diff --git a/backport-changelog/7.0/10894.md b/backport-changelog/7.0/10894.md
index f55e198f0d95f3..6694148cf3f57f 100644
--- a/backport-changelog/7.0/10894.md
+++ b/backport-changelog/7.0/10894.md
@@ -1,3 +1,5 @@
 https://github.com/WordPress/wordpress-develop/pull/10894
 
 * https://github.com/WordPress/gutenberg/pull/75366
+* https://github.com/WordPress/gutenberg/pull/75681
+* https://github.com/WordPress/gutenberg/pull/75682
diff --git a/lib/compat/wordpress-7.0/class-wp-http-polling-sync-server.php b/lib/compat/wordpress-7.0/class-wp-http-polling-sync-server.php
index 83dc8d9e619f50..680857b1749b2c 100644
--- a/lib/compat/wordpress-7.0/class-wp-http-polling-sync-server.php
+++ b/lib/compat/wordpress-7.0/class-wp-http-polling-sync-server.php
@@ -434,17 +434,14 @@ private function get_updates( string $room, int $client_id, int $cursor, bool $i
 			}
 
 			// Determine if this client should perform compaction.
-			$compaction_request = null;
-			if ( $is_compactor && $total_updates > self::COMPACTION_THRESHOLD ) {
-				$compaction_request = $updates_after_cursor;
-			}
+			$should_compact = $is_compactor && $total_updates > self::COMPACTION_THRESHOLD;
 
 			return array(
-				'compaction_request' => $compaction_request,
-				'end_cursor'         => $this->storage->get_cursor( $room ),
-				'room'               => $room,
-				'total_updates'      => $total_updates,
-				'updates'            => $typed_updates,
+				'end_cursor'     => $this->storage->get_cursor( $room ),
+				'room'           => $room,
+				'should_compact' => $should_compact,
+				'total_updates'  => $total_updates,
+				'updates'        => $typed_updates,
 			);
 		}
 	}
diff --git a/packages/sync/src/providers/http-polling/README.md b/packages/sync/src/providers/http-polling/README.md
index 42d729d4758e4a..d48d0cfc251d9e 100644
--- a/packages/sync/src/providers/http-polling/README.md
+++ b/packages/sync/src/providers/http-polling/README.md
@@ -55,7 +55,7 @@ Updates are tagged with a type to enable different server-side handling:
 | `sync_step1` | State vector announcement    | Stored, delivered to other clients   |
 | `sync_step2` | Missing updates response     | Stored, delivered to other clients   |
 | `update`     | Regular document change      | Stored until compacted               |
-| `compaction` | Merged updates via Y.mergeUpdates | Clears older updates, then stored |
+| `compaction` | Full document state via Y.encodeStateAsUpdate | Clears older updates, then stored |
 
 ## Data Flow
 
@@ -109,13 +109,9 @@ To prevent unbounded message growth, the server coordinates compaction:
 
 1. **Threshold reached**: Server detects >50 stored updates for a room
 2. **Client selection**: Server nominates the lowest active client ID
-3. **Compaction request**: Server sends all updates to the nominated client via `compaction_request`
-4. **Client merges**: Uses `Y.mergeUpdates()` to combine all updates, preserving operation metadata
-5. **Client sends compaction**: The merged update replaces older updates on the server
-
-**Why Y.mergeUpdates instead of Y.encodeStateAsUpdate?**
-
-`Y.mergeUpdates()` preserves the original operation metadata (client IDs, logical clocks). This allows Yjs to correctly deduplicate when a compaction is applied to a document that already contains some of those operations. Using `Y.encodeStateAsUpdate()` would create fresh metadata, causing content duplication on clients that already have overlapping state.
+3. **Compaction request**: Server sends `should_compact: true` to the nominated client
+4. **Client encodes**: Uses `Y.encodeStateAsUpdate()` to capture the full document state
+5. **Client sends compaction**: The encoded state replaces older updates on the server
 
 ### 5. Awareness
 
@@ -164,7 +160,7 @@ Single endpoint for bidirectional sync including awareness. Clients send their u
       "updates": [
         { "type": "update", "data": "base64-encoded-yjs-update" }
       ],
-      "compaction_request": null
+      "should_compact": false
     }
   ]
 }
@@ -177,7 +173,7 @@ Single endpoint for bidirectional sync including awareness. Clients send their u
 - `after`: Cursor timestamp; only receive updates newer than this
 - `awareness`: Client's awareness state (or null to disconnect)
 - `end_cursor`: New cursor to use in next request
-- `compaction_request`: Array of all updates if this client should compact (null otherwise)
+- `should_compact`: Boolean indicating whether this client should compact
 - `updates`: Array of typed updates with base64-encoded Yjs data
 
 ## Permissions
diff --git a/packages/sync/src/providers/http-polling/polling-manager.ts b/packages/sync/src/providers/http-polling/polling-manager.ts
index 2ee3df452307fa..6422fbe9f3d99a 100644
--- a/packages/sync/src/providers/http-polling/polling-manager.ts
+++ b/packages/sync/src/providers/http-polling/polling-manager.ts
@@ -50,6 +50,7 @@ interface RegisterRoomOptions {
 
 interface RoomState {
 	clientId: number;
+	createCompactionUpdate: () => SyncUpdate;
 	endCursor: number;
 	localAwarenessState: LocalAwarenessState;
 	log: LogFunction;
@@ -67,9 +68,11 @@ const roomStates: Map< string, RoomState > = new Map();
  * the original operation metadata (client IDs, logical clocks) so that
  * Yjs deduplication works correctly when the compaction is applied.
  *
+ * Deprecated: The server is moving towards full state updates for compaction.
+ *
  * @param updates The updates to merge
  */
-function createCompactionUpdate( updates: SyncUpdate[] ): SyncUpdate {
+function createDeprecatedCompactionUpdate( updates: SyncUpdate[] ): SyncUpdate {
 	// Extract only compaction and update types for merging (skip sync-step updates).
 	// Decode base64 updates to Uint8Array for merging.
 	const mergeable = updates
@@ -306,11 +309,21 @@ function poll(): void {
 				roomState.updateQueue.addBulk( responseUpdates );
 
 				// Respond to compaction requests from server. The server asks only one
-				// client at a time to compact (lowest active client ID). We merge the
-				// received updates (the server has given us everything it has).
-				if ( room.compaction_request ) {
+				// client at a time to compact (lowest active client ID). We encode our
+				// full document state to replace all prior updates on the server.
+				if ( room.should_compact ) {
+					roomState.log( 'Server requested compaction update' );
+					roomState.updateQueue.clear();
+					roomState.updateQueue.add(
+						roomState.createCompactionUpdate()
+					);
+				} else if ( room.compaction_request ) {
+					// Deprecated
+					roomState.log( 'Server requested (old) compaction update' );
 					roomState.updateQueue.add(
-						createCompactionUpdate( room.compaction_request )
+						createDeprecatedCompactionUpdate(
+							room.compaction_request
+						)
 					);
 				}
 			} );
@@ -387,6 +400,11 @@ function registerRoom( {
 
 	const roomState: RoomState = {
 		clientId: doc.clientID,
+		createCompactionUpdate: () =>
+			createSyncUpdate(
+				Y.encodeStateAsUpdate( doc ),
+				SyncUpdateType.COMPACTION
+			),
 		endCursor: 0,
 		localAwarenessState: awareness.getLocalState() ?? {},
 		log,
diff --git a/packages/sync/src/providers/http-polling/types.ts b/packages/sync/src/providers/http-polling/types.ts
index 08d143c0e16694..a045f66dcf489e 100644
--- a/packages/sync/src/providers/http-polling/types.ts
+++ b/packages/sync/src/providers/http-polling/types.ts
@@ -31,8 +31,9 @@ interface SyncEnvelopeFromClient {
 
 interface SyncEnvelopeFromServer {
 	awareness: AwarenessState;
-	compaction_request?: SyncUpdate[];
+	compaction_request?: SyncUpdate[]; // deprecated
 	end_cursor: number; // use as `after` in next request
+	should_compact?: boolean;
 	room: string;
 	updates: SyncUpdate[];
 }