diff --git a/config/suppliers/letter-variant/notify-standard-test1.json b/config/suppliers/letter-variant/notify-standard-test1.json
index f69b59360..762356f1a 100644
--- a/config/suppliers/letter-variant/notify-standard-test1.json
+++ b/config/suppliers/letter-variant/notify-standard-test1.json
@@ -21,7 +21,8 @@
   "id": "notify-standard-test1",
   "name": "Dev Happy Path",
   "packSpecificationIds": [
-    "notify-c5"
+    "notify-c5",
+    "notify-c4"
   ],
   "priority": 50,
   "status": "PROD",
diff --git a/config/suppliers/supplier-allocation/supplier1-volumeGroup-test3.json b/config/suppliers/supplier-allocation/supplier1-volumeGroup-test3.json
index f08467c9f..299dc86c7 100644
--- a/config/suppliers/supplier-allocation/supplier1-volumeGroup-test3.json
+++ b/config/suppliers/supplier-allocation/supplier1-volumeGroup-test3.json
@@ -1,5 +1,5 @@
 {
-  "allocationPercentage": 100,
+  "allocationPercentage": 50,
   "id": "supplier1-volumeGroup-test3",
   "status": "PROD",
   "supplier": "supplier1",
diff --git a/config/suppliers/supplier-allocation/supplier2-volumeGroup-test3.json b/config/suppliers/supplier-allocation/supplier2-volumeGroup-test3.json
new file mode 100644
index 000000000..3d8fa19cd
--- /dev/null
+++ b/config/suppliers/supplier-allocation/supplier2-volumeGroup-test3.json
@@ -0,0 +1,7 @@
+{
+  "allocationPercentage": 50,
+  "id": "supplier2-volumeGroup-test3",
+  "status": "PROD",
+  "supplier": "supplier2",
+  "volumeGroup": "volumeGroup-test3"
+}
diff --git a/config/suppliers/supplier-pack/supplier2-client1-campaign1.json b/config/suppliers/supplier-pack/supplier2-client1-campaign1.json
new file mode 100644
index 000000000..fad6dec27
--- /dev/null
+++ b/config/suppliers/supplier-pack/supplier2-client1-campaign1.json
@@ -0,0 +1,7 @@
+{
+  "approval": "APPROVED",
+  "id": "supplier2-client1-campaign1",
+  "packSpecificationId": "client1-campaign1",
+  "status": "PROD",
+  "supplierId": "supplier2"
+}
diff --git a/tests/component-tests/allocation-tests/letter-allocation.spec.ts b/tests/component-tests/allocation-tests/letter-allocation.spec.ts
new file mode 100644
index 000000000..5a7264466
--- /dev/null
+++ b/tests/component-tests/allocation-tests/letter-allocation.spec.ts
@@ -0,0 +1,92 @@
+import { expect, test } from "@playwright/test";
+import { sendSnsEvent } from "tests/helpers/send-sns-event";
+import { createPreparedV1Event } from "tests/helpers/event-fixtures";
+import { randomUUID } from "node:crypto";
+import { logger } from "tests/helpers/pino-logger";
+import {
+  getAllocationLogForDomainId,
+  getVariantsForAllocation,
+} from "tests/helpers/allocation-helper";
+
+test.describe("Allocator Lambda Tests", () => {
+  test.setTimeout(180_000); // 3 minutes for long running polling
+
+  test(`Verify that allocator successfully allocates a letter and emits PENDING event`, async () => {
+    const domainId = randomUUID();
+    logger.info(`Testing event subscription with domainId: ${domainId}`);
+
+    const letterVariant = getVariantsForAllocation(1);
+    const preparedEvent = createPreparedV1Event({
+      domainId,
+      letterVariantId: letterVariant,
+    });
+
+    const response = await sendSnsEvent(preparedEvent);
+
+    expect(response.MessageId).toBeTruthy();
+
+    const supplierAllocatorLog = await getAllocationLogForDomainId(domainId);
+    const supplierId =
+      supplierAllocatorLog.msg?.allocationDetails?.supplierSpec?.supplierId;
+    const specId =
+      supplierAllocatorLog.msg?.allocationDetails?.supplierSpec?.specId;
+    const billingId =
+      supplierAllocatorLog.msg?.allocationDetails?.supplierSpec?.billingId;
+    const allocationStatus =
+      supplierAllocatorLog.msg?.allocationDetails?.allocationStatus?.status;
+
+    if (!supplierId) {
+      throw new Error("supplierId was not found in supplier allocator log");
+    }
+
+    expect(specId).toBeTruthy();
+    expect(billingId).toBeTruthy();
+    expect(allocationStatus).toBe("PENDING");
+  });
+
+  test("Verify that unknown letter variant is marked as rejected allocation", async () => {
+    const domainId = randomUUID();
+    logger.info(`Testing rejected allocation with domainId: ${domainId}`);
+
+    const preparedEvent = createPreparedV1Event({
+      domainId,
+      letterVariantId: `unknown-variant-${domainId}`,
+    });
+
+    const response = await sendSnsEvent(preparedEvent);
+
+    expect(response.MessageId).toBeTruthy();
+
+    const supplierAllocatorLog = await getAllocationLogForDomainId(domainId);
+    const supplierId =
+      supplierAllocatorLog.msg?.allocationDetails?.supplierSpec?.supplierId;
+    const allocationStatus =
+      supplierAllocatorLog.msg?.allocationDetails?.allocationStatus?.status;
+    const reasonCode =
+      supplierAllocatorLog.msg?.allocationDetails?.allocationStatus?.reasonCode;
+
+    expect(supplierId).toBe("unknown");
+    expect(allocationStatus).toBe("REJECTED");
+    expect(reasonCode).toBe("NO_SUPPLIERS_AVAILABLE");
+  });
+
+  test("Verify that first eligible supplier is selected", async () => {
+    const letterVariant = getVariantsForAllocation(1);
+    const domainId = randomUUID();
+
+    const preparedEvent = createPreparedV1Event({
+      domainId,
+      letterVariantId: letterVariant,
+      pageCount: 6, // pagecount that makes supplier1 ineligible and supplier2 eligible based on our config
+    });
+
+    const response = await sendSnsEvent(preparedEvent);
+    expect(response.MessageId).toBeTruthy();
+
+    const supplierAllocatorLog = await getAllocationLogForDomainId(domainId);
+    const supplierId =
+      supplierAllocatorLog.msg?.allocationDetails?.supplierSpec?.supplierId;
+
+    expect(supplierId).toBe("supplier2");
+  });
+});
diff --git a/tests/helpers/allocation-helper.ts b/tests/helpers/allocation-helper.ts
new file mode 100644
index 000000000..0a6a03898
--- /dev/null
+++ b/tests/helpers/allocation-helper.ts
@@ -0,0 +1,49 @@
+import { pollSupplierAllocatorLogForResolvedSpec } from "./aws-cloudwatch-helper";
+import { logger } from "./pino-logger";
+
+export const AllocationTestVariantMap: Record<string, number> = {
+  "notify-standard-test1": 1,
+  "client1-campaign1": 2,
+};
+
+export function getVariantsForAllocation(testCase: number) {
+  const variants = Object.keys(AllocationTestVariantMap).filter(
+    // safe as comes from map's keys which are controlled by us
+    // eslint-disable-next-line security/detect-object-injection
+    (variant) => AllocationTestVariantMap[variant] === testCase,
+  );
+  if (variants.length === 0) {
+    throw new Error(`No variants found with testCase ${testCase}`);
+  }
+  return variants[0];
+}
+
+export type SupplierAllocatorLog = {
+  msg?: {
+    allocationDetails?: {
+      supplierSpec?: {
+        supplierId?: string;
+        specId?: string;
+        billingId?: string;
+      };
+      allocationStatus?: {
+        status?: "PENDING" | "REJECTED";
+        reasonCode?: string;
+      };
+    };
+  };
+};
+
+export async function getAllocationLogForDomainId(
+  domainId: string,
+): Promise<SupplierAllocatorLog> {
+  const message = await pollSupplierAllocatorLogForResolvedSpec(domainId);
+  const supplierAllocatorLog = JSON.parse(message) as SupplierAllocatorLog;
+
+  logger.info({
+    description: "Received supplier allocator log message",
+    message: supplierAllocatorLog,
+  });
+
+  return supplierAllocatorLog;
+}