diff --git a/MLS.Agent.Tests/ApiViaHttpTests.cs b/MLS.Agent.Tests/ApiViaHttpTests.cs
index d5a60916b..4dda58523 100644
--- a/MLS.Agent.Tests/ApiViaHttpTests.cs
+++ b/MLS.Agent.Tests/ApiViaHttpTests.cs
@@ -31,6 +31,7 @@
 using WorkspaceServer.Tests.TestUtility;
 using CodeManipulation = WorkspaceServer.Tests.CodeManipulation;
 using SourceFile = Microsoft.DotNet.Try.Protocol.ClientApi.SourceFile;
+using MLS.Agent.Tools;
 
 namespace MLS.Agent.Tests
 {
@@ -823,6 +824,22 @@ public async Task Can_serve_from_webassembly_controller()
                 result = await response.Content.ReadAsStringAsync();
                 result.Should().Contain("DotNet.invokeMethodAsync");
             }
+
+            // Now do the same thing in hosted mode using the already installed package
+            using (var agent = new AgentService(StartupOptions.FromCommandLine("hosted")))
+            {
+                var response = await agent.GetAsync($@"/LocalCodeRunner/{name}");
+
+                response.EnsureSuccess();
+                var result = await response.Content.ReadAsStringAsync();
+                result.Should().Contain("Loading...");
+
+                response = await agent.GetAsync($@"/LocalCodeRunner/{name}/interop.js");
+
+                response.EnsureSuccess();
+                result = await response.Content.ReadAsStringAsync();
+                result.Should().Contain("DotNet.invokeMethodAsync");
+            }
         }
 
         [Fact]
diff --git a/WorkspaceServer/PackageRegistry.cs b/WorkspaceServer/PackageRegistry.cs
index 2ede19a40..3c846620e 100644
--- a/WorkspaceServer/PackageRegistry.cs
+++ b/WorkspaceServer/PackageRegistry.cs
@@ -151,7 +151,7 @@ private Task<IPackage> GetPackageFromPackageBuilder(string packageName, Budget b
 
         public static PackageRegistry CreateForTryMode(DirectoryInfo project, PackageSource addSource = null)
         {
-            var finders = GetDefaultPackageFinders().Append(new WebAssemblyAssetFinder(Package.DefaultPackagesDirectory, addSource));
+            var finders = GetDefaultPackageFinders().Append(new PackageInstallingWebAssemblyAssetFinder(Package.DefaultPackagesDirectory, addSource));
             var registry = new PackageRegistry(
                 true,
                 addSource,
@@ -169,8 +169,10 @@ public static PackageRegistry CreateForTryMode(DirectoryInfo project, PackageSou
 
         public static PackageRegistry CreateForHostedMode()
         {
+            var finders = GetDefaultPackageFinders().Append(new WebAssemblyAssetFinder(Package.DefaultPackagesDirectory));
             var registry = new PackageRegistry(
-                false);
+                createRebuildablePackages: false,
+                packageFinders: finders);
 
             registry.Add("console",
                          packageBuilder =>
diff --git a/WorkspaceServer/Packaging/PackageInstallingWebAssemblyAssetFinder.cs b/WorkspaceServer/Packaging/PackageInstallingWebAssemblyAssetFinder.cs
new file mode 100644
index 000000000..e799e0435
--- /dev/null
+++ b/WorkspaceServer/Packaging/PackageInstallingWebAssemblyAssetFinder.cs
@@ -0,0 +1,64 @@
+// Copyright (c) .NET Foundation and contributors. All rights reserved.
+// Licensed under the MIT license. See LICENSE file in the project root for full license information.
+
+using System.IO;
+using System.Threading.Tasks;
+using Clockwise;
+using Pocket;
+using WorkspaceServer.WorkspaceFeatures;
+
+namespace WorkspaceServer.Packaging
+{
+    public class PackageInstallingWebAssemblyAssetFinder : WebAssemblyAssetFinder, IPackageFinder
+    {
+        private readonly PackageSource _addSource;
+
+        public PackageInstallingWebAssemblyAssetFinder(DirectoryInfo workingDirectory, PackageSource addSource = null)
+            : base(workingDirectory)
+        {
+            _addSource = addSource;
+        }
+
+        async Task<TPackage> IPackageFinder.Find<TPackage>(PackageDescriptor descriptor)
+        {
+            if (descriptor.IsPathSpecified)
+            {
+                return null;
+            }
+
+            var candidate = new PackageTool(descriptor.Name, _workingDirectory);
+            if (candidate.Exists)
+            {
+                var package = await CreatePackage(descriptor, candidate);
+                return package as TPackage;
+            }
+
+            return await TryInstallAndLocateTool(descriptor) as TPackage;
+        }
+
+        private async Task<IPackage> TryInstallAndLocateTool(PackageDescriptor packageDesciptor)
+        {
+            var dotnet = new Dotnet();
+
+            var installationResult = await dotnet.ToolInstall(
+                packageDesciptor.Name,
+                _workingDirectory,
+                _addSource,
+                new Budget());
+
+            if (installationResult.ExitCode != 0)
+            {
+                Logger<LocalToolInstallingPackageDiscoveryStrategy>.Log.Warning($"Tool not installed: {packageDesciptor.Name}");
+                return null;
+            }
+
+            var tool = new PackageTool(packageDesciptor.Name, _workingDirectory);
+            if (tool.Exists)
+            {
+                return await CreatePackage(packageDesciptor, tool);
+            }
+
+            return null;
+        }
+    }
+}
diff --git a/WorkspaceServer/Packaging/WebAssemblyAssetFinder.cs b/WorkspaceServer/Packaging/WebAssemblyAssetFinder.cs
index e71fd4f68..65a8754b8 100644
--- a/WorkspaceServer/Packaging/WebAssemblyAssetFinder.cs
+++ b/WorkspaceServer/Packaging/WebAssemblyAssetFinder.cs
@@ -4,23 +4,17 @@
 using System;
 using System.IO;
 using System.Threading.Tasks;
-using Clockwise;
-using Pocket;
 using WorkspaceServer.WorkspaceFeatures;
 
 namespace WorkspaceServer.Packaging
 {
     public class WebAssemblyAssetFinder : IPackageFinder
     {
-        private readonly DirectoryInfo _workingDirectory;
-        private readonly ToolPackageLocator _locator;
-        private readonly PackageSource _addSource;
+        protected readonly DirectoryInfo _workingDirectory;
 
-        public WebAssemblyAssetFinder(DirectoryInfo workingDirectory, PackageSource addSource = null)
+        public WebAssemblyAssetFinder(DirectoryInfo workingDirectory)
         {
             _workingDirectory = workingDirectory;
-            _locator = new ToolPackageLocator(workingDirectory);
-            _addSource = addSource;
         }
 
         async Task<TPackage> IPackageFinder.Find<TPackage>(PackageDescriptor descriptor)
@@ -37,35 +31,10 @@ async Task<TPackage> IPackageFinder.Find<TPackage>(PackageDescriptor descriptor)
                 return package as TPackage;
             }
 
-            return (await TryInstallAndLocateTool(descriptor) as TPackage);
-        }
-
-        private async Task<IPackage> TryInstallAndLocateTool(PackageDescriptor packageDesciptor)
-        {
-            var dotnet = new Dotnet();
-
-            var installationResult = await dotnet.ToolInstall(
-                packageDesciptor.Name,
-                _workingDirectory,
-                _addSource,
-                new Budget());
-
-            if (installationResult.ExitCode != 0)
-            {
-                Logger<LocalToolInstallingPackageDiscoveryStrategy>.Log.Warning($"Tool not installed: {packageDesciptor.Name}");
-                return null;
-            }
-
-            var tool = new PackageTool(packageDesciptor.Name, _workingDirectory);
-            if (tool.Exists)
-            {
-                return await CreatePackage(packageDesciptor, tool);
-            }
-
             return null;
         }
 
-        private async Task<IPackage> CreatePackage(PackageDescriptor descriptor, PackageTool tool)
+        protected async Task<IPackage> CreatePackage(PackageDescriptor descriptor, PackageTool tool)
         {
             await tool.Prepare();
             var wasmAsset = await tool.LocateWasmAsset();
@@ -78,5 +47,6 @@ private async Task<IPackage> CreatePackage(PackageDescriptor descriptor, Package
 
             return null;
         }
+
     }
 }