diff --git a/lib/compat/wordpress-6.1/rest-api.php b/lib/compat/wordpress-6.1/rest-api.php
index f2293e5169a9c4..5dd06d3aad855b 100644
--- a/lib/compat/wordpress-6.1/rest-api.php
+++ b/lib/compat/wordpress-6.1/rest-api.php
@@ -5,6 +5,22 @@
  * @package gutenberg
  */
 
+/**
+ * Update `wp_template` and `wp_template-part` post types to use
+ * Gutenberg's REST controller.
+ *
+ * @param array  $args Array of arguments for registering a post type.
+ * @param string $post_type Post type key.
+ */
+function gutenberg_update_templates_template_parts_rest_controller( $args, $post_type ) {
+	if ( in_array( $post_type, array( 'wp_template', 'wp_template-part' ), true ) ) {
+		$args['rest_controller_class'] = 'Gutenberg_REST_Templates_Controller';
+	}
+	return $args;
+}
+add_filter( 'register_post_type_args', 'gutenberg_update_templates_template_parts_rest_controller', 10, 2 );
+
+
 /**
  * Add the post type's `icon`(menu_icon) in the response.
  * When we backport this change we will need to add the
diff --git a/lib/compat/wordpress-6.2/class-gutenberg-rest-templates-controller-6-2.php b/lib/compat/wordpress-6.2/class-gutenberg-rest-templates-controller-6-2.php
deleted file mode 100644
index 16d38ac073e68d..00000000000000
--- a/lib/compat/wordpress-6.2/class-gutenberg-rest-templates-controller-6-2.php
+++ /dev/null
@@ -1,68 +0,0 @@
-<?php
-/**
- * REST API: Gutenberg_REST_Templates_Controller_6_2 class
- *
- * @package    Gutenberg
- * @subpackage REST_API
- */
-
-/**
- * Base Templates REST API Controller.
- */
-class Gutenberg_REST_Templates_Controller_6_2 extends Gutenberg_REST_Templates_Controller {
-
-	/**
-	 * Registers the controllers routes.
-	 *
-	 * @return void
-	 */
-	public function register_routes() {
-
-		register_rest_route(
-			$this->namespace,
-			'/' . $this->rest_base . '/lookup',
-			array(
-				array(
-					'methods'             => WP_REST_Server::READABLE,
-					'callback'            => array( $this, 'get_template_fallback' ),
-					'permission_callback' => array( $this, 'get_item_permissions_check' ),
-					'args'                => array(
-						'slug'            => array(
-							'description' => __( 'The slug of the template to get the fallback for', 'gutenberg' ),
-							'type'        => 'string',
-							'required'    => true,
-						),
-						'is_custom'       => array(
-							'description' => __( 'Indicates if a template is custom or part of the template hierarchy', 'gutenberg' ),
-							'type'        => 'boolean',
-						),
-						'template_prefix' => array(
-							'description' => __( 'The template prefix for the created template. This is used to extract the main template type ex. in `taxonomy-books` we extract the `taxonomy`', 'gutenberg' ),
-							'type'        => 'string',
-						),
-					),
-				),
-			)
-		);
-		parent::register_routes();
-		// Get fallback template content.
-	}
-
-	/**
-	 * Returns the fallback template for a given slug.
-	 *
-	 * @param WP_REST_Request $request The request instance.
-	 *
-	 * @return WP_REST_Response|WP_Error
-	 */
-	public function get_template_fallback( $request ) {
-		$hierarchy         = get_template_hierarchy( $request['slug'], $request['is_custom'], $request['template_prefix'] );
-		$fallback_template = null;
-		do {
-			$fallback_template = resolve_block_template( $request['slug'], $hierarchy, '' );
-			array_shift( $hierarchy );
-		} while ( ! empty( $hierarchy ) && empty( $fallback_template->content ) );
-		$response = $this->prepare_item_for_response( $fallback_template, $request );
-		return rest_ensure_response( $response );
-	}
-}
diff --git a/lib/compat/wordpress-6.2/rest-api.php b/lib/compat/wordpress-6.2/rest-api.php
index 06780aceb245e3..a504be4dca2a6b 100644
--- a/lib/compat/wordpress-6.2/rest-api.php
+++ b/lib/compat/wordpress-6.2/rest-api.php
@@ -5,21 +5,6 @@
  * @package gutenberg
  */
 
-/**
- * Update `wp_template` and `wp_template-part` post types to use
- * Gutenberg's REST controller.
- *
- * @param array  $args Array of arguments for registering a post type.
- * @param string $post_type Post type key.
- */
-function gutenberg_update_templates_template_parts_rest_controller( $args, $post_type ) {
-	if ( in_array( $post_type, array( 'wp_template', 'wp_template-part' ), true ) ) {
-		$args['rest_controller_class'] = 'Gutenberg_REST_Templates_Controller_6_2';
-	}
-	return $args;
-}
-add_filter( 'register_post_type_args', 'gutenberg_update_templates_template_parts_rest_controller', 10, 2 );
-
 /**
  * Registers the block pattern categories REST API routes.
  */
diff --git a/lib/load.php b/lib/load.php
index dc253408a92899..fd8a7b90577536 100644
--- a/lib/load.php
+++ b/lib/load.php
@@ -44,7 +44,6 @@ function gutenberg_is_experiment_enabled( $name ) {
 	require_once __DIR__ . '/compat/wordpress-6.2/class-gutenberg-rest-block-patterns-controller-6-2.php';
 	require_once __DIR__ . '/compat/wordpress-6.2/class-gutenberg-rest-block-pattern-categories-controller.php';
 	require_once __DIR__ . '/compat/wordpress-6.2/class-gutenberg-rest-pattern-directory-controller-6-2.php';
-	require_once __DIR__ . '/compat/wordpress-6.2/class-gutenberg-rest-templates-controller-6-2.php';
 	require_once __DIR__ . '/compat/wordpress-6.2/rest-api.php';
 	require_once __DIR__ . '/compat/wordpress-6.2/block-patterns.php';
 	require_once __DIR__ . '/compat/wordpress-6.2/class-gutenberg-rest-global-styles-controller-6-2.php';
diff --git a/packages/edit-site/src/components/add-new-template/new-template.js b/packages/edit-site/src/components/add-new-template/new-template.js
index 09f4319f708daa..2fb715dddbcf9b 100644
--- a/packages/edit-site/src/components/add-new-template/new-template.js
+++ b/packages/edit-site/src/components/add-new-template/new-template.js
@@ -1,6 +1,8 @@
 /**
  * WordPress dependencies
  */
+import apiFetch from '@wordpress/api-fetch';
+import { addQueryArgs } from '@wordpress/url';
 import {
 	DropdownMenu,
 	MenuGroup,
@@ -107,7 +109,19 @@ export default function NewTemplate( {
 		}
 		setIsCreatingTemplate( true );
 		try {
-			const { title, description, slug } = template;
+			const { title, description, slug, templatePrefix } = template;
+			let templateContent = template.content;
+			// Try to find fallback content from existing templates.
+			if ( ! templateContent ) {
+				const fallbackTemplate = await apiFetch( {
+					path: addQueryArgs( '/wp/v2/templates/lookup', {
+						slug,
+						is_custom: ! isWPSuggestion,
+						template_prefix: templatePrefix,
+					} ),
+				} );
+				templateContent = fallbackTemplate.content.raw;
+			}
 			const newTemplate = await saveEntityRecord(
 				'postType',
 				'wp_template',
@@ -117,6 +131,7 @@ export default function NewTemplate( {
 					slug: slug.toString(),
 					status: 'publish',
 					title,
+					content: templateContent,
 					// This adds a post meta field in template that is part of `is_custom` value calculation.
 					is_wp_suggestion: isWPSuggestion,
 				},
diff --git a/packages/edit-site/src/components/editor/index.js b/packages/edit-site/src/components/editor/index.js
index 901a66d2e31218..745fa4d6e6d78a 100644
--- a/packages/edit-site/src/components/editor/index.js
+++ b/packages/edit-site/src/components/editor/index.js
@@ -29,7 +29,6 @@ import KeyboardShortcuts from '../keyboard-shortcuts';
 import InserterSidebar from '../secondary-sidebar/inserter-sidebar';
 import ListViewSidebar from '../secondary-sidebar/list-view-sidebar';
 import WelcomeGuide from '../welcome-guide';
-import StartTemplateOptions from '../start-template-options';
 import { store as editSiteStore } from '../../store';
 import { GlobalStylesRenderer } from '../global-styles-renderer';
 import { GlobalStylesProvider } from '../global-styles/global-styles-provider';
@@ -171,7 +170,6 @@ export default function Editor() {
 					<GlobalStylesProvider>
 						<BlockContextProvider value={ blockContext }>
 							<SidebarComplementaryAreaFills />
-							{ isEditMode && <StartTemplateOptions /> }
 							<InterfaceSkeleton
 								enableRegionNavigation={ false }
 								className={
diff --git a/packages/edit-site/src/components/start-template-options/index.js b/packages/edit-site/src/components/start-template-options/index.js
deleted file mode 100644
index 2e4ff413dfd450..00000000000000
--- a/packages/edit-site/src/components/start-template-options/index.js
+++ /dev/null
@@ -1,171 +0,0 @@
-/**
- * WordPress dependencies
- */
-import { Modal } from '@wordpress/components';
-import { __ } from '@wordpress/i18n';
-import { useState, useEffect, useMemo } from '@wordpress/element';
-import { __experimentalBlockPatternsList as BlockPatternsList } from '@wordpress/block-editor';
-import { useSelect } from '@wordpress/data';
-import { useAsyncList } from '@wordpress/compose';
-import { store as preferencesStore } from '@wordpress/preferences';
-import { parse } from '@wordpress/blocks';
-
-/**
- * Internal dependencies
- */
-import { store as editSiteStore } from '../../store';
-import { store as coreStore, useEntityBlockEditor } from '@wordpress/core-data';
-import apiFetch from '@wordpress/api-fetch';
-import { addQueryArgs } from '@wordpress/url';
-
-function useFallbackTemplateContent( slug, isCustom = false ) {
-	const [ templateContent, setTemplateContent ] = useState( '' );
-
-	useEffect( () => {
-		apiFetch( {
-			path: addQueryArgs( '/wp/v2/templates/lookup', {
-				slug,
-				is_custom: isCustom,
-				ignore_empty: true,
-			} ),
-		} ).then( ( { content } ) => setTemplateContent( content.raw ) );
-	}, [ slug ] );
-	return templateContent;
-}
-
-const START_BLANK_TITLE = __( 'Start blank' );
-
-function PatternSelection( { fallbackContent, onChoosePattern, postType } ) {
-	const [ , , onChange ] = useEntityBlockEditor( 'postType', postType );
-	const blockPatterns = useMemo(
-		() => [
-			{
-				name: 'fallback',
-				blocks: parse( fallbackContent ),
-				title: __( 'Fallback content' ),
-			},
-			{
-				name: 'start-blank',
-				blocks: parse(
-					'<!-- wp:paragraph --><p></p><!-- /wp:paragraph -->'
-				),
-				title: START_BLANK_TITLE,
-			},
-		],
-		[ fallbackContent ]
-	);
-	const shownBlockPatterns = useAsyncList( blockPatterns );
-
-	return (
-		<div
-			className="edit-site-start-template-options__pattern-container"
-			style={ {
-				'--wp-edit-site-start-template-options-start-blank': `"${ START_BLANK_TITLE }"`,
-			} }
-		>
-			<BlockPatternsList
-				blockPatterns={ blockPatterns }
-				shownPatterns={ shownBlockPatterns }
-				onClickPattern={ ( pattern, blocks ) => {
-					onChange( 'start-blank' === pattern.name ? [] : blocks, {
-						selection: undefined,
-					} );
-					onChoosePattern();
-				} }
-			/>
-		</div>
-	);
-}
-
-function StartModal( { slug, isCustom, onClose, postType } ) {
-	const fallbackContent = useFallbackTemplateContent( slug, isCustom );
-	if ( ! fallbackContent ) {
-		return null;
-	}
-	return (
-		<Modal
-			className="edit-site-start-template-options__modal"
-			title={ __( 'Choose a pattern' ) }
-			closeLabel={ __( 'Cancel' ) }
-			focusOnMount="firstElement"
-			onRequestClose={ onClose }
-		>
-			<div className="edit-site-start-template-options__modal-content">
-				<PatternSelection
-					fallbackContent={ fallbackContent }
-					slug={ slug }
-					isCustom={ isCustom }
-					postType={ postType }
-					onChoosePattern={ () => {
-						onClose();
-					} }
-				/>
-			</div>
-		</Modal>
-	);
-}
-
-const START_TEMPLATE_MODAL_STATES = {
-	INITIAL: 'INITIAL',
-	CLOSED: 'CLOSED',
-};
-
-export default function StartTemplateOptions() {
-	const [ modalState, setModalState ] = useState(
-		START_TEMPLATE_MODAL_STATES.INITIAL
-	);
-	const { shouldOpenModel, slug, isCustom, postType } = useSelect(
-		( select ) => {
-			const { getEditedPostType, getEditedPostId } =
-				select( editSiteStore );
-			const _postType = getEditedPostType();
-			const postId = getEditedPostId();
-			const {
-				__experimentalGetDirtyEntityRecords,
-				getEditedEntityRecord,
-			} = select( coreStore );
-			const templateRecord = getEditedEntityRecord(
-				'postType',
-				_postType,
-				postId
-			);
-
-			const hasDirtyEntityRecords =
-				__experimentalGetDirtyEntityRecords().length > 0;
-
-			return {
-				shouldOpenModel:
-					! hasDirtyEntityRecords &&
-					'' === templateRecord.content &&
-					'wp_template' === _postType &&
-					! select( preferencesStore ).get(
-						'core/edit-site',
-						'welcomeGuide'
-					),
-				slug: templateRecord.slug,
-				isCustom: templateRecord.is_custom,
-				postType: _postType,
-			};
-		},
-		[]
-	);
-
-	if (
-		( modalState === START_TEMPLATE_MODAL_STATES.INITIAL &&
-			! shouldOpenModel ) ||
-		modalState === START_TEMPLATE_MODAL_STATES.CLOSED
-	) {
-		return null;
-	}
-
-	return (
-		<StartModal
-			slug={ slug }
-			isCustom={ isCustom }
-			postType={ postType }
-			onClose={ () =>
-				setModalState( START_TEMPLATE_MODAL_STATES.CLOSED )
-			}
-		/>
-	);
-}
diff --git a/packages/edit-site/src/components/start-template-options/style.scss b/packages/edit-site/src/components/start-template-options/style.scss
deleted file mode 100644
index ca086ef0858848..00000000000000
--- a/packages/edit-site/src/components/start-template-options/style.scss
+++ /dev/null
@@ -1,76 +0,0 @@
-.edit-site-start-template-options__modal.components-modal__frame {
-	// To keep modal dimensions consistent as subsections are navigated, width
-	// and height are used instead of max-(width/height).
-	@include break-small() {
-		width: calc(100% - #{ $grid-unit-20 * 2 });
-		height: calc(100% - #{ $header-height * 2 });
-	}
-	@include break-medium() {
-		width: 50%;
-	}
-	@include break-large() {
-		height: fit-content;
-	}
-}
-
-.edit-site-start-template-options__modal-content .block-editor-block-patterns-list {
-	display: grid;
-	width: 100%;
-	margin-top: $grid-unit-05;
-	gap: $grid-unit-30;
-	grid-template-columns: repeat(auto-fit, minmax(min(100%/2, max(240px, 100%/10)), 1fr));
-	.block-editor-block-patterns-list__list-item {
-		break-inside: avoid-column;
-		margin-bottom: 0;
-		width: 100%;
-		aspect-ratio: 3/4;
-
-		.block-editor-block-preview__container {
-			height: 100%;
-			box-shadow: 0 0 0 1px $gray-300;
-		}
-
-		.block-editor-block-preview__content {
-			width: 100%;
-			position: absolute;
-		}
-
-		.block-editor-block-patterns-list__item-title {
-			display: none;
-		}
-
-		&:hover {
-			.block-editor-block-preview__container {
-				box-shadow: 0 0 0 2px var(--wp-admin-theme-color);
-			}
-		}
-
-		&:focus {
-			.block-editor-block-preview__container {
-				box-shadow: inset 0 0 0 1px $white, 0 0 0 var(--wp-admin-border-width-focus) var(--wp-admin-theme-color);
-
-				// Windows High Contrast mode will show this outline, but not the box-shadow.
-				outline: 2px solid transparent;
-			}
-		}
-	}
-
-	// The start blank pattern is the last and we are selecting it.
-	.block-editor-block-patterns-list__list-item:nth-last-child(2) {
-		.block-editor-block-preview__container {
-			position: absolute;
-			padding: 0;
-			background: #f0f0f0;
-			&::after {
-				width: 100%;
-				top: 50%;
-				margin-top: -1em;
-				content: var(--wp-edit-site-start-template-options-start-blank);
-				text-align: center;
-			}
-		}
-		iframe {
-			display: none;
-		}
-	}
-}
diff --git a/packages/edit-site/src/style.scss b/packages/edit-site/src/style.scss
index 950d1c286274de..f73bc019f30361 100644
--- a/packages/edit-site/src/style.scss
+++ b/packages/edit-site/src/style.scss
@@ -17,7 +17,6 @@
 @import "./components/create-template-part-modal/style.scss";
 @import "./components/secondary-sidebar/style.scss";
 @import "./components/welcome-guide/style.scss";
-@import "./components/start-template-options/style.scss";
 @import "./components/keyboard-shortcut-help-modal/style.scss";
 @import "./components/layout/style.scss";
 @import "./components/save-panel/style.scss";
diff --git a/phpunit/class-gutenberg-rest-templates-controller-test.php b/phpunit/class-gutenberg-rest-templates-controller-test.php
index e8d770ee55b174..2c8521d63fd825 100644
--- a/phpunit/class-gutenberg-rest-templates-controller-test.php
+++ b/phpunit/class-gutenberg-rest-templates-controller-test.php
@@ -49,12 +49,6 @@ public function test_get_template_fallback() {
 		$response = rest_get_server()->dispatch( $request );
 		$this->assertSame( 'singular', $response->get_data()['slug'], 'Should fallback to `singular.html`.' );
 		// Should fallback to `index.html`.
-		$request->set_param( 'slug', 'tag' );
-		$request->set_param( 'ignore_empty', true );
-		$request->set_param( 'is_custom', false );
-		$response = rest_get_server()->dispatch( $request );
-		$this->assertSame( 'index', $response->get_data()['slug'], 'Should fallback to `index.html`.' );
-		// Should fallback to `index.html`.
 		$request->set_param( 'slug', 'tag-rigas' );
 		$request->set_param( 'is_custom', false );
 		$request->set_param( 'template_prefix', 'tag' );
diff --git a/test/emptytheme/templates/tag.html b/test/emptytheme/templates/tag.html
deleted file mode 100644
index e69de29bb2d1d6..00000000000000