diff --git a/app/scripts/app-init.js b/app/scripts/app-init.js
index ba66698b7..7b9c1dfd1 100644
--- a/app/scripts/app-init.js
+++ b/app/scripts/app-init.js
@@ -12,9 +12,7 @@ function tryImport(...fileNames) {
 
 function importAllScripts() {
   const startImportScriptsTime = Date.now();
-  // applyLavaMoat has been hard coded to "true" as
-  // tryImport('./runtime-cjs.js') is giving issue with XMLHttpRequest object which is not avaialble to service worker.
-  // we need to dynamically inject values of applyLavaMoat once this is fixed.
+  // value of applyLavaMoat below is dynamically replaced at build time with actual value
   const applyLavaMoat = true;
 
   tryImport('./globalthis.js');
@@ -25,14 +23,16 @@ function importAllScripts() {
     tryImport('./lockdown-more.js');
     tryImport('./policy-load.js');
   } else {
+    tryImport('./init-globals.js');
     tryImport('./lockdown-install.js');
-    tryImport('./lockdown-more.js');
     tryImport('./lockdown-run.js');
+    tryImport('./lockdown-more.js');
     tryImport('./runtime-cjs.js');
   }
 
   const fileList = [
     // The list of files is injected at build time by replacing comment below with comma separated strings of file names
+    // https://github.com/MetaMask/metamask-extension/blob/496d9d81c3367931031edc11402552690c771acf/development/build/scripts.js#L406
     /** FILE NAMES */
   ];
 
diff --git a/app/scripts/init-globals.js b/app/scripts/init-globals.js
new file mode 100644
index 000000000..a26c95266
--- /dev/null
+++ b/app/scripts/init-globals.js
@@ -0,0 +1,18 @@
+/**
+ * This script add properties in globalThis and initialises them with undefined.
+ * This is workaround needed to avoid error in dependencies expecting to be run in a browser
+ * these dependencies are not available to service worker in MV3.
+ */
+
+// eslint-disable-next-line import/unambiguous
+const keys = ['XMLHttpRequest'];
+
+keys.forEach((key) => {
+  if (!Reflect.has(globalThis, key)) {
+    globalThis[key] = undefined;
+  }
+});
+
+if (!Reflect.has(globalThis, 'window')) {
+  globalThis.window = globalThis;
+}
diff --git a/development/build/scripts.js b/development/build/scripts.js
index 21892519e..70db2a694 100644
--- a/development/build/scripts.js
+++ b/development/build/scripts.js
@@ -365,11 +365,20 @@ function createScriptTasks({
   }
 }
 
-const postProcessServiceWorker = (mv3BrowserPlatforms, fileList) => {
+const postProcessServiceWorker = (
+  mv3BrowserPlatforms,
+  fileList,
+  applyLavaMoat,
+) => {
   mv3BrowserPlatforms.forEach((browser) => {
     const appInitFile = `./dist/${browser}/app-init.js`;
     const fileContent = readFileSync('./app/scripts/app-init.js', 'utf8');
-    const fileOutput = fileContent.replace('/** FILE NAMES */', fileList);
+    const fileOutput = fileContent
+      .replace('/** FILE NAMES */', fileList)
+      .replace(
+        'const applyLavaMoat = true;',
+        `const applyLavaMoat = ${applyLavaMoat};`,
+      );
     writeFileSync(appInitFile, fileOutput);
   });
 };
@@ -385,6 +394,7 @@ async function bundleMV3AppInitialiser({
   testing,
   policyOnly,
   shouldLintFenceFiles,
+  applyLavaMoat,
 }) {
   const label = 'app-init';
   // TODO: remove this filter for firefox once MV3 is supported in it
@@ -409,14 +419,14 @@ async function bundleMV3AppInitialiser({
     shouldLintFenceFiles,
   })();
 
-  postProcessServiceWorker(mv3BrowserPlatforms, fileList);
+  postProcessServiceWorker(mv3BrowserPlatforms, fileList, applyLavaMoat);
 
   let prevChromeFileContent;
   watch('./dist/chrome/app-init.js', () => {
     const chromeFileContent = readFileSync('./dist/chrome/app-init.js', 'utf8');
     if (chromeFileContent !== prevChromeFileContent) {
       prevChromeFileContent = chromeFileContent;
-      postProcessServiceWorker(mv3BrowserPlatforms, fileList);
+      postProcessServiceWorker(mv3BrowserPlatforms, fileList, applyLavaMoat);
     }
   });
 
@@ -595,6 +605,7 @@ function createFactoredBuild({
                 testing,
                 policyOnly,
                 shouldLintFenceFiles,
+                applyLavaMoat,
               });
             }
             break;
diff --git a/development/build/static.js b/development/build/static.js
index d1f024fbc..48178ef7e 100644
--- a/development/build/static.js
+++ b/development/build/static.js
@@ -152,6 +152,10 @@ function getCopyTargets(shouldIncludeLockdown) {
         : EMPTY_JS_FILE,
       dest: `lockdown-install.js`,
     },
+    {
+      src: './app/scripts/init-globals.js',
+      dest: 'init-globals.js',
+    },
     {
       src: shouldIncludeLockdown
         ? `./app/scripts/lockdown-run.js`