diff --git a/src/vs/editor/contrib/snippet/snippetSession.ts b/src/vs/editor/contrib/snippet/snippetSession.ts
index 1794938bdc145595ab6327a7b3a47810f5d9c840..aa72b601f39409a598bb9b1e1b9f4c044910d630 100644
--- a/src/vs/editor/contrib/snippet/snippetSession.ts
+++ b/src/vs/editor/contrib/snippet/snippetSession.ts
@@ -272,7 +272,7 @@ export class SnippetSession {
 		const snippets: OneSnippet[] = [];
 
 		const modelBasedVariableResolver = new ModelBasedVariableResolver(model);
-		const clipboardVariableResolver = new ClipboardBasedVariableResolver(editor.invokeWithinContext(accessor => accessor.get(IClipboardService, optional)));
+		const clipboardService = editor.invokeWithinContext(accessor => accessor.get(IClipboardService, optional));
 
 		let delta = 0;
 
@@ -286,11 +286,11 @@ export class SnippetSession {
 		// the original index. that allows you to create correct
 		// offset-based selection logic without changing the
 		// primary selection
-		const indexedSelection = editor.getSelections()
+		const indexedSelections = editor.getSelections()
 			.map((selection, idx) => ({ selection, idx }))
 			.sort((a, b) => Range.compareRangesUsingStarts(a.selection, b.selection));
 
-		for (const { selection, idx } of indexedSelection) {
+		for (const { selection, idx } of indexedSelections) {
 
 			// extend selection with the `overwriteBefore` and `overwriteAfter` and then
 			// compare if this matches the extensions of the primary selection
@@ -317,7 +317,7 @@ export class SnippetSession {
 				.parse(adjustedTemplate, true, enforceFinalTabstop)
 				.resolveVariables(new CompositeSnippetVariableResolver([
 					modelBasedVariableResolver,
-					clipboardVariableResolver,
+					new ClipboardBasedVariableResolver(clipboardService, idx, indexedSelections.length),
 					new SelectionBasedVariableResolver(model, selection)
 				]));
 
diff --git a/src/vs/editor/contrib/snippet/snippetVariables.ts b/src/vs/editor/contrib/snippet/snippetVariables.ts
index d6103e266cd68cde1d552f70939fc2bc99cf45b9..eac5593f75aa7c0c1ad18cdc3ebed8029b26854c 100644
--- a/src/vs/editor/contrib/snippet/snippetVariables.ts
+++ b/src/vs/editor/contrib/snippet/snippetVariables.ts
@@ -9,7 +9,7 @@ import { basename, dirname } from 'vs/base/common/paths';
 import { IModel } from 'vs/editor/common/editorCommon';
 import { Selection } from 'vs/editor/common/core/selection';
 import { VariableResolver, Variable, Text } from 'vs/editor/contrib/snippet/snippetParser';
-import { getLeadingWhitespace, commonPrefixLength } from 'vs/base/common/strings';
+import { getLeadingWhitespace, commonPrefixLength, isFalsyOrWhitespace } from 'vs/base/common/strings';
 import { IClipboardService } from 'vs/platform/clipboard/common/clipboardService';
 
 export const KnownSnippetVariableNames = Object.freeze({
@@ -145,14 +145,28 @@ export class ModelBasedVariableResolver implements VariableResolver {
 export class ClipboardBasedVariableResolver implements VariableResolver {
 
 	constructor(
-		private readonly _clipboardService: IClipboardService
+		private readonly _clipboardService: IClipboardService,
+		private readonly _selectionIdx: number,
+		private readonly _selectionCount: number
 	) {
 		//
 	}
 
 	resolve(variable: Variable): string {
-		return (variable.name === 'CLIPBOARD' && this._clipboardService)
-			? this._clipboardService.readText() || undefined
-			: undefined;
+		if (variable.name !== 'CLIPBOARD' || !this._clipboardService) {
+			return undefined;
+		}
+
+		const text = this._clipboardService.readText();
+		if (!text) {
+			return undefined;
+		}
+
+		const lines = text.split(/\r\n|\n|\r/).filter(s => !isFalsyOrWhitespace(s));
+		if (lines.length === this._selectionCount) {
+			return lines[this._selectionIdx];
+		} else {
+			return text;
+		}
 	}
 }
diff --git a/src/vs/editor/contrib/snippet/test/snippetVariables.test.ts b/src/vs/editor/contrib/snippet/test/snippetVariables.test.ts
index 7920178fe02d1f71582287e3102e52a0c690f1fe..f98043d0c20b9f1ae9a8ea57367edcae7c5bbc38 100644
--- a/src/vs/editor/contrib/snippet/test/snippetVariables.test.ts
+++ b/src/vs/editor/contrib/snippet/test/snippetVariables.test.ts
@@ -208,15 +208,17 @@ suite('Snippet Variables Resolver', function () {
 	});
 
 	test('Add variable to insert value from clipboard to a snippet #40153', function () {
+
 		let readTextResult: string;
-		let _throw = () => { throw new Error(); };
-		let resolver = new ClipboardBasedVariableResolver(new class implements IClipboardService {
+		const clipboardService = new class implements IClipboardService {
 			_serviceBrand: any;
 			readText(): string { return readTextResult; }
-			writeText = _throw;
-			readFindText = _throw;
-			writeFindText = _throw;
-		});
+			_throw = () => { throw new Error(); };
+			writeText = this._throw;
+			readFindText = this._throw;
+			writeFindText = this._throw;
+		};
+		let resolver = new ClipboardBasedVariableResolver(clipboardService, 1, 0);
 
 		readTextResult = undefined;
 		assertVariableResolve(resolver, 'CLIPBOARD', undefined);
@@ -233,4 +235,30 @@ suite('Snippet Variables Resolver', function () {
 		assertVariableResolve(resolver, 'foo', undefined);
 		assertVariableResolve(resolver, 'cLIPBOARD', undefined);
 	});
+
+	test('Add variable to insert value from clipboard to a snippet #40153', function () {
+
+		let readTextResult: string;
+		let resolver: VariableResolver;
+		const clipboardService = new class implements IClipboardService {
+			_serviceBrand: any;
+			readText(): string { return readTextResult; }
+			_throw = () => { throw new Error(); };
+			writeText = this._throw;
+			readFindText = this._throw;
+			writeFindText = this._throw;
+		};
+
+		resolver = new ClipboardBasedVariableResolver(clipboardService, 1, 2);
+		readTextResult = 'line1';
+		assertVariableResolve(resolver, 'CLIPBOARD', 'line1');
+		readTextResult = 'line1\nline2\nline3';
+		assertVariableResolve(resolver, 'CLIPBOARD', 'line1\nline2\nline3');
+
+		readTextResult = 'line1\nline2';
+		assertVariableResolve(resolver, 'CLIPBOARD', 'line2');
+		readTextResult = 'line1\nline2';
+		resolver = new ClipboardBasedVariableResolver(clipboardService, 0, 2);
+		assertVariableResolve(resolver, 'CLIPBOARD', 'line1');
+	});
 });