diff --git a/cmd/crates/soroban-test/tests/it/init.rs b/cmd/crates/soroban-test/tests/it/init.rs
index c3cc9b6941..f90a0cb15a 100644
--- a/cmd/crates/soroban-test/tests/it/init.rs
+++ b/cmd/crates/soroban-test/tests/it/init.rs
@@ -1,14 +1,13 @@
 use assert_fs::prelude::*;
 use predicates::prelude::predicate;
-use soroban_test::{AssertExt, TestEnv};
+use soroban_test::TestEnv;
 
 #[test]
 fn init() {
     let sandbox = TestEnv::default();
-    let major = soroban_cli::commands::version::pkg()
-        .split('.')
-        .next()
-        .unwrap();
+    let cli_version = soroban_cli::commands::version::pkg();
+    let major = cli_version.split('.').next().unwrap();
+    let is_rc = cli_version.contains("rc");
     sandbox
         .new_assert_cmd("contract")
         .arg("init")
@@ -20,68 +19,12 @@ fn init() {
         .child("Cargo.toml")
         .assert(predicate::function(|c: &str| {
             let table = toml::from_str::<toml::Table>(c).unwrap();
-            table["workspace"]["dependencies"]["soroban-sdk"].as_str()
-                == Some(&format!("{major}.0.0"))
+            let sdk_version = table["workspace"]["dependencies"]["soroban-sdk"].as_str();
+            println!("Check expected version {major}.0.0 matches template's {sdk_version:?}");
+            if is_rc {
+                sdk_version.map(|x| x.split('-').next()).flatten() == Some(&format!("{major}.0.0"))
+            } else {
+                sdk_version == Some(&format!("{major}.0.0"))
+            }
         }));
 }
-
-#[test]
-fn init_and_deploy() {
-    let name = "hello_world";
-    let sandbox = TestEnv::default();
-
-    sandbox
-        .new_assert_cmd("contract")
-        .arg("init")
-        .arg("--name")
-        .arg(name)
-        .arg("project")
-        .assert()
-        .success();
-
-    let manifest_path = sandbox
-        .dir()
-        .join(format!("project/contracts/{name}/Cargo.toml"));
-    assert!(manifest_path.exists());
-
-    sandbox
-        .new_assert_cmd("contract")
-        .arg("build")
-        .arg("--manifest-path")
-        .arg(manifest_path)
-        .assert()
-        .success();
-
-    let target_dir = sandbox
-        .dir()
-        .join("project/target/wasm32-unknown-unknown/release");
-    assert!(target_dir.exists());
-
-    let assert = sandbox
-        .new_assert_cmd("contract")
-        .arg("deploy")
-        .arg("--wasm")
-        .arg(target_dir.join(format!("{name}.wasm")))
-        .assert();
-
-    let contract = assert.stdout_as_str();
-
-    assert.success();
-
-    let assert = sandbox
-        .new_assert_cmd("contract")
-        .arg("invoke")
-        .arg("--id")
-        .arg(contract)
-        .arg("--")
-        .arg("hello")
-        .arg("--to")
-        .arg("bar")
-        .assert();
-
-    let output = assert.stdout_as_str();
-
-    assert_eq!(output, r#"["Hello","bar"]"#);
-
-    assert.success();
-}
diff --git a/cmd/crates/soroban-test/tests/it/integration.rs b/cmd/crates/soroban-test/tests/it/integration.rs
index 3ec0d61ed8..c7a3fbec5c 100644
--- a/cmd/crates/soroban-test/tests/it/integration.rs
+++ b/cmd/crates/soroban-test/tests/it/integration.rs
@@ -4,6 +4,7 @@ mod cookbook;
 mod custom_types;
 mod dotenv;
 mod hello_world;
+mod init;
 mod keys;
 mod snapshot;
 mod tx;
diff --git a/cmd/crates/soroban-test/tests/it/integration/init.rs b/cmd/crates/soroban-test/tests/it/integration/init.rs
new file mode 100644
index 0000000000..e47d44c818
--- /dev/null
+++ b/cmd/crates/soroban-test/tests/it/integration/init.rs
@@ -0,0 +1,62 @@
+use soroban_test::{AssertExt, TestEnv};
+
+#[test]
+fn init_and_deploy() {
+    let name = "hello_world";
+    let sandbox = TestEnv::default();
+
+    sandbox
+        .new_assert_cmd("contract")
+        .arg("init")
+        .arg("--name")
+        .arg(name)
+        .arg("project")
+        .assert()
+        .success();
+
+    let manifest_path = sandbox
+        .dir()
+        .join(format!("project/contracts/{name}/Cargo.toml"));
+    assert!(manifest_path.exists());
+
+    sandbox
+        .new_assert_cmd("contract")
+        .arg("build")
+        .arg("--manifest-path")
+        .arg(manifest_path)
+        .assert()
+        .success();
+
+    let target_dir = sandbox
+        .dir()
+        .join("project/target/wasm32-unknown-unknown/release");
+    assert!(target_dir.exists());
+
+    let assert = sandbox
+        .new_assert_cmd("contract")
+        .arg("deploy")
+        .arg("--wasm")
+        .arg(target_dir.join(format!("{name}.wasm")))
+        .assert();
+
+    let contract = assert.stdout_as_str();
+
+    assert.success();
+
+    let assert = sandbox
+        .new_assert_cmd("contract")
+        .arg("invoke")
+        .arg("--id")
+        .arg(contract)
+        .arg("--")
+        .arg("hello")
+        .arg("--to")
+        .arg("bar")
+        .assert();
+
+    let output = assert.stdout_as_str();
+
+    assert_eq!(output, r#"["Hello","bar"]"#);
+
+    assert.success();
+}
diff --git a/cmd/soroban-cli/src/utils/contract-workspace-template/Cargo.toml.removeextension b/cmd/soroban-cli/src/utils/contract-workspace-template/Cargo.toml.removeextension
index c0d6366e03..34a2a49381 100644
--- a/cmd/soroban-cli/src/utils/contract-workspace-template/Cargo.toml.removeextension
+++ b/cmd/soroban-cli/src/utils/contract-workspace-template/Cargo.toml.removeextension
@@ -5,7 +5,7 @@ members = [
 ]
 
 [workspace.dependencies]
-soroban-sdk = "21.0.0"
+soroban-sdk = "22.0.0-rc.3"
 
 [profile.release]
 opt-level = "z"