diff --git a/lib/class-wp-rest-block-directory-controller.php b/lib/class-wp-rest-block-directory-controller.php
index 9e911d28c9bd09..df1f2e408506e0 100644
--- a/lib/class-wp-rest-block-directory-controller.php
+++ b/lib/class-wp-rest-block-directory-controller.php
@@ -97,10 +97,6 @@ public function get_items( $request ) {
 		$result = array();
 
 		foreach ( $response->plugins as $plugin ) {
-			if ( $this->find_plugin_for_slug( $plugin['slug'] ) ) {
-				continue;
-			}
-
 			$data     = $this->prepare_item_for_response( $plugin, $request );
 			$result[] = $this->prepare_response_for_collection( $data );
 		}
diff --git a/packages/block-directory/src/store/actions.js b/packages/block-directory/src/store/actions.js
index 09e7b6b5d52b9a..ec73abe2ffbdce 100644
--- a/packages/block-directory/src/store/actions.js
+++ b/packages/block-directory/src/store/actions.js
@@ -8,6 +8,7 @@ import { apiFetch, dispatch, select } from '@wordpress/data-controls';
  * Internal dependencies
  */
 import { loadAssets } from './controls';
+import getPluginUrl from './utils/get-plugin-url';
 
 /**
  * Returns an action object used in signalling that the downloadable blocks
@@ -54,16 +55,35 @@ export function* installBlockType( block ) {
 			throw new Error( __( 'Block has no assets.' ) );
 		}
 		yield setIsInstalling( block.id, true );
-		const response = yield apiFetch( {
-			path: 'wp/v2/plugins',
-			data: {
-				slug: block.id,
-				status: 'active',
-			},
-			method: 'POST',
+
+		// If we have a wp:plugin link, the plugin is installed but inactive.
+		const url = getPluginUrl( block );
+		let links = {};
+		if ( url ) {
+			yield apiFetch( {
+				url,
+				data: {
+					status: 'active',
+				},
+				method: 'PUT',
+			} );
+		} else {
+			const response = yield apiFetch( {
+				path: 'wp/v2/plugins',
+				data: {
+					slug: block.id,
+					status: 'active',
+				},
+				method: 'POST',
+			} );
+			// Add the `self` link for newly-installed blocks.
+			links = response._links;
+		}
+
+		yield addInstalledBlockType( {
+			...block,
+			links: { ...block.links, ...links },
 		} );
-		const endpoint = response?._links?.self[ 0 ]?.href;
-		yield addInstalledBlockType( { ...block, endpoint } );
 
 		yield loadAssets( assets );
 		const registeredBlocks = yield select( 'core/blocks', 'getBlockTypes' );
@@ -112,14 +132,14 @@ export function* installBlockType( block ) {
 export function* uninstallBlockType( block ) {
 	try {
 		yield apiFetch( {
-			url: block.endpoint,
+			url: getPluginUrl( block ),
 			data: {
 				status: 'inactive',
 			},
 			method: 'PUT',
 		} );
 		yield apiFetch( {
-			url: block.endpoint,
+			url: getPluginUrl( block ),
 			method: 'DELETE',
 		} );
 		yield removeInstalledBlockType( block );
diff --git a/packages/block-directory/src/store/test/actions.js b/packages/block-directory/src/store/test/actions.js
index 71244383d624d1..147ad2b1e415b3 100644
--- a/packages/block-directory/src/store/test/actions.js
+++ b/packages/block-directory/src/store/test/actions.js
@@ -4,11 +4,20 @@
 import { installBlockType, uninstallBlockType } from '../actions';
 
 describe( 'actions', () => {
-	const endpoint = '/wp-json/wp/v2/plugins/block/block';
+	const pluginEndpoint =
+		'https://example.com/wp-json/wp/v2/plugins/block/block';
 	const item = {
 		id: 'block/block',
 		name: 'Test Block',
 		assets: [ 'script.js' ],
+		links: {
+			'wp:install-plugin': [
+				{
+					href:
+						'https://example.com/wp-json/wp/v2/plugins?slug=waves',
+				},
+			],
+		},
 	};
 	const plugin = {
 		plugin: 'block/block.php',
@@ -18,24 +27,25 @@ describe( 'actions', () => {
 		_links: {
 			self: [
 				{
-					href: endpoint,
+					href: pluginEndpoint,
 				},
 			],
 		},
 	};
 
 	describe( 'installBlockType', () => {
+		const block = item;
 		it( 'should install a block successfully', () => {
-			const generator = installBlockType( item );
+			const generator = installBlockType( block );
 
 			expect( generator.next().value ).toEqual( {
 				type: 'CLEAR_ERROR_NOTICE',
-				blockId: item.id,
+				blockId: block.id,
 			} );
 
 			expect( generator.next().value ).toEqual( {
 				type: 'SET_INSTALLING_BLOCK',
-				blockId: item.id,
+				blockId: block.id,
 				isInstalling: true,
 			} );
 
@@ -47,15 +57,86 @@ describe( 'actions', () => {
 				},
 			} );
 
-			const itemWithEndpoint = { ...item, endpoint };
 			expect( generator.next( plugin ).value ).toEqual( {
 				type: 'ADD_INSTALLED_BLOCK_TYPE',
-				item: itemWithEndpoint,
+				item: {
+					...block,
+					links: {
+						...block.links,
+						self: [
+							{
+								href: pluginEndpoint,
+							},
+						],
+					},
+				},
+			} );
+
+			expect( generator.next().value ).toEqual( {
+				type: 'LOAD_ASSETS',
+				assets: block.assets,
+			} );
+
+			expect( generator.next().value ).toEqual( {
+				args: [],
+				selectorName: 'getBlockTypes',
+				storeKey: 'core/blocks',
+				type: 'SELECT',
+			} );
+
+			expect( generator.next( [ block ] ).value ).toEqual( {
+				type: 'SET_INSTALLING_BLOCK',
+				blockId: block.id,
+				isInstalling: false,
+			} );
+
+			expect( generator.next() ).toEqual( {
+				value: true,
+				done: true,
+			} );
+		} );
+
+		it( 'should activate an inactive block plugin successfully', () => {
+			const inactiveBlock = {
+				...block,
+				links: {
+					...block.links,
+					'wp:plugin': [
+						{
+							href: pluginEndpoint,
+						},
+					],
+				},
+			};
+			const generator = installBlockType( inactiveBlock );
+
+			expect( generator.next().value ).toEqual( {
+				type: 'CLEAR_ERROR_NOTICE',
+				blockId: inactiveBlock.id,
+			} );
+
+			expect( generator.next().value ).toEqual( {
+				type: 'SET_INSTALLING_BLOCK',
+				blockId: inactiveBlock.id,
+				isInstalling: true,
+			} );
+
+			expect( generator.next().value ).toMatchObject( {
+				type: 'API_FETCH',
+				request: {
+					url: pluginEndpoint,
+					method: 'PUT',
+				},
+			} );
+
+			expect( generator.next( plugin ).value ).toEqual( {
+				type: 'ADD_INSTALLED_BLOCK_TYPE',
+				item: inactiveBlock,
 			} );
 
 			expect( generator.next().value ).toEqual( {
 				type: 'LOAD_ASSETS',
-				assets: item.assets,
+				assets: inactiveBlock.assets,
 			} );
 
 			expect( generator.next().value ).toEqual( {
@@ -65,9 +146,9 @@ describe( 'actions', () => {
 				type: 'SELECT',
 			} );
 
-			expect( generator.next( [ item ] ).value ).toEqual( {
+			expect( generator.next( [ inactiveBlock ] ).value ).toEqual( {
 				type: 'SET_INSTALLING_BLOCK',
-				blockId: item.id,
+				blockId: inactiveBlock.id,
 				isInstalling: false,
 			} );
 
@@ -78,21 +159,21 @@ describe( 'actions', () => {
 		} );
 
 		it( 'should set an error if the plugin has no assets', () => {
-			const generator = installBlockType( { ...item, assets: [] } );
+			const generator = installBlockType( { ...block, assets: [] } );
 
 			expect( generator.next().value ).toEqual( {
 				type: 'CLEAR_ERROR_NOTICE',
-				blockId: item.id,
+				blockId: block.id,
 			} );
 
 			expect( generator.next().value ).toMatchObject( {
 				type: 'SET_ERROR_NOTICE',
-				blockId: item.id,
+				blockId: block.id,
 			} );
 
 			expect( generator.next().value ).toEqual( {
 				type: 'SET_INSTALLING_BLOCK',
-				blockId: item.id,
+				blockId: block.id,
 				isInstalling: false,
 			} );
 
@@ -103,16 +184,16 @@ describe( 'actions', () => {
 		} );
 
 		it( "should set an error if the plugin can't install", () => {
-			const generator = installBlockType( item );
+			const generator = installBlockType( block );
 
 			expect( generator.next().value ).toEqual( {
 				type: 'CLEAR_ERROR_NOTICE',
-				blockId: item.id,
+				blockId: block.id,
 			} );
 
 			expect( generator.next().value ).toEqual( {
 				type: 'SET_INSTALLING_BLOCK',
-				blockId: item.id,
+				blockId: block.id,
 				isInstalling: true,
 			} );
 
@@ -131,12 +212,12 @@ describe( 'actions', () => {
 			};
 			expect( generator.throw( apiError ).value ).toMatchObject( {
 				type: 'SET_ERROR_NOTICE',
-				blockId: item.id,
+				blockId: block.id,
 			} );
 
 			expect( generator.next().value ).toEqual( {
 				type: 'SET_INSTALLING_BLOCK',
-				blockId: item.id,
+				blockId: block.id,
 				isInstalling: false,
 			} );
 
@@ -148,16 +229,26 @@ describe( 'actions', () => {
 	} );
 
 	describe( 'uninstallBlockType', () => {
-		const itemWithEndpoint = { ...item, endpoint };
+		const block = {
+			...item,
+			links: {
+				...item.links,
+				self: [
+					{
+						href: pluginEndpoint,
+					},
+				],
+			},
+		};
 
 		it( 'should uninstall a block successfully', () => {
-			const generator = uninstallBlockType( itemWithEndpoint );
+			const generator = uninstallBlockType( block );
 
 			// First the deactivation step
 			expect( generator.next().value ).toMatchObject( {
 				type: 'API_FETCH',
 				request: {
-					url: endpoint,
+					url: pluginEndpoint,
 					method: 'PUT',
 				},
 			} );
@@ -166,14 +257,14 @@ describe( 'actions', () => {
 			expect( generator.next().value ).toMatchObject( {
 				type: 'API_FETCH',
 				request: {
-					url: endpoint,
+					url: pluginEndpoint,
 					method: 'DELETE',
 				},
 			} );
 
 			expect( generator.next().value ).toEqual( {
 				type: 'REMOVE_INSTALLED_BLOCK_TYPE',
-				item: itemWithEndpoint,
+				item: block,
 			} );
 
 			expect( generator.next() ).toEqual( {
@@ -183,12 +274,12 @@ describe( 'actions', () => {
 		} );
 
 		it( "should set a global notice if the plugin can't be deleted", () => {
-			const generator = uninstallBlockType( itemWithEndpoint );
+			const generator = uninstallBlockType( block );
 
 			expect( generator.next().value ).toMatchObject( {
 				type: 'API_FETCH',
 				request: {
-					url: endpoint,
+					url: pluginEndpoint,
 					method: 'PUT',
 				},
 			} );
@@ -196,7 +287,7 @@ describe( 'actions', () => {
 			expect( generator.next().value ).toMatchObject( {
 				type: 'API_FETCH',
 				request: {
-					url: endpoint,
+					url: pluginEndpoint,
 					method: 'DELETE',
 				},
 			} );
diff --git a/packages/block-directory/src/store/utils/get-plugin-url.js b/packages/block-directory/src/store/utils/get-plugin-url.js
new file mode 100644
index 00000000000000..71bd8257d66b43
--- /dev/null
+++ b/packages/block-directory/src/store/utils/get-plugin-url.js
@@ -0,0 +1,17 @@
+/**
+ * Get the plugin's direct API link out of a block-directory response.
+ *
+ * @param {Object} block The block object
+ *
+ * @return {string} The plugin URL, if exists.
+ */
+export default function getPluginUrl( block ) {
+	if ( ! block ) {
+		return false;
+	}
+	const link = block.links[ 'wp:plugin' ] || block.links.self;
+	if ( link && link.length ) {
+		return link[ 0 ].href;
+	}
+	return false;
+}
diff --git a/packages/e2e-tests/specs/editor/plugins/block-directory-add.test.js b/packages/e2e-tests/specs/editor/plugins/block-directory-add.test.js
index 249e5bba64598b..b77f97f952601a 100644
--- a/packages/e2e-tests/specs/editor/plugins/block-directory-add.test.js
+++ b/packages/e2e-tests/specs/editor/plugins/block-directory-add.test.js
@@ -37,6 +37,7 @@ const MOCK_BLOCK1 = {
 		'https://fake_url.com/block.js', // we will mock this
 	],
 	humanized_updated: '5 months ago',
+	links: {},
 };
 
 const MOCK_INSTALLED_BLOCK_PLUGIN_DETAILS = {
@@ -55,6 +56,13 @@ const MOCK_INSTALLED_BLOCK_PLUGIN_DETAILS = {
 	requires_wp: '',
 	requires_php: '',
 	text_domain: 'block-directory-test-block',
+	_links: {
+		self: [
+			{
+				href: '',
+			},
+		],
+	},
 };
 
 const MOCK_BLOCK2 = {