      await createRunnerLoop({
+        environment,
+        runnerServiceConfig: enableOrgLevel
+          ? `--url ${configBaseUrl}/${payload.repositoryOwner} --token ${token} ${labelsArgument}${runnerGroupArgument}`
+          : `--url ${configBaseUrl}/${payload.repositoryOwner}/${payload.repositoryName} ` +
+          `--token ${token} ${labelsArgument}`,
         runnerOwner,
+        runnerType
+
       });
     } else {
       console.info('No runner will be created, maximum number of runners reached.');
     }
   }
 };
+
+export async function createRunnerLoop(runnerParameters: RunnerInputParameters): Promise<void> {
+  const launchTemplateNames = process.env.LAUNCH_TEMPLATE_NAME?.split(',') as string[];
+  let launched = false;
+  for (const launchTemplateName of launchTemplateNames) {
+    console.info(`Attempting to launch instance using ${launchTemplateName}.`);
+    try {
+      await createRunner(runnerParameters, launchTemplateName);
+      launched = true;
+      break;
+    } catch (error) {
+      console.error(error);
+    }
+  }
+  if (launched == false) {
+    throw Error('All launch templates failed');
+  }
+}
diff --git a/modules/runners/main.tf b/modules/runners/main.tf
index 35387014..ac742d8d 100644
--- a/modules/runners/main.tf
+++ b/modules/runners/main.tf
@@ -17,6 +17,8 @@ locals {
   userdata_template              = var.userdata_template == null ? "${path.module}/templates/user-data.sh" : var.userdata_template
   userdata_arm_patch             = "${path.module}/templates/arm-runner-patch.tpl"
   userdata_install_config_runner = "${path.module}/templates/install-config-runner.sh"
+
+  instance_types = var.instance_types == null ? [var.instance_type] : var.instance_types
 }
 
 data "aws_ami" "runner" {
@@ -34,7 +36,9 @@ data "aws_ami" "runner" {
 }
 
 resource "aws_launch_template" "runner" {
-  name = "${var.environment}-action-runner"
+  for_each = local.instance_types
+
+  name = "${var.environment}-action-runner-${each.value}"
 
   dynamic "block_device_mappings" {
     for_each = [var.block_device_mappings]
@@ -62,7 +66,7 @@ resource "aws_launch_template" "runner" {
   }
 
   image_id      = data.aws_ami.runner.id
-  instance_type = var.instance_type
+  instance_type = each.value
   key_name      = var.key_name
 
   vpc_security_group_ids = compact(concat(
@@ -102,6 +106,8 @@ resource "aws_launch_template" "runner" {
   }))
 
   tags = local.tags
+
+  update_default_version = true
 }
 
 locals {
diff --git a/modules/runners/scale-up.tf b/modules/runners/scale-up.tf
index 54188806..37c40d7d 100644
--- a/modules/runners/scale-up.tf
+++ b/modules/runners/scale-up.tf
@@ -39,8 +39,7 @@ resource "aws_lambda_function" "scale_up" {
       RUNNER_EXTRA_LABELS         = var.runner_extra_labels
       RUNNER_GROUP_NAME           = var.runner_group_name
       RUNNERS_MAXIMUM_COUNT       = var.runners_maximum_count
-      LAUNCH_TEMPLATE_NAME        = aws_launch_template.runner.name
-      LAUNCH_TEMPLATE_VERSION     = aws_launch_template.runner.latest_version
+      LAUNCH_TEMPLATE_NAME        = join(",", [for template in aws_launch_template.runner : template.name])
       SUBNET_IDS                  = join(",", var.subnet_ids)
     }
   }
diff --git a/modules/runners/variables.tf b/modules/runners/variables.tf
index f1ca68aa..0516f0b1 100644
--- a/modules/runners/variables.tf
+++ b/modules/runners/variables.tf
@@ -58,11 +58,17 @@ variable "market_options" {
 }
 
 variable "instance_type" {
-  description = "Default instance type for the action runner."
+  description = "[DEPRECATED] See instance_types."
   type        = string
   default     = "m5.large"
 }
 
+variable "instance_types" {
+  description = "List of instance types for the action runner."
+  type        = set(string)
+  default     = null
+}
+
 variable "ami_filter" {
   description = "List of maps used to create the AMI filter for the action runner AMI."
   type        = map(list(string))
diff --git a/outputs.tf b/outputs.tf
index 7b39a8d8..3cb4684a 100644
--- a/outputs.tf
+++ b/outputs.tf
@@ -1,8 +1,8 @@
 output "runners" {
   value = {
-    launch_template_name    = module.runners.launch_template.name
-    launch_template_id      = module.runners.launch_template.id
-    launch_template_version = module.runners.launch_template.latest_version
+    launch_template_name    = [for template in module.runners.launch_template : template.name]
+    launch_template_id      = [for template in module.runners.launch_template : template.id]
+    launch_template_version = [for template in module.runners.launch_template : template.latest_version]
     lambda_up               = module.runners.lambda_scale_up
     lambda_down             = module.runners.lambda_scale_down
     role_runner             = module.runners.role_runner
diff --git a/variables.tf b/variables.tf
index 4f455467..21773e9f 100644
--- a/variables.tf
+++ b/variables.tf
@@ -126,7 +126,7 @@ variable "instance_profile_path" {
 }
 
 variable "instance_type" {
-  description = "Instance type for the action runner."
+  description = "[DEPRECATED] See instance_types."
   type        = string
   default     = "m5.large"
 }
@@ -354,3 +354,9 @@ variable "volume_size" {
   type        = number
   default     = 30
 }
+
+variable "instance_types" {
+  description = "List of instance types for the action runner."
+  type        = set(string)
+  default     = null
+}