diff --git a/changelog/fix-8775-direct-checkout-shortcode-orders b/changelog/fix-8775-direct-checkout-shortcode-orders
new file mode 100644
index 00000000000..28379f9ff19
--- /dev/null
+++ b/changelog/fix-8775-direct-checkout-shortcode-orders
@@ -0,0 +1,4 @@
+Significance: patch
+Type: fix
+
+Fix shortcode orders when using WooPay Direct Checkout.
diff --git a/includes/class-wc-payments-woopay-direct-checkout.php b/includes/class-wc-payments-woopay-direct-checkout.php
index 4132801186b..012851bc002 100644
--- a/includes/class-wc-payments-woopay-direct-checkout.php
+++ b/includes/class-wc-payments-woopay-direct-checkout.php
@@ -27,7 +27,10 @@ public function init() {
 	/**
 	 * This filter is used to ensure the session's store_api_draft_order is used, if it exists.
 	 * This prevents a bug where the store_api_draft_order is not used and instead, a new
-	 * order_awaiting_payment is created during the checkout request.
+	 * order_awaiting_payment is created during the checkout request. The bug being evident
+	 * if a product had one remaining stock and the store_api_draft_order was reserving it,
+	 * an order would fail to be placed since when order_awaiting_payment is created, it would
+	 * not be able to reserve the one stock.
 	 *
 	 * @param int $order_id The order ID being used.
 	 * @return int|mixed The new order ID to use.
@@ -39,11 +42,23 @@ public function maybe_use_store_api_draft_order_id( $order_id ) {
 		$is_already_defined_order_id = ! empty( $order_id );
 		// Only apply this filter if the session doesn't already have an order_awaiting_payment.
 		$is_order_awaiting_payment = isset( WC()->session->order_awaiting_payment );
-		if ( ! $is_checkout || $is_already_defined_order_id || $is_order_awaiting_payment ) {
+		// Only apply this filter if draft order ID exists.
+		$has_draft_order = ! empty( WC()->session->get( 'store_api_draft_order' ) );
+		if ( ! $is_checkout || $is_already_defined_order_id || $is_order_awaiting_payment || ! $has_draft_order ) {
 			return $order_id;
 		}
 
-		return absint( WC()->session->get( 'store_api_draft_order', $order_id ) );
+		$draft_order_id = absint( WC()->session->get( 'store_api_draft_order' ) );
+		// Set the order status to "pending" payment, so that it can be resumed.
+		$draft_order = wc_get_order( $draft_order_id );
+		$draft_order->set_status( 'pending' );
+		$draft_order->save();
+
+		// Move $draft_order_id in session, from store_api_draft_order to order_awaiting_payment.
+		WC()->session->set( 'store_api_draft_order', null );
+		WC()->session->set( 'order_awaiting_payment', $draft_order_id );
+
+		return $order_id;
 	}
 
 	/**