diff --git a/src/vs/platform/configuration/common/configurations.ts b/src/vs/platform/configuration/common/configurations.ts
index 0a2e5ca0e6f35..9b88ebcb5e1db 100644
--- a/src/vs/platform/configuration/common/configurations.ts
+++ b/src/vs/platform/configuration/common/configurations.ts
@@ -122,8 +122,10 @@ export class PolicyConfiguration extends Disposable implements IPolicyConfigurat
 	async initialize(): Promise<ConfigurationModel> {
 		this.logService.trace('PolicyConfiguration#initialize');
 
-		this.update(await this.updatePolicyDefinitions(this.defaultConfiguration.configurationModel.keys), false);
-		this.update(await this.updatePolicyDefinitions(Object.keys(this.configurationRegistry.getExcludedConfigurationProperties())), false);
+		this.update(await this.updatePolicyDefinitions([
+			...this.defaultConfiguration.configurationModel.keys,
+			...Object.keys(this.configurationRegistry.getExcludedConfigurationProperties()),
+		]), false);
 		this._register(this.policyService.onDidChange(policyNames => this.onDidChangePolicies(policyNames)));
 		this._register(this.defaultConfiguration.onDidChangeConfiguration(async ({ properties }) => this.update(await this.updatePolicyDefinitions(properties), true)));
 		return this._configurationModel;
diff --git a/src/vs/platform/configuration/test/common/policyConfiguration.test.ts b/src/vs/platform/configuration/test/common/policyConfiguration.test.ts
index d289130c0ba6d..39947f5eeae3c 100644
--- a/src/vs/platform/configuration/test/common/policyConfiguration.test.ts
+++ b/src/vs/platform/configuration/test/common/policyConfiguration.test.ts
@@ -4,6 +4,7 @@
  *--------------------------------------------------------------------------------------------*/
 
 import assert from 'assert';
+import { IStringDictionary } from '../../../../base/common/collections.js';
 import { Event } from '../../../../base/common/event.js';
 import { URI } from '../../../../base/common/uri.js';
 import { DefaultConfiguration, PolicyConfiguration } from '../../common/configurations.js';
@@ -15,17 +16,28 @@ import { Extensions, IConfigurationNode, IConfigurationRegistry } from '../../co
 import { Registry } from '../../../registry/common/platform.js';
 import { VSBuffer } from '../../../../base/common/buffer.js';
 import { deepClone } from '../../../../base/common/objects.js';
-import { IPolicyService } from '../../../policy/common/policy.js';
+import { AbstractPolicyService, IPolicyService, PolicyDefinition } from '../../../policy/common/policy.js';
 import { FilePolicyService } from '../../../policy/common/filePolicyService.js';
 import { runWithFakedTimers } from '../../../../base/test/common/timeTravelScheduler.js';
 import { ensureNoDisposablesAreLeakedInTestSuite } from '../../../../base/test/common/utils.js';
 import { PolicyCategory } from '../../../../base/common/policy.js';
 
+class TestPolicyService extends AbstractPolicyService {
+
+	updateCount = 0;
+
+	protected _updatePolicyDefinitions(_policyDefinitions: IStringDictionary<PolicyDefinition>): Promise<void> {
+		this.updateCount++;
+		return Promise.resolve();
+	}
+}
+
 suite('PolicyConfiguration', () => {
 
 	const disposables = ensureNoDisposablesAreLeakedInTestSuite();
 
 	let testObject: PolicyConfiguration;
+	let defaultConfiguration: DefaultConfiguration;
 	let fileService: IFileService;
 	let policyService: IPolicyService;
 	const policyFile = URI.file('policyFile').with({ scheme: 'vscode-tests' });
@@ -132,7 +144,7 @@ suite('PolicyConfiguration', () => {
 	suiteTeardown(() => Registry.as<IConfigurationRegistry>(Extensions.Configuration).deregisterConfigurations([policyConfigurationNode]));
 
 	setup(async () => {
-		const defaultConfiguration = disposables.add(new DefaultConfiguration(new NullLogService()));
+		defaultConfiguration = disposables.add(new DefaultConfiguration(new NullLogService()));
 		await defaultConfiguration.initialize();
 		fileService = disposables.add(new FileService(new NullLogService()));
 		const diskFileSystemProvider = disposables.add(new InMemoryFileSystemProvider());
@@ -141,6 +153,23 @@ suite('PolicyConfiguration', () => {
 		testObject = disposables.add(new PolicyConfiguration(defaultConfiguration, policyService, new NullLogService()));
 	});
 
+	test('initialize: submits included and excluded policy definitions together', async () => {
+		const testPolicyService = disposables.add(new TestPolicyService());
+		const testPolicyConfiguration = disposables.add(new PolicyConfiguration(defaultConfiguration, testPolicyService, new NullLogService()));
+
+		await testPolicyConfiguration.initialize();
+
+		assert.deepStrictEqual({
+			updateCount: testPolicyService.updateCount,
+			hasIncludedPolicy: !!testPolicyService.policyDefinitions.PolicySettingA,
+			hasExcludedPolicy: !!testPolicyService.policyDefinitions.PolicyInternalSetting,
+		}, {
+			updateCount: 1,
+			hasIncludedPolicy: true,
+			hasExcludedPolicy: true,
+		});
+	});
+
 	test('initialize: with policies', async () => {
 		await fileService.writeFile(policyFile, VSBuffer.fromString(JSON.stringify({ 'PolicySettingA': 'policyValueA' })));