diff --git a/internal/cloud/e2e/init_with_empty_tags_test.go b/internal/cloud/e2e/init_with_empty_tags_test.go
new file mode 100644
index 000000000..313d66e69
--- /dev/null
+++ b/internal/cloud/e2e/init_with_empty_tags_test.go
@@ -0,0 +1,108 @@
+//go:build e2e
+// +build e2e
+
+package main
+
+import (
+	"fmt"
+	"io/ioutil"
+	"os"
+	"testing"
+
+	expect "github.com/Netflix/go-expect"
+	"github.com/hashicorp/terraform/internal/e2e"
+)
+
+func Test_init_with_empty_tags(t *testing.T) {
+	skipWithoutRemoteTerraformVersion(t)
+
+	cases := map[string]struct {
+		operations []operationSets
+	}{
+		"terraform init with cloud block - no tagged workspaces exist yet": {
+			operations: []operationSets{
+				{
+					prep: func(t *testing.T, orgName, dir string) {
+						wsTag := "emptytag"
+						tfBlock := terraformConfigCloudBackendTags(orgName, wsTag)
+						writeMainTF(t, tfBlock, dir)
+					},
+					commands: []tfCommand{
+						{
+							command:           []string{"init"},
+							expectedCmdOutput: `There are no workspaces with the configured tags`,
+							userInput:         []string{"emptytag-prod"},
+							postInputOutput:   []string{`Terraform Cloud has been successfully initialized!`},
+						},
+					},
+				},
+			},
+		},
+	}
+
+	for name, tc := range cases {
+		fmt.Println("Test: ", name)
+		organization, cleanup := createOrganization(t)
+		defer cleanup()
+		exp, err := expect.NewConsole(expect.WithStdout(os.Stdout), expect.WithDefaultTimeout(expectConsoleTimeout))
+		if err != nil {
+			t.Fatal(err)
+		}
+		defer exp.Close()
+
+		tmpDir, err := ioutil.TempDir("", "terraform-test")
+		if err != nil {
+			t.Fatal(err)
+		}
+		defer os.RemoveAll(tmpDir)
+
+		tf := e2e.NewBinary(terraformBin, tmpDir)
+		tf.AddEnv("TF_LOG=info")
+		tf.AddEnv(cliConfigFileEnv)
+		defer tf.Close()
+
+		for _, op := range tc.operations {
+			op.prep(t, organization.Name, tf.WorkDir())
+			for _, tfCmd := range op.commands {
+				cmd := tf.Cmd(tfCmd.command...)
+				cmd.Stdin = exp.Tty()
+				cmd.Stdout = exp.Tty()
+				cmd.Stderr = exp.Tty()
+
+				err = cmd.Start()
+				if err != nil {
+					t.Fatal(err)
+				}
+
+				if tfCmd.expectedCmdOutput != "" {
+					_, err := exp.ExpectString(tfCmd.expectedCmdOutput)
+					if err != nil {
+						t.Fatal(err)
+					}
+				}
+
+				lenInput := len(tfCmd.userInput)
+				lenInputOutput := len(tfCmd.postInputOutput)
+				if lenInput > 0 {
+					for i := 0; i < lenInput; i++ {
+						input := tfCmd.userInput[i]
+						exp.SendLine(input)
+						// use the index to find the corresponding
+						// output that matches the input.
+						if lenInputOutput-1 >= i {
+							output := tfCmd.postInputOutput[i]
+							_, err := exp.ExpectString(output)
+							if err != nil {
+								t.Fatal(err)
+							}
+						}
+					}
+				}
+				err = cmd.Wait()
+				if err != nil && !tfCmd.expectError {
+					t.Fatal(err)
+				}
+			}
+		}
+	}
+}
diff --git a/internal/command/meta_backend.go b/internal/command/meta_backend.go
index 75eab4351..1729b42d9 100644
--- a/internal/command/meta_backend.go
+++ b/internal/command/meta_backend.go
@@ -223,7 +223,24 @@ func (m *Meta) selectWorkspace(b backend.Backend) error {
 		return fmt.Errorf("Failed to get existing workspaces: %s", err)
 	}
 	if len(workspaces) == 0 {
-		return fmt.Errorf(strings.TrimSpace(errBackendNoExistingWorkspaces))
+		if c, ok := b.(*cloud.Cloud); ok && m.input {
+			// len is always 1 if using Name; 0 means we're using Tags and there
+			// aren't any matching workspaces. Which might be normal and fine, so
+			// let's just ask:
+			name, err := m.UIInput().Input(context.Background(), &terraform.InputOpts{
+				Id:          "create-workspace",
+				Query:       "\n[reset][bold][yellow]No workspaces found.[reset]",
+				Description: fmt.Sprintf(inputCloudInitCreateWorkspace, strings.Join(c.WorkspaceMapping.Tags, ", ")),
+			})
+			name = strings.TrimSpace(name)
+			if err != nil || name == "" {
+				return fmt.Errorf("Couldn't create initial workspace: no name provided")
+			}
+			log.Printf("[TRACE] Meta.selectWorkspace: selecting the new TFC workspace requested by the user (%s)", name)
+			return m.SetWorkspace(name)
+		} else {
+			return fmt.Errorf(strings.TrimSpace(errBackendNoExistingWorkspaces))
+		}
 	}
 
 	// Get the currently selected workspace.
@@ -1376,6 +1393,15 @@ Terraform has detected that the configuration specified for the backend
 has changed. Terraform will now check for existing state in the backends.
 `
 
+const inputCloudInitCreateWorkspace = `
+There are no workspaces with the configured tags (%s)
+in your Terraform Cloud organization. To finish initializing, Terraform needs at
+least one workspace available.
+
+Terraform can create a properly tagged workspace for you now. Please enter a
+name to create a new Terraform Cloud workspace:
+`
+
 const successBackendUnset = `
 Successfully unset the backend %q. Terraform will now operate locally.
 `