diff --git a/.changeset/four-lies-flash.md b/.changeset/four-lies-flash.md
new file mode 100644
index 00000000000..214882a3992
--- /dev/null
+++ b/.changeset/four-lies-flash.md
@@ -0,0 +1,5 @@
+---
+"hardhat": patch
+---
+
+Allow overriding the type of the network configs `default` and `localhost` [#7805](https://github.com/NomicFoundation/hardhat/pull/7805)
diff --git a/v-next/hardhat/src/internal/builtin-plugins/network-manager/hook-handlers/config.ts b/v-next/hardhat/src/internal/builtin-plugins/network-manager/hook-handlers/config.ts
index a17807bb8c7..d7bcea55817 100644
--- a/v-next/hardhat/src/internal/builtin-plugins/network-manager/hook-handlers/config.ts
+++ b/v-next/hardhat/src/internal/builtin-plugins/network-manager/hook-handlers/config.ts
@@ -38,33 +38,54 @@ export async function extendUserConfig(
   const networks: Record<string, NetworkUserConfig> =
     extendedConfig.networks ?? {};
 
-  const localhostConfig: Omit<HttpNetworkUserConfig, "url"> = {
-    // eslint-disable-next-line @typescript-eslint/consistent-type-assertions -- This is always http
-    ...(networks.localhost as HttpNetworkUserConfig),
-  };
+  const localhostConfig: NetworkUserConfig | undefined = networks.localhost;
+  const defaultConfig: NetworkUserConfig | undefined = networks.default;
 
-  const defaultConfig: Partial<EdrNetworkUserConfig> = {
-    // eslint-disable-next-line @typescript-eslint/consistent-type-assertions -- This is always edr
-    ...(networks.default as EdrNetworkUserConfig),
-  };
+  let extendedLocalhostConfig: NetworkUserConfig;
+  if (
+    localhostConfig === undefined ||
+    localhostConfig.type === undefined ||
+    localhostConfig.type === "http"
+  ) {
+    extendedLocalhostConfig = {
+      url: "http://localhost:8545",
+      type: "http",
+      /* eslint-disable-next-line @typescript-eslint/consistent-type-assertions
+        -- We cast it here because otherwise TS complains that some fields are
+        always overwritten, which is not true for js incomplete configs. */
+      ...(localhostConfig as Partial<HttpNetworkUserConfig>),
+    };
+  } else {
+    extendedLocalhostConfig = localhostConfig;
+  }
+
+  let extendedDefaultConfig: NetworkUserConfig;
+  if (
+    defaultConfig === undefined ||
+    defaultConfig.type === undefined ||
+    defaultConfig.type === "edr-simulated"
+  ) {
+    extendedDefaultConfig = {
+      chainId: 31337,
+      gas: "auto",
+      gasMultiplier: 1,
+      gasPrice: "auto",
+      type: "edr-simulated",
+      /* eslint-disable-next-line @typescript-eslint/consistent-type-assertions
+        -- We cast it here because otherwise TS complains that some fields are
+        always overwritten, which is not true for js incomplete configs. */
+      ...(defaultConfig as Partial<EdrNetworkUserConfig>),
+    };
+  } else {
+    extendedDefaultConfig = defaultConfig;
+  }
 
   return {
     ...extendedConfig,
     networks: {
       ...networks,
-      localhost: {
-        url: "http://localhost:8545",
-        ...localhostConfig,
-        type: "http",
-      },
-      [DEFAULT_NETWORK_NAME]: {
-        chainId: 31337,
-        gas: "auto",
-        gasMultiplier: 1,
-        gasPrice: "auto",
-        ...defaultConfig,
-        type: "edr-simulated",
-      },
+      localhost: extendedLocalhostConfig,
+      [DEFAULT_NETWORK_NAME]: extendedDefaultConfig,
     },
   };
 }
diff --git a/v-next/hardhat/test/internal/builtin-plugins/network-manager/hook-handlers/config.ts b/v-next/hardhat/test/internal/builtin-plugins/network-manager/hook-handlers/config.ts
index 25db2727d66..48d1587ea6c 100644
--- a/v-next/hardhat/test/internal/builtin-plugins/network-manager/hook-handlers/config.ts
+++ b/v-next/hardhat/test/internal/builtin-plugins/network-manager/hook-handlers/config.ts
@@ -41,6 +41,43 @@ describe("network-manager/hook-handlers/config", () => {
       });
     });
 
+    it("should extend the localhost network when its type is undefined", async () => {
+      const config = {
+        networks: {
+          localhost: {},
+        },
+      };
+      const next = async (nextConfig: HardhatUserConfig) => nextConfig;
+
+      /* eslint-disable-next-line @typescript-eslint/consistent-type-assertions
+      -- testing incomplete config for js users */
+      const extendedConfig = await extendUserConfig(config as any, next);
+      assert.deepEqual(extendedConfig.networks?.localhost, {
+        type: "http",
+        url: "http://localhost:8545",
+      });
+    });
+
+    it("should extend the default network when its type is undefined", async () => {
+      const config = {
+        networks: {
+          default: {},
+        },
+      };
+      const next = async (nextConfig: HardhatUserConfig) => nextConfig;
+
+      /* eslint-disable-next-line @typescript-eslint/consistent-type-assertions
+      -- testing incomplete config for js users */
+      const extendedConfig = await extendUserConfig(config as any, next);
+      assert.deepEqual(extendedConfig.networks?.default, {
+        chainId: 31337,
+        gas: "auto",
+        gasMultiplier: 1,
+        gasPrice: "auto",
+        type: "edr-simulated",
+      });
+    });
+
     it("should allow setting other properties of the localhost network", async () => {
       const config: HardhatUserConfig = {
         networks: {
@@ -79,24 +116,40 @@ describe("network-manager/hook-handlers/config", () => {
       });
     });
 
-    it("should not allow overriding the type of the localhost network", async () => {
+    it("should allow overriding the type of the localhost network", async () => {
       const config = {
         networks: {
           localhost: {
-            type: "http2",
+            type: "edr-simulated",
           },
         },
-      };
+      } as const;
       const next = async (nextConfig: HardhatUserConfig) => nextConfig;
 
-      /* eslint-disable-next-line @typescript-eslint/consistent-type-assertions
-      -- testing invalid network type for js users */
-      const extendedConfig = await extendUserConfig(config as any, next);
+      const extendedConfig = await extendUserConfig(config, next);
       assert.deepEqual(extendedConfig.networks?.localhost, {
-        url: "http://localhost:8545",
-        type: "http",
+        type: "edr-simulated",
       });
     });
+
+    it("should allow overriding the type of the default network", async () => {
+      const config = {
+        networks: {
+          default: {
+            type: "http",
+            url: "http://localhost:8545",
+          },
+        },
+      } as const;
+      const next = async (nextConfig: HardhatUserConfig) => nextConfig;
+
+      const extendedConfig = await extendUserConfig(config, next);
+      assert.equal(extendedConfig.networks?.default.type, "http");
+      assert.equal(
+        extendedConfig.networks?.default.url,
+        "http://localhost:8545",
+      );
+    });
   });
 
   describe("validateUserConfig", () => {
@@ -1331,6 +1384,93 @@ describe("network-manager/hook-handlers/config", () => {
       });
     });
 
+    it("should resolve the localhost network when its type is overridden to edr-simulated", async () => {
+      // This is how the user config looks like after it's been extended
+      // by the extendUserConfig hook handler when the user overrides
+      // the localhost network type to "edr-simulated".
+      const extendedConfig: HardhatUserConfig = {
+        paths: {
+          cache: "/tmp/hardhat-cache",
+        },
+        networks: {
+          localhost: {
+            type: "edr-simulated",
+          },
+        },
+      };
+
+      const resolvedConfig = await resolveUserConfig(
+        extendedConfig,
+        (variable) => resolveConfigurationVariable(hre.hooks, variable),
+        next,
+      );
+
+      const localhost = resolvedConfig.networks.localhost;
+      assert(
+        localhost.type === "edr-simulated",
+        "The network type should be edr-simulated",
+      );
+
+      assert.equal(localhost.chainId, 31337);
+      assert.equal(localhost.chainType, undefined);
+      assert.equal(localhost.from, undefined);
+      assert.equal(localhost.gas, "auto");
+      assert.equal(localhost.gasMultiplier, 1);
+      assert.equal(localhost.gasPrice, "auto");
+
+      // EDR-specific fields
+      assert.equal(localhost.allowBlocksWithSameTimestamp, false);
+      assert.equal(localhost.allowUnlimitedContractSize, false);
+      assert.equal(localhost.blockGasLimit, 60_000_000n);
+      assert.deepEqual(localhost.mining, {
+        auto: true,
+        interval: 0,
+        mempool: { order: "priority" },
+      });
+      assert.equal(localhost.throwOnCallFailures, true);
+      assert.equal(localhost.throwOnTransactionFailures, true);
+      assert.equal(localhost.loggingEnabled, false);
+      assert.equal(localhost.minGasPrice, 0n);
+      assert.equal(localhost.networkId, 31337);
+      assert.equal(localhost.forking, undefined);
+    });
+
+    it("should resolve the default network when its type is overridden to http", async () => {
+      // This is how the user config looks like after it's been extended
+      // by the extendUserConfig hook handler when the user overrides
+      // the default network type to "http".
+      const extendedConfig: HardhatUserConfig = {
+        networks: {
+          default: {
+            type: "http",
+            url: "http://localhost:8545",
+          },
+        },
+      };
+
+      const resolvedConfig = await resolveUserConfig(
+        extendedConfig,
+        (variable) => resolveConfigurationVariable(hre.hooks, variable),
+        next,
+      );
+
+      assert.deepEqual(resolvedConfig.networks, {
+        default: {
+          type: "http",
+          chainId: undefined,
+          chainType: undefined,
+          from: undefined,
+          gas: "auto",
+          gasMultiplier: 1,
+          gasPrice: "auto",
+          accounts: "remote",
+          url: new FixedValueConfigurationVariable("http://localhost:8545"),
+          timeout: 300_000,
+          httpHeaders: {},
+        },
+      });
+    });
+
     describe("accounts", () => {
       it("should normalize the accounts' private keys", async () => {
         const userConfig: HardhatUserConfig = {