diff --git a/lib/vscode/src/vs/server/node/server.ts b/lib/vscode/src/vs/server/node/server.ts
index 244c42495..52addd1e1 100644
--- a/lib/vscode/src/vs/server/node/server.ts
+++ b/lib/vscode/src/vs/server/node/server.ts
@@ -120,7 +120,7 @@ export class Vscode {
 		};
 	}
 
-	public async handleWebSocket(socket: net.Socket, query: Query, _permessageDeflate: boolean): Promise<true> {
+	public async handleWebSocket(socket: net.Socket, query: Query, permessageDeflate: boolean): Promise<true> {
 		if (!query.reconnectionToken) {
 			throw new Error('Reconnection token is missing from query parameters');
 		}
@@ -128,7 +128,8 @@ export class Vscode {
 			reconnectionToken: <string>query.reconnectionToken,
 			reconnection: query.reconnection === 'true',
 			skipWebSocketFrames: query.skipWebSocketFrames === 'true',
-			// TODO: permessageDeflate,
+			permessageDeflate,
+			recordInflateBytes: permessageDeflate,
 		});
 		try {
 			await this.connect(await protocol.handshake(), protocol);
diff --git a/src/node/routes/vscode.ts b/src/node/routes/vscode.ts
index 4f1d14e9a..f8cbbd302 100644
--- a/src/node/routes/vscode.ts
+++ b/src/node/routes/vscode.ts
@@ -199,16 +199,20 @@ wsRouter.ws("/", ensureAuthenticated, async (req) => {
     .createHash("sha1")
     .update(req.headers["sec-websocket-key"] + magic)
     .digest("base64")
-  req.ws.write(
-    [
-      "HTTP/1.1 101 Switching Protocols",
-      "Upgrade: websocket",
-      "Connection: Upgrade",
-      `Sec-WebSocket-Accept: ${reply}`,
-    ].join("\r\n") + "\r\n\r\n",
-  )
-  // TODO: Parse this header properly. Currently unused so haven't bothered.
+
+  const responseHeaders = [
+    "HTTP/1.1 101 Switching Protocols",
+    "Upgrade: websocket",
+    "Connection: Upgrade",
+    `Sec-WebSocket-Accept: ${reply}`,
+  ]
+
+  // TODO: Parse this header properly.
   const extensions = req.headers["sec-websocket-extensions"]
   const permessageDeflate = extensions ? extensions.includes("permessage-deflate") : false
+  responseHeaders.push("Sec-WebSocket-Extensions: permessage-deflate; server_max_window_bits=15")
+
+  req.ws.write(responseHeaders.join("\r\n") + "\r\n\r\n")
+
   await vscode.sendWebsocket(req.ws, req.query, permessageDeflate)
 })