diff --git a/vscode-extensions/commons/commons-language-server/src/main/java/org/springframework/ide/vscode/commons/languageserver/completion/VscodeCompletionEngineAdapter.java b/vscode-extensions/commons/commons-language-server/src/main/java/org/springframework/ide/vscode/commons/languageserver/completion/VscodeCompletionEngineAdapter.java
index 67b8b5e60..4c7e8d213 100644
--- a/vscode-extensions/commons/commons-language-server/src/main/java/org/springframework/ide/vscode/commons/languageserver/completion/VscodeCompletionEngineAdapter.java
+++ b/vscode-extensions/commons/commons-language-server/src/main/java/org/springframework/ide/vscode/commons/languageserver/completion/VscodeCompletionEngineAdapter.java
@@ -129,19 +129,25 @@ public class VscodeCompletionEngineAdapter implements VscodeCompletionEngine {
 			edits.apply(newDoc);
 			TextEdit vscodeEdit = new TextEdit();
 			vscodeEdit.setRange(doc.toRange(replaceEdit.start, replaceEdit.end-replaceEdit.start));
-			vscodeEdit.setNewText(vscodeIndentFix(vscodeEdit.getRange().getStart(), replaceEdit.newText));
+			vscodeEdit.setNewText(vscodeIndentFix(doc, vscodeEdit.getRange().getStart(), replaceEdit.newText));
 			//TODO: cursor offset within newText? for now we assume its always at the end.
 			item.setTextEdit(vscodeEdit);
 		}
 	}
 
-	private String vscodeIndentFix(Position start, String newText) {
+	private String vscodeIndentFix(TextDocument doc, Position start, String newText) {
 		//Vscode applies some magic indent to a multi-line edit text. We do everything ourself so we have adjust for the magic
 		// and do some kind of 'inverse magic' here.
-		int vscodeMagicIndent = start.getCharacter();
-		return StringUtil.stripIndentation(vscodeMagicIndent, newText);
+		//See here: https://github.com/Microsoft/language-server-protocol/issues/83
+		int referenceLine = start.getLine();
+		int referenceLineIndent = doc.getLineIndentation(referenceLine);
+		int vscodeMagicIndent = Math.min(start.getCharacter(), referenceLineIndent);
+		return vscodeMagicIndent>0
+				? StringUtil.stripIndentation(vscodeMagicIndent, newText)
+				: newText;
 	}
 
+
 	@Override
 	public CompletableFuture<CompletionItem> resolveCompletion(CompletionItem unresolved) {
 		//TODO: item is pre-resoved so we don't do anything, but we really should somehow defer some work, such as
diff --git a/vscode-extensions/commons/commons-util/src/main/java/org/springframework/ide/vscode/commons/util/text/TextDocument.java b/vscode-extensions/commons/commons-util/src/main/java/org/springframework/ide/vscode/commons/util/text/TextDocument.java
index 60f59d7dc..393009f8f 100644
--- a/vscode-extensions/commons/commons-util/src/main/java/org/springframework/ide/vscode/commons/util/text/TextDocument.java
+++ b/vscode-extensions/commons/commons-util/src/main/java/org/springframework/ide/vscode/commons/util/text/TextDocument.java
@@ -208,4 +208,47 @@ public class TextDocument implements IDocument {
 		return "TextDocument(uri="+uri+",\n"+this.text+"\n)";
 	}
 
+	/**
+	 * Returns the number of leading spaces in front of a line. If the line only contains spaces then
+	 * this returns the number of spaces the line contains.
+	 * <p>
+	 * This may return -1 if, for some reason, a line's indentation cannot be determined (e.g. the line does
+	 * not exist in the document)
+	 */
+	public int getLineIndentation(int line) {
+		//TODO: this works fine only if we assume all indentation is done with spaces only.
+		// To generalize this it should probably return a String containing exactly the spaces
+		// and tabs at the front of the line.
+		IRegion r = getLineInformation(line);
+		if (r==null) {
+			//not a line in the document so it has no indentation
+			return -1;
+		}
+		int len = r.getLength();
+		int startOfLine = r.getOffset();
+		int leadingSpaces = 0;
+		while (leadingSpaces<len) {
+			char c = getSafeChar(startOfLine+leadingSpaces);
+			if (c==' ') {
+				leadingSpaces++;
+			} else if (c!=' ') {
+				return leadingSpaces;
+			}
+			leadingSpaces++;
+		}
+		return leadingSpaces;
+	}
+
+	/**
+	 * Like getChar but never throws {@link BadLocationException}. Instead it
+	 * return (char)0 for offsets outside the document.
+	 */
+	public char getSafeChar(int offset) {
+		try {
+			return getChar(offset);
+		} catch (BadLocationException e) {
+			return 0;
+		}
+	}
+
 }
diff --git a/vscode-extensions/commons/language-server-test-harness/src/main/java/org/springframework/ide/vscode/languageserver/testharness/Editor.java b/vscode-extensions/commons/language-server-test-harness/src/main/java/org/springframework/ide/vscode/languageserver/testharness/Editor.java
index 21452dd84..368aad75f 100644
--- a/vscode-extensions/commons/language-server-test-harness/src/main/java/org/springframework/ide/vscode/languageserver/testharness/Editor.java
+++ b/vscode-extensions/commons/language-server-test-harness/src/main/java/org/springframework/ide/vscode/languageserver/testharness/Editor.java
@@ -271,9 +271,14 @@ public class Editor {
 		if (edit!=null) {
 			String replaceWith = edit.getNewText();
 			//Apply indentfix, this is magic vscode seems to apply to edits returned by language server. So our harness has to
-			// mimick that behavior. I'm not sure this fix is really emulating it faithfully as its undocumented :-(
-			int indentFix = edit.getRange().getStart().getCharacter();
-			replaceWith = replaceWith.replaceAll("\\n", "\n"+Strings.repeat(" ", indentFix));
+			// mimick that behavior. See https://github.com/Microsoft/language-server-protocol/issues/83
+			int referenceLine = edit.getRange().getStart().getLine();
+			int cursorOffset = edit.getRange().getStart().getCharacter();
+			String referenceIndent = document.getLineIndentString(referenceLine);
+			if (cursorOffset<referenceIndent.length()) {
+				referenceIndent = referenceIndent.substring(0, cursorOffset);
+			}
+			replaceWith = replaceWith.replaceAll("\\n", "\n"+referenceIndent);
 
 			int cursorReplaceOffset = replaceWith.indexOf(VS_CODE_CURSOR_MARKER);
 			if (cursorReplaceOffset>=0) {
diff --git a/vscode-extensions/commons/language-server-test-harness/src/main/java/org/springframework/ide/vscode/languageserver/testharness/TextDocumentInfo.java b/vscode-extensions/commons/language-server-test-harness/src/main/java/org/springframework/ide/vscode/languageserver/testharness/TextDocumentInfo.java
index 6aa225e86..52066fc43 100644
--- a/vscode-extensions/commons/language-server-test-harness/src/main/java/org/springframework/ide/vscode/languageserver/testharness/TextDocumentInfo.java
+++ b/vscode-extensions/commons/language-server-test-harness/src/main/java/org/springframework/ide/vscode/languageserver/testharness/TextDocumentInfo.java
@@ -142,4 +142,24 @@ public class TextDocumentInfo {
 		return id;
 	}
 
+	public String getLineIndentString(int line) {
+		int start = startOfLine(line);
+		int scan = start;
+		char c = getSafeChar(scan);
+		StringBuilder indentStr = new StringBuilder();
+		while (c==' '|| c=='\t') {
+			indentStr.append(c);
+			c = getSafeChar(++scan);
+		}
+		return indentStr.toString();
+	}
+
+	private char getSafeChar(int pos) {
+		String text = getText();
+		if (pos>0 && pos<text.length()) {
+			return text.charAt(pos);
+		}
+		return 0;
+	}
+
 }
diff --git a/vscode-extensions/vscode-concourse/src/test/java/org/springframework/ide/vscode/concourse/PipelineYamlEditorTest.java b/vscode-extensions/vscode-concourse/src/test/java/org/springframework/ide/vscode/concourse/PipelineYamlEditorTest.java
index 09ae893d2..2f4124c2f 100644
--- a/vscode-extensions/vscode-concourse/src/test/java/org/springframework/ide/vscode/concourse/PipelineYamlEditorTest.java
+++ b/vscode-extensions/vscode-concourse/src/test/java/org/springframework/ide/vscode/concourse/PipelineYamlEditorTest.java
@@ -158,6 +158,22 @@ public class PipelineYamlEditorTest {
 				"      <*>"
 		);
 	}
+	
+	@Test
+	public void PT_136196057_do_step_completion_indentation() throws Exception {
+		assertCompletions(
+				"jobs:\n" +
+				"- name:\n"+
+				"  plan:\n" +
+				"  - do<*>"
+				, // => 
+				"jobs:\n" +
+				"- name:\n"+
+				"  plan:\n" +
+				"  - do:\n" +
+				"    - <*>"
+		);
+	}
 
 	@Test
 	public void primaryStepHovers() throws Exception {