diff --git a/Cargo.toml b/Cargo.toml
index 5860b19d45..5ae4251d15 100644
--- a/Cargo.toml
+++ b/Cargo.toml
@@ -57,6 +57,7 @@ hyper = "1.5"
 hyper-rustls = { version = "0.27", default-features = false }
 hyper-util = "0.1"
 parking_lot = "0.12"
+percent-encoding = "2.3.2"
 pin-project = "1.1.3"
 proc-macro-crate = "3"
 proc-macro2 = "1"
diff --git a/client/http-client/Cargo.toml b/client/http-client/Cargo.toml
index f1ec306a0d..48a375d488 100644
--- a/client/http-client/Cargo.toml
+++ b/client/http-client/Cargo.toml
@@ -24,6 +24,7 @@ hyper-util = { workspace = true, features = ["client", "client-legacy", "tokio",
 http-body = { workspace = true }
 jsonrpsee-types = { workspace = true }
 jsonrpsee-core = { workspace = true, features = ["client", "http-helpers"] }
+percent-encoding = { workspace = true }
 rustls = { workspace = true, optional = true, features = ["logging", "std", "tls12", "ring"] }
 rustls-platform-verifier = { workspace = true, optional = true }
 serde = { workspace = true, features = ["alloc"] }
diff --git a/client/http-client/src/transport.rs b/client/http-client/src/transport.rs
index 8226758f4b..adda7c7404 100644
--- a/client/http-client/src/transport.rs
+++ b/client/http-client/src/transport.rs
@@ -17,6 +17,7 @@ use jsonrpsee_core::{
 	TEN_MB_SIZE_BYTES,
 	http_helpers::{self, HttpError},
 };
+use percent_encoding::percent_decode_str;
 use std::future::Future;
 use std::pin::Pin;
 use std::task::{Context, Poll};
@@ -308,7 +309,13 @@ impl<L> HttpTransportClientBuilder<L> {
 
 		if let Some(pwd) = url.password() {
 			if !cached_headers.contains_key(hyper::header::AUTHORIZATION) {
-				let digest = base64::engine::general_purpose::STANDARD.encode(format!("{}:{pwd}", url.username()));
+				let usr = percent_decode_str(url.username())
+					.decode_utf8()
+					.map_err(|_| Error::Url("username is not valid utf8".into()))?;
+				let pwd = percent_decode_str(pwd)
+					.decode_utf8()
+					.map_err(|_| Error::Url("password is not valid utf8".into()))?;
+				let digest = base64::engine::general_purpose::STANDARD.encode(format!("{usr}:{pwd}"));
 				cached_headers.insert(
 					hyper::header::AUTHORIZATION,
 					HeaderValue::from_str(&format!("Basic {digest}"))
@@ -504,4 +511,23 @@ mod tests {
 		let response = client.send(body).await.unwrap_err();
 		assert!(matches!(response, Error::RequestTooLarge));
 	}
+
+	#[test]
+	fn http_with_username_and_password() {
+		let client = HttpTransportClientBuilder::new().build("http://user:pwd@localhost:9999").unwrap();
+		assert_eq!(client.headers["authorization"], "Basic dXNlcjpwd2Q=");
+	}
+
+	#[test]
+	fn http_with_special_username_and_password() {
+		let client = HttpTransportClientBuilder::new().build("http://=:=@localhost:9999").unwrap();
+		assert_eq!(client.headers["authorization"], "Basic PTo9");
+	}
+
+	#[test]
+	fn http_with_percent_username_and_password() {
+		// username "a", password "b"
+		let client = HttpTransportClientBuilder::new().build("http://%61:%62@localhost:9999").unwrap();
+		assert_eq!(client.headers["authorization"], "Basic YTpi");
+	}
 }
diff --git a/client/transport/Cargo.toml b/client/transport/Cargo.toml
index c641442d39..4cb1602c57 100644
--- a/client/transport/Cargo.toml
+++ b/client/transport/Cargo.toml
@@ -28,6 +28,7 @@ tokio-util = { workspace = true, features = ["compat"], optional = true }
 tokio = { workspace = true, features = ["net", "time", "macros"], optional = true }
 pin-project = { workspace = true, optional = true }
 url = { workspace = true, optional = true }
+percent-encoding = { workspace = true, optional = true }
 base64 = { workspace = true, optional = true }
 
 # tls
@@ -59,6 +60,7 @@ ws = [
     "thiserror",
     "tracing",
     "url",
+    "percent-encoding",
 ]
 web = [
     "gloo-net",
diff --git a/client/transport/src/ws/mod.rs b/client/transport/src/ws/mod.rs
index 8e00741c48..8ff1108010 100644
--- a/client/transport/src/ws/mod.rs
+++ b/client/transport/src/ws/mod.rs
@@ -35,6 +35,7 @@ use futures_util::io::{BufReader, BufWriter};
 use jsonrpsee_core::Cow;
 use jsonrpsee_core::TEN_MB_SIZE_BYTES;
 use jsonrpsee_core::client::{ReceivedMessage, TransportReceiverT, TransportSenderT};
+use percent_encoding::percent_decode_str;
 use soketto::connection::CloseReason;
 use soketto::connection::Error::Utf8;
 use soketto::data::ByteSlice125;
@@ -633,7 +634,13 @@ impl TryFrom<url::Url> for Target {
 		}
 
 		let basic_auth = if let Some(pwd) = url.password() {
-			let digest = base64::engine::general_purpose::STANDARD.encode(format!("{}:{}", url.username(), pwd));
+			let usr = percent_decode_str(url.username())
+				.decode_utf8()
+				.map_err(|_| WsHandshakeError::Url("username is not valid utf8".into()))?;
+			let pwd = percent_decode_str(pwd)
+				.decode_utf8()
+				.map_err(|_| WsHandshakeError::Url("password is not valid utf8".into()))?;
+			let digest = base64::engine::general_purpose::STANDARD.encode(format!("{usr}:{pwd}"));
 			let val = HeaderValue::from_str(&format!("Basic {digest}"))
 				.map_err(|_| WsHandshakeError::Url("Header value `authorization basic user:pwd` invalid".into()))?;
 
@@ -771,4 +778,27 @@ mod tests {
 
 		assert_ws_target(target, "127.0.0.1", "127.0.0.1", Mode::Plain, "/", Some(basic_auth));
 	}
+
+	#[test]
+	fn ws_with_special_username_and_password() {
+		use base64::Engine;
+
+		let target = parse_target("ws://=:=@127.0.0.1").unwrap();
+		let digest = base64::engine::general_purpose::STANDARD.encode("=:=");
+		let basic_auth = HeaderValue::from_str(&format!("Basic {digest}")).unwrap();
+
+		assert_ws_target(target, "127.0.0.1", "127.0.0.1", Mode::Plain, "/", Some(basic_auth));
+	}
+
+	#[test]
+	fn ws_with_percent_username_and_password() {
+		use base64::Engine;
+
+		// username "a", password "b"
+		let target = parse_target("ws://%61:%62@127.0.0.1").unwrap();
+		let digest = base64::engine::general_purpose::STANDARD.encode("a:b");
+		let basic_auth = HeaderValue::from_str(&format!("Basic {digest}")).unwrap();
+
+		assert_ws_target(target, "127.0.0.1", "127.0.0.1", Mode::Plain, "/", Some(basic_auth));
+	}
 }