diff --git a/openhands/llm/llm.py b/openhands/llm/llm.py
index 3ecf19c3672e..f6b2954565f9 100644
--- a/openhands/llm/llm.py
+++ b/openhands/llm/llm.py
@@ -8,6 +8,7 @@
 import requests
 
 from openhands.core.config import LLMConfig
+from openhands.utils.ensure_httpx_close import ensure_httpx_close
 
 with warnings.catch_warnings():
     warnings.simplefilter('ignore')
@@ -232,9 +233,9 @@ def wrapper(*args, **kwargs):
 
             # Record start time for latency measurement
             start_time = time.time()
-
-            # we don't support streaming here, thus we get a ModelResponse
-            resp: ModelResponse = self._completion_unwrapped(*args, **kwargs)
+            with ensure_httpx_close():
+                # we don't support streaming here, thus we get a ModelResponse
+                resp: ModelResponse = self._completion_unwrapped(*args, **kwargs)
 
             # Calculate and record latency
             latency = time.time() - start_time
@@ -289,7 +290,11 @@ def wrapper(*args, **kwargs):
                     'messages': messages,
                     'response': resp,
                     'args': args,
-                    'kwargs': {k: v for k, v in kwargs.items() if k != 'messages'},
+                    'kwargs': {
+                        k: v
+                        for k, v in kwargs.items()
+                        if k not in ('messages', 'client')
+                    },
                     'timestamp': time.time(),
                     'cost': cost,
                 }
diff --git a/openhands/utils/ensure_httpx_close.py b/openhands/utils/ensure_httpx_close.py
new file mode 100644
index 000000000000..e7177f47b104
--- /dev/null
+++ b/openhands/utils/ensure_httpx_close.py
@@ -0,0 +1,78 @@
+"""
+LiteLLM currently have an issue where HttpHandlers are being created but not
+closed. We have submitted a PR to them, (https://github.com/BerriAI/litellm/pull/8711)
+and their dev team say they are in the process of a refactor that will fix this, but
+in the meantime, we need to manage the lifecycle of the httpx.Client manually.
+
+We can't simply pass in our own client object, because all the different implementations use
+different types of client object.
+
+So we monkey patch the httpx.Client class to track newly created instances and close these
+when the operations complete. (Since some paths create a single shared client and reuse these,
+we actually need to create a proxy object that allows these clients to be reusable.)
+
+Hopefully, this will be fixed soon and we can remove this abomination.
+"""
+
+import contextlib
+from typing import Callable
+
+import httpx
+
+
+@contextlib.contextmanager
+def ensure_httpx_close():
+    wrapped_class = httpx.Client
+    proxys = []
+
+    class ClientProxy:
+        """
+        Sometimes LiteLLM opens a new httpx client for each connection, and does not close them.
+        Sometimes it does close them. Sometimes, it reuses a client between connections. For cases
+        where a client is reused, we need to be able to reuse the client even after closing it.
+        """
+
+        client_constructor: Callable
+        args: tuple
+        kwargs: dict
+        client: httpx.Client
+
+        def __init__(self, *args, **kwargs):
+            self.args = args
+            self.kwargs = kwargs
+            self.client = wrapped_class(*self.args, **self.kwargs)
+            proxys.append(self)
+
+        def __getattr__(self, name):
+            # Invoke a method on the proxied client - create one if required
+            if self.client is None:
+                self.client = wrapped_class(*self.args, **self.kwargs)
+            return getattr(self.client, name)
+
+        def close(self):
+            # Close the client if it is open
+            if self.client:
+                self.client.close()
+                self.client = None
+
+        def __iter__(self, *args, **kwargs):
+            # We have to override this as debuggers invoke it causing the client to reopen
+            if self.client:
+                return self.client.iter(*args, **kwargs)
+            return object.__getattribute__(self, 'iter')(*args, **kwargs)
+
+        @property
+        def is_closed(self):
+            # Check if closed
+            if self.client is None:
+                return True
+            return self.client.is_closed
+
+    httpx.Client = ClientProxy
+    try:
+        yield
+    finally:
+        httpx.Client = wrapped_class
+        while proxys:
+            proxy = proxys.pop()
+            proxy.close()
diff --git a/tests/unit/test_ensure_httpx_close.py b/tests/unit/test_ensure_httpx_close.py
new file mode 100644
index 000000000000..eab8ff13e43f
--- /dev/null
+++ b/tests/unit/test_ensure_httpx_close.py
@@ -0,0 +1,69 @@
+import httpx
+
+from openhands.utils.ensure_httpx_close import ensure_httpx_close
+
+
+def test_ensure_httpx_close_basic():
+    """Test basic functionality of ensure_httpx_close."""
+    ctx = ensure_httpx_close()
+    with ctx:
+        # Create a client - should be tracked
+        client = httpx.Client()
+
+    # After context exit, client should be closed
+    assert client.is_closed
+
+
+def test_ensure_httpx_close_multiple_clients():
+    """Test ensure_httpx_close with multiple clients."""
+    ctx = ensure_httpx_close()
+    with ctx:
+        client1 = httpx.Client()
+        client2 = httpx.Client()
+
+    assert client1.is_closed
+    assert client2.is_closed
+
+
+def test_ensure_httpx_close_nested():
+    """Test nested usage of ensure_httpx_close."""
+    with ensure_httpx_close():
+        client1 = httpx.Client()
+
+        with ensure_httpx_close():
+            client2 = httpx.Client()
+            assert not client2.is_closed
+
+        # After inner context, client2 should be closed
+        assert client2.is_closed
+        # client1 should still be open since outer context is still active
+        assert not client1.is_closed
+
+    # After outer context, both clients should be closed
+    assert client1.is_closed
+    assert client2.is_closed
+
+
+def test_ensure_httpx_close_exception():
+    """Test ensure_httpx_close when an exception occurs."""
+    client = None
+    try:
+        with ensure_httpx_close():
+            client = httpx.Client()
+            raise ValueError('Test exception')
+    except ValueError:
+        pass
+
+    # Client should be closed even if an exception occurred
+    assert client is not None
+    assert client.is_closed
+
+
+def test_ensure_httpx_close_restore_client():
+    """Test that the original client is restored after context exit."""
+    original_client = httpx.Client
+    with ensure_httpx_close():
+        assert httpx.Client != original_client
+
+    # Original __init__ should be restored
+    assert httpx.Client == original_client
diff --git a/tests/unit/test_llm.py b/tests/unit/test_llm.py
index 0ec7fe252192..57906c2c776c 100644
--- a/tests/unit/test_llm.py
+++ b/tests/unit/test_llm.py
@@ -1,4 +1,6 @@
 import copy
+import tempfile
+from pathlib import Path
 from unittest.mock import MagicMock, patch
 
 import pytest
@@ -489,3 +491,27 @@ def test_llm_token_usage(mock_litellm_completion, default_config):
     assert usage_entry_2['cache_read_tokens'] == 1
     assert usage_entry_2['cache_write_tokens'] == 3
     assert usage_entry_2['response_id'] == 'test-response-usage-2'
+
+
+@patch('openhands.llm.llm.litellm_completion')
+def test_completion_with_log_completions(mock_litellm_completion, default_config):
+    with tempfile.TemporaryDirectory() as temp_dir:
+        default_config.log_completions = True
+        default_config.log_completions_folder = temp_dir
+        mock_response = {
+            'choices': [{'message': {'content': 'This is a mocked response.'}}]
+        }
+        mock_litellm_completion.return_value = mock_response
+
+        test_llm = LLM(config=default_config)
+        response = test_llm.completion(
+            messages=[{'role': 'user', 'content': 'Hello!'}],
+            stream=False,
+            drop_params=True,
+        )
+        assert (
+            response['choices'][0]['message']['content'] == 'This is a mocked response.'
+        )
+        files = list(Path(temp_dir).iterdir())
+        # Expect a log to be generated
+        assert len(files) == 1