diff --git a/prdoc/pr_12684.prdoc b/prdoc/pr_12684.prdoc
new file mode 100644
index 000000000000..e76b82f5d99e
--- /dev/null
+++ b/prdoc/pr_12684.prdoc
@@ -0,0 +1,17 @@
+title: 'sp-io: report runtime panic messages to the host by default'
+doc:
+- audience: Runtime Dev
+  description: |-
+    The runtime panic handler in `sp-io` now marshals panic (and OOM) messages
+    to the host via the `PanicHandler::abort_on_panic` host function by
+    default, so callers receive `Runtime panicked: <message>` instead of an
+    opaque `wasm trap: wasm 'unreachable' instruction executed` error. This
+    was previously opt-in behind the `improved_panic_error_reporting` feature,
+    which is now a deprecated no-op. Runtimes targeting a host client without
+    the `PanicHandler` host functions can restore the previous behavior with
+    the new `legacy_panic_error_reporting` feature. The polkadot PVF executor
+    instantiates with `allow_missing_func_imports`, so parachain validation is
+    unaffected: a panic during validation traps exactly as before.
+crates:
+- name: sp-io
+  bump: minor
diff --git a/substrate/primitives/io/Cargo.toml b/substrate/primitives/io/Cargo.toml
index 38ff09e0cdf0..84941fe56f9b 100644
--- a/substrate/primitives/io/Cargo.toml
+++ b/substrate/primitives/io/Cargo.toml
@@ -83,24 +83,24 @@ disable_panic_handler = []
 disable_oom = []
 disable_allocator = []
 
-# This feature flag controls the runtime's behavior when encountering
-# a panic or when it runs out of memory, improving the diagnostics.
-#
-# When enabled the runtime will marshal the relevant error message
-# to the host through the `PanicHandler::abort_on_panic` runtime interface.
-# This gives the caller direct programmatic access to the error message.
+# DEPRECATED: Marshalling the panic message to the host through the
+# `PanicHandler::abort_on_panic` runtime interface is the default behavior
+# now; this feature flag is a no-op kept for backwards compatibility.
+# See `legacy_panic_error_reporting` to opt out of it.
+improved_panic_error_reporting = []
+
+# Restores the legacy behavior when encountering a panic or running out of
+# memory: the error message is only printed to the logs and execution aborts
+# via the `unreachable` instruction, with the caller receiving a generic
+# "wasm `unreachable` instruction executed" error message instead of the
+# panic message.
 #
-# When disabled the error message will only be printed out in the
-# logs, with the caller receiving a generic "wasm `unreachable` instruction executed"
-# error message.
+# Only needed when targeting a host client that does not provide the
+# `PanicHandler::abort_on_panic` host function.
 #
 # This has no effect if both `disable_panic_handler` and `disable_oom`
 # are enabled.
-#
-# WARNING: Enabling this feature flag requires the `PanicHandler::abort_on_panic`
-#          host function to be supported by the host. Do *not* enable it for your
-#          runtime without first upgrading your host client!
-improved_panic_error_reporting = []
+legacy_panic_error_reporting = []
 
 # This feature adds BLS crypto primitives.
 # It should not be used in production since the implementation and interface may still
diff --git a/substrate/primitives/io/src/lib.rs b/substrate/primitives/io/src/lib.rs
index 7a8fbb7da016..0318415b45be 100644
--- a/substrate/primitives/io/src/lib.rs
+++ b/substrate/primitives/io/src/lib.rs
@@ -1957,26 +1957,22 @@ pub fn unreachable() -> ! {
 #[panic_handler]
 pub fn panic(info: &core::panic::PanicInfo) -> ! {
 	let message = alloc::format!("{}", info);
-	#[cfg(feature = "improved_panic_error_reporting")]
-	{
-		panic_handler::abort_on_panic(&message);
-	}
-	#[cfg(not(feature = "improved_panic_error_reporting"))]
+	#[cfg(feature = "legacy_panic_error_reporting")]
 	{
 		logging::log(RuntimeInterfaceLogLevel::Error, "runtime", message.as_bytes());
 		unreachable();
 	}
+	#[cfg(not(feature = "legacy_panic_error_reporting"))]
+	{
+		panic_handler::abort_on_panic(&message);
+	}
 }
 
 /// A default OOM handler for the runtime environment.
 #[cfg(all(not(feature = "disable_oom"), enable_alloc_error_handler))]
 #[alloc_error_handler]
 pub fn oom(_: core::alloc::Layout) -> ! {
-	#[cfg(feature = "improved_panic_error_reporting")]
-	{
-		panic_handler::abort_on_panic("Runtime memory exhausted.");
-	}
-	#[cfg(not(feature = "improved_panic_error_reporting"))]
+	#[cfg(feature = "legacy_panic_error_reporting")]
 	{
 		logging::log(
 			RuntimeInterfaceLogLevel::Error,
@@ -1985,6 +1981,10 @@ pub fn oom(_: core::alloc::Layout) -> ! {
 		);
 		unreachable();
 	}
+	#[cfg(not(feature = "legacy_panic_error_reporting"))]
+	{
+		panic_handler::abort_on_panic("Runtime memory exhausted.");
+	}
 }
 
 /// Type alias for Externalities implementation used in tests.