diff --git a/launcher/src/local-storage-key-provider.ts b/launcher/src/local-storage-key-provider.ts
index f0533a8c2bf..bc6f2db2443 100644
--- a/launcher/src/local-storage-key-provider.ts
+++ b/launcher/src/local-storage-key-provider.ts
@@ -57,11 +57,11 @@ export class LocalStorageKeyProvider {
 
   async getPartOfPublicKey(file: string): Promise<string> {
     let content = await fs.readFile(file);
-    content = content.substring(content.indexOf(' ') + 1);
+    content = content.split(' ')[1];
 
     let secret = '';
     for (let i = 0; i < 32; i++) {
-      secret += content.charAt(i * 4);
+      secret += content.charAt(i * 2);
     }
 
     return secret;
diff --git a/launcher/tests/local-storage-key-provider.spec.ts b/launcher/tests/local-storage-key-provider.spec.ts
index f191f5301a8..a376af85d85 100644
--- a/launcher/tests/local-storage-key-provider.spec.ts
+++ b/launcher/tests/local-storage-key-provider.spec.ts
@@ -16,7 +16,11 @@ some code, some code, a mask to be replaced {{LOCAL-STORAGE}}/{{SECURE-KEY}}, so
 `;
 
 const NEW_WORKBENCH_FILE = `
-some code, some code, a mask to be replaced 1234567890ABCDEFGHIJKLMNOPQRSTUV, some code
+some code, some code, a mask to be replaced 11223344556677889900AABBCCDDEEFF, some code
+`;
+
+const NEW_WORKBENCH_FILE_NEW_LINE = `
+some code, some code, a mask to be replaced AACNa1ZINEAAIblpQoqFHrJPOyAt2gX1, some code
 `;
 
 describe('Test setting of Local Storage public key to VS Code', () => {
@@ -70,4 +74,47 @@ describe('Test setting of Local Storage public key to VS Code', () => {
 
     expect(writeFileMock).toBeCalledWith('out/vs/code/browser/workbench/workbench.js', NEW_WORKBENCH_FILE);
   });
+
+  test('should work with a public key including new lines', async () => {
+    const pathExistsMock = jest.fn();
+    const readdirMock = jest.fn();
+    const isFileMock = jest.fn();
+    const readFileMock = jest.fn();
+    const writeFileMock = jest.fn();
+    Object.assign(fs, {
+      pathExists: pathExistsMock,
+      readdir: readdirMock,
+      isFile: isFileMock,
+      readFile: readFileMock,
+      writeFile: writeFileMock,
+    });
+
+    pathExistsMock.mockImplementation(async (path: string) => {
+      return '/etc/ssh' === path || '/etc/ssh/first-key.pub' === path;
+    });
+
+    readdirMock.mockImplementation(async (path: string) => {
+      return ['some-file', 'first-key', 'second-key', 'first-key.pub', 'second-key.pub'];
+    });
+
+    isFileMock.mockImplementation(async (path: string) => {
+      return '/etc/ssh/first-key' === path || '/etc/ssh/first-key.pub' === path;
+    });
+
+    readFileMock.mockImplementation(async (file: string) => {
+      switch (file) {
+        case '/etc/ssh/first-key.pub':
+          // This key has new lines, and was randomly generated for this test
+          return `ssh-ed25519 AAAAC3NzaC1lZDI1NTE5AAAAIObHl2pRQsoCqvF7HrrUJwPcOByIAOtS2ggoX51xMWAQ eclipse@che.com
+          `;
+        case 'out/vs/code/browser/workbench/workbench.js':
+          return ORIGIN_WORKBENCH_FILE;
+      }
+    });
+
+    const localStorageKeyProvider = new LocalStorageKeyProvider();
+    await localStorageKeyProvider.configure();
+
+    expect(writeFileMock).toBeCalledWith('out/vs/code/browser/workbench/workbench.js', NEW_WORKBENCH_FILE_NEW_LINE);
+  });
 });