diff --git a/packages/common/src/tests/utils/stringUtilsTests.ts b/packages/common/src/tests/utils/stringUtilsTests.ts
index 41614f5c5..de7f44ec5 100644
--- a/packages/common/src/tests/utils/stringUtilsTests.ts
+++ b/packages/common/src/tests/utils/stringUtilsTests.ts
@@ -331,6 +331,14 @@ describe("StringUtils", () => {
       str += "\n    other";
       doTest(str, "this is a `\n    test`\nother", { isInStringAtPos: index => index >= pos && index < end });
     });
+
+    it("should handle lines that only have indentation", () => {
+      doTest("  test\n  \n  test", "test\n\ntest", { indentSizeInSpaces: 2 });
+    });
+
+    it("should ignore empty lines", () => {
+      doTest("  test\n\n  test", "test\n\ntest", { indentSizeInSpaces: 2 });
+    });
   });
 
   describe(nameof(StringUtils, "indent"), () => {
diff --git a/packages/common/src/utils/StringUtils.ts b/packages/common/src/utils/StringUtils.ts
index 966474fe4..cdff778a9 100644
--- a/packages/common/src/utils/StringUtils.ts
+++ b/packages/common/src/utils/StringUtils.ts
@@ -183,11 +183,15 @@ export class StringUtils {
 
         // indentation for spaces rounds up to the nearest tab size multiple
         const indentWidth = Math.ceil(spacesCount / indentSizeInSpaces) * indentSizeInSpaces + tabsCount * indentSizeInSpaces;
-        if (minIndentWidth == null || indentWidth < minIndentWidth)
+        if (str.charCodeAt(i) !== CharCodes.NEWLINE && (minIndentWidth == null || indentWidth < minIndentWidth))
           minIndentWidth = indentWidth;
 
         endPositions.push(i);
         isAtStartOfLine = false;
+
+        // this check is needed for lines that are empty or consist purely of spaces/tabs
+        if (str.charCodeAt(i) === CharCodes.NEWLINE)
+          i--;
       }
     }