diff --git a/packages/core/src/browser/preferences/preference-contribution.ts b/packages/core/src/browser/preferences/preference-contribution.ts
index d3a329cabac9b..a86e3e9236f0e 100644
--- a/packages/core/src/browser/preferences/preference-contribution.ts
+++ b/packages/core/src/browser/preferences/preference-contribution.ts
@@ -34,6 +34,8 @@ import { JSONValue } from '@phosphor/coreutils';
 
 export const PreferenceContribution = Symbol('PreferenceContribution');
 
+export const DefaultOverridesPreferenceSchemaId = 'defaultOverrides';
+
 /**
  * A {@link PreferenceContribution} allows adding additional custom preferences.
  * For this, the {@link PreferenceContribution} has to provide a valid JSON Schema specifying which preferences
@@ -202,34 +204,44 @@ export class PreferenceSchemaProvider extends PreferenceProvider {
         const defaultScope = PreferenceSchema.getDefaultScope(schema);
         const overridable = schema.overridable || false;
         for (const [preferenceName, rawSchemaProps] of Object.entries(schema.properties)) {
-            if (this.combinedSchema.properties[preferenceName]) {
+            if (this.combinedSchema.properties[preferenceName] && DefaultOverridesPreferenceSchemaId !== schema.id) {
                 console.error('Preference name collision detected in the schema for property: ' + preferenceName);
-            } else if (!rawSchemaProps.hasOwnProperty('included') || rawSchemaProps.included) {
-                const schemaProps = PreferenceDataProperty.fromPreferenceSchemaProperty(rawSchemaProps, defaultScope);
-                if (typeof schemaProps.overridable !== 'boolean' && overridable) {
-                    schemaProps.overridable = true;
-                }
-                if (schemaProps.overridable) {
-                    this.overridePatternProperties.properties[preferenceName] = schemaProps;
+            } else {
+                let schemaProps;
+                if (this.combinedSchema.properties[preferenceName] && DefaultOverridesPreferenceSchemaId === schema.id) {
+                    // update existing default value in schema
+                    schemaProps = PreferenceDataProperty.fromPreferenceSchemaProperty(rawSchemaProps, defaultScope);
+                    this.updateSchemaPropsDefault(preferenceName, schemaProps);
+                } else if (!rawSchemaProps.hasOwnProperty('included') || rawSchemaProps.included) {
+                    // add overrides for languages
+                    schemaProps = PreferenceDataProperty.fromPreferenceSchemaProperty(rawSchemaProps, defaultScope);
+                    if (typeof schemaProps.overridable !== 'boolean' && overridable) {
+                        schemaProps.overridable = true;
+                    }
+                    if (schemaProps.overridable) {
+                        this.overridePatternProperties.properties[preferenceName] = schemaProps;
+                    }
+                    this.updateSchemaProps(preferenceName, schemaProps);
                 }
-                this.updateSchemaProps(preferenceName, schemaProps);
-
-                const schemaDefault = this.getDefaultValue(schemaProps);
-                const configuredDefault = this.getConfiguredDefault(preferenceName);
-                if (this.preferenceOverrideService.testOverrideValue(preferenceName, schemaDefault)) {
-                    schemaProps.defaultValue = PreferenceSchemaProperties.is(configuredDefault)
-                        ? PreferenceProvider.merge(schemaDefault, configuredDefault)
-                        : schemaDefault;
-                    if (schemaProps.defaultValue && PreferenceSchemaProperties.is(schemaProps.defaultValue)) {
-                        for (const overriddenPreferenceName in schemaProps.defaultValue) {
-                            const overrideValue = schemaDefault[overriddenPreferenceName];
-                            const overridePreferenceName = `${preferenceName}.${overriddenPreferenceName}`;
-                            changes.push(this.doSetPreferenceValue(overridePreferenceName, overrideValue, { scope, domain }));
+
+                if (schemaProps !== undefined) {
+                    const schemaDefault = this.getDefaultValue(schemaProps);
+                    const configuredDefault = this.getConfiguredDefault(preferenceName);
+                    if (this.preferenceOverrideService.testOverrideValue(preferenceName, schemaDefault)) {
+                        schemaProps.defaultValue = PreferenceSchemaProperties.is(configuredDefault)
+                            ? PreferenceProvider.merge(schemaDefault, configuredDefault)
+                            : schemaDefault;
+                        if (schemaProps.defaultValue && PreferenceSchemaProperties.is(schemaProps.defaultValue)) {
+                            for (const overriddenPreferenceName in schemaProps.defaultValue) {
+                                const overrideValue = schemaDefault[overriddenPreferenceName];
+                                const overridePreferenceName = `${preferenceName}.${overriddenPreferenceName}`;
+                                changes.push(this.doSetPreferenceValue(overridePreferenceName, overrideValue, { scope, domain }));
+                            }
                         }
+                    } else {
+                        schemaProps.defaultValue = configuredDefault === undefined ? schemaDefault : configuredDefault;
+                        changes.push(this.doSetPreferenceValue(preferenceName, schemaProps.defaultValue, { scope, domain }));
                     }
-                } else {
-                    schemaProps.defaultValue = configuredDefault === undefined ? schemaDefault : configuredDefault;
-                    changes.push(this.doSetPreferenceValue(preferenceName, schemaProps.defaultValue, { scope, domain }));
                 }
             }
         }
@@ -383,6 +395,19 @@ export class PreferenceSchemaProvider extends PreferenceProvider {
         }
     }
 
+    protected updateSchemaPropsDefault(key: string, property: PreferenceDataProperty): void {
+        this.combinedSchema.properties[key].default = property.default;
+        this.combinedSchema.properties[key].defaultValue = property.defaultValue;
+        if (this.workspaceSchema.properties[key]) {
+            this.workspaceSchema.properties[key].default = property.default;
+            this.workspaceSchema.properties[key].defaultValue = property.defaultValue;
+        }
+        if (this.folderSchema.properties[key]) {
+            this.folderSchema.properties[key].default = property.default;
+            this.folderSchema.properties[key].defaultValue = property.defaultValue;
+        }
+    }
+
     protected removePropFromSchemas(key: string): void {
         // If we remove a key from combined, it should also be removed from all narrower scopes.
         delete this.combinedSchema.properties[key];
diff --git a/packages/plugin-ext/src/main/browser/plugin-contribution-handler.ts b/packages/plugin-ext/src/main/browser/plugin-contribution-handler.ts
index fe671d99b6dd3..50075206eb8dd 100644
--- a/packages/plugin-ext/src/main/browser/plugin-contribution-handler.ts
+++ b/packages/plugin-ext/src/main/browser/plugin-contribution-handler.ts
@@ -27,7 +27,7 @@ import {
     LabelProviderContribution,
     PreferenceSchemaProvider
 } from '@theia/core/lib/browser';
-import { PreferenceLanguageOverrideService, PreferenceSchema, PreferenceSchemaProperties } from '@theia/core/lib/browser/preferences';
+import { DefaultOverridesPreferenceSchemaId, PreferenceLanguageOverrideService, PreferenceSchema, PreferenceSchemaProperties } from '@theia/core/lib/browser/preferences';
 import { KeybindingsContributionPointHandler } from './keybindings/keybindings-contribution-handler';
 import { MonacoSnippetSuggestProvider } from '@theia/monaco/lib/browser/monaco-snippet-suggest-provider';
 import { PluginSharedStyle } from './plugin-shared-style';
@@ -487,7 +487,7 @@ export class PluginContributionHandler {
 
     protected updateDefaultOverridesSchema(configurationDefaults: PreferenceSchemaProperties): Disposable {
         const defaultOverrides: PreferenceSchema = {
-            id: 'defaultOverrides',
+            id: DefaultOverridesPreferenceSchemaId,
             title: 'Default Configuration Overrides',
             properties: {}
         };
@@ -495,11 +495,18 @@ export class PluginContributionHandler {
         for (const key in configurationDefaults) {
             const defaultValue = configurationDefaults[key];
             if (this.preferenceOverrideService.testOverrideValue(key, defaultValue)) {
+                // language specific override
                 defaultOverrides.properties[key] = {
                     type: 'object',
                     default: defaultValue,
                     description: `Configure editor settings to be overridden for ${key} language.`
                 };
+            } else {
+                // regular configuration override
+                defaultOverrides.properties[key] = {
+                    default: defaultValue,
+                    description: `Configure default setting for ${key}.`
+                };
             }
         }
         if (Object.keys(defaultOverrides.properties).length) {
diff --git a/packages/preferences/src/browser/views/components/preference-select-input.ts b/packages/preferences/src/browser/views/components/preference-select-input.ts
index 62e7cf8291754..81a806a2f7bc0 100644
--- a/packages/preferences/src/browser/views/components/preference-select-input.ts
+++ b/packages/preferences/src/browser/views/components/preference-select-input.ts
@@ -30,12 +30,14 @@ export class PreferenceSelectInputRenderer extends PreferenceLeafNodeRenderer<JS
 
     protected readonly selectComponent = React.createRef<SelectComponent>();
 
+    protected selectOptions: SelectOption[] = [];
+
     protected get enumValues(): JSONValue[] {
         return this.preferenceNode.preference.data.enum!;
     }
 
-    protected get selectOptions(): SelectOption[] {
-        const items: SelectOption[] = [];
+    protected updateSelectOptions(): void {
+        const updatedSelectOptions: SelectOption[] = [];
         const values = this.enumValues;
         const preferenceData = this.preferenceNode.preference.data;
         const defaultValue = preferenceData.default;
@@ -51,7 +53,7 @@ export class PreferenceSelectInputRenderer extends PreferenceLeafNodeRenderer<JS
                 enumDescription = this.markdownRenderer.renderInline(markdownEnumDescription);
                 markdown = true;
             }
-            items.push({
+            updatedSelectOptions.push({
                 label,
                 value: stringValue,
                 detail,
@@ -59,10 +61,11 @@ export class PreferenceSelectInputRenderer extends PreferenceLeafNodeRenderer<JS
                 markdown
             });
         }
-        return items;
+        this.selectOptions = updatedSelectOptions;
     }
 
     protected createInteractable(parent: HTMLElement): void {
+        this.updateSelectOptions();
         const interactable = document.createElement('div');
         const selectComponent = React.createElement(SelectComponent, {
             options: this.selectOptions,
@@ -86,6 +89,7 @@ export class PreferenceSelectInputRenderer extends PreferenceLeafNodeRenderer<JS
 
     protected doHandleValueChange(): void {
         this.updateInspection();
+        this.updateSelectOptions();
         const newValue = this.getDataValue();
         this.updateModificationStatus(this.getValue());
         if (document.activeElement !== this.interactable && this.selectComponent.current) {