The increasing penetration of variable renewable energy resources and new demands have significantly heightened the need for flexibility in power systems. Data centres present a unique opportunity to enhance power system flexibility due to their substantial yet controllable energy consumption and advanced technological capabilities. This paper provides an in-depth analysis of the potential role of data centres in improving power system flexibility. Initially, the flexibility requirements of modern power systems are defined, followed by an exploration of the flexibility assets and operational flexibility capabilities of data centres. Then, the flexibility capacities of data centres are examined, and the opportunities and benefits of leveraging this flexibility are explored, supported by case studies illustrating real-world examples. This paper underscores the vital role of data centres in the evolving energy landscape. In particular, the analysis reveals that data centres have a high potential to address the increasing flexibility requirements driven by the integration of renewable energy and the transition towards net-zero emission goals. Moreover, the findings emphasise key challenges, including ensuring Quality of Service (QoS) and adherence to Service Level Agreements (SLA), the need for further legislative development to facilitate data centres’ participation in energy markets and the provision of ancillary services, as regulatory frameworks differ across regions and variations exist in energy market structures. The findings provide actionable insights for policymakers, industry stakeholders and data centre operators, demonstrating how data centres enhance the stability, flexibility and efficiency of power systems