diff --git a/src/plugins/terminal/scrollback.cpp b/src/plugins/terminal/scrollback.cpp
index ca85c942d3d..e22d5fa2436 100644
--- a/src/plugins/terminal/scrollback.cpp
+++ b/src/plugins/terminal/scrollback.cpp
@@ -10,15 +10,11 @@
 
 namespace Terminal::Internal {
 
-Scrollback::Line::Line(int cols, const VTermScreenCell *cells, VTermState *vts)
+Scrollback::Line::Line(int cols, const VTermScreenCell *cells)
     : m_cols(cols)
     , m_cells(std::make_unique<VTermScreenCell[]>(cols))
 {
     memcpy(m_cells.get(), cells, cols * sizeof(cells[0]));
-    for (int i = 0; i < cols; ++i) {
-        vterm_state_convert_color_to_rgb(vts, &m_cells[i].fg);
-        vterm_state_convert_color_to_rgb(vts, &m_cells[i].bg);
-    }
 }
 
 const VTermScreenCell *Scrollback::Line::cell(int i) const
@@ -31,9 +27,9 @@ Scrollback::Scrollback(size_t capacity)
     : m_capacity(capacity)
 {}
 
-void Scrollback::emplace(int cols, const VTermScreenCell *cells, VTermState *vts)
+void Scrollback::emplace(int cols, const VTermScreenCell *cells)
 {
-    m_deque.emplace_front(cols, cells, vts);
+    m_deque.emplace_front(cols, cells);
     while (m_deque.size() > m_capacity) {
         m_deque.pop_back();
     }
diff --git a/src/plugins/terminal/scrollback.h b/src/plugins/terminal/scrollback.h
index 356b44fa535..9ca71eec615 100644
--- a/src/plugins/terminal/scrollback.h
+++ b/src/plugins/terminal/scrollback.h
@@ -21,7 +21,7 @@ public:
     class Line
     {
     public:
-        Line(int cols, const VTermScreenCell *cells, VTermState *vts);
+        Line(int cols, const VTermScreenCell *cells);
         Line(Line &&other) = default;
         Line() = delete;
 
@@ -44,9 +44,7 @@ public:
     const Line &line(size_t index) const { return m_deque.at(index); };
     const std::deque<Line> &lines() const { return m_deque; };
 
-    void emplace(int cols,
-                 const VTermScreenCell *cells,
-                 VTermState *vts);
+    void emplace(int cols, const VTermScreenCell *cells);
     void popto(int cols, VTermScreenCell *cells);
 
     void clear();
diff --git a/src/plugins/terminal/terminalsurface.cpp b/src/plugins/terminal/terminalsurface.cpp
index 128c05213d6..83749596c38 100644
--- a/src/plugins/terminal/terminalsurface.cpp
+++ b/src/plugins/terminal/terminalsurface.cpp
@@ -89,6 +89,18 @@ struct TerminalSurfacePrivate
         vterm_state_set_unrecognised_fallbacks(vts, &m_vtermStateFallbacks, this);
         vterm_state_set_bold_highbright(vts, true);
 
+        VTermColor fg;
+        VTermColor bg;
+        vterm_color_indexed(&fg, ColorIndex::Foreground);
+        vterm_color_indexed(&bg, ColorIndex::Background);
+        vterm_state_set_default_colors(vts, &fg, &bg);
+
+        for (int i = 0; i < 16; ++i) {
+            VTermColor col;
+            vterm_color_indexed(&col, i);
+            vterm_state_set_palette_color(vts, i, &col);
+        }
+
         vterm_screen_reset(m_vtermScreen, 1);
     }
 
@@ -101,6 +113,25 @@ struct TerminalSurfacePrivate
         return QSize(cols, rows);
     }
 
+    std::variant<int, QColor> toVariantColor(const VTermColor &color)
+    {
+        if (color.type & VTERM_COLOR_DEFAULT_BG)
+            return ColorIndex::Background;
+        else if (color.type & VTERM_COLOR_DEFAULT_FG)
+            return ColorIndex::Foreground;
+        else if (color.type & VTERM_COLOR_INDEXED) {
+            if (color.indexed.idx >= 16) {
+                VTermColor c = color;
+                vterm_state_convert_color_to_rgb(vterm_obtain_state(m_vterm.get()), &c);
+                return toQColor(c);
+            }
+            return color.indexed.idx;
+        } else if (color.type == VTERM_COLOR_RGB)
+            return toQColor(color);
+        else
+            return -1;
+    }
+
     TerminalCell toCell(const VTermScreenCell &cell)
     {
         TerminalCell result;
@@ -113,13 +144,8 @@ struct TerminalSurfacePrivate
         if (static_cast<bool>(cell.attrs.reverse))
             std::swap(fg, bg);
 
-        const QColor cellBgColor = toQColor(*bg);
-        const QColor cellFgColor = toQColor(*fg);
-
-        if (cellBgColor != m_defaultBgColor)
-            result.background = toQColor(*bg);
-
-        result.foreground = cellFgColor;
+        result.backgroundColor = toVariantColor(*bg);
+        result.foregroundColor = toVariantColor(*fg);
 
         result.bold = cell.attrs.bold;
         result.strikeOut = cell.attrs.strike;
@@ -151,26 +177,6 @@ struct TerminalSurfacePrivate
         return result;
     }
 
-    VTermColor defaultBgColor() const
-    {
-        VTermColor defaultBg;
-        if (!m_altscreen) {
-            VTermColor defaultFg;
-            vterm_state_get_default_colors(vterm_obtain_state(m_vterm.get()),
-                                           &defaultFg,
-                                           &defaultBg);
-            // We want to compare the cell bg against this later and cells don't
-            // set DEFAULT_BG
-            defaultBg.type = VTERM_COLOR_RGB;
-            return defaultBg;
-        } // This is a slightly better guess when in an altscreen
-
-        VTermPos vtp{0, 0};
-        static VTermScreenCell refCell{};
-        vterm_screen_get_cell(m_vtermScreen, vtp, &refCell);
-        return refCell.bg;
-    }
-
     // Callbacks from vterm
     void invalidate(VTermRect rect)
     {
@@ -185,7 +191,7 @@ struct TerminalSurfacePrivate
 
     int sb_pushline(int cols, const VTermScreenCell *cells)
     {
-        m_scrollback->emplace(cols, cells, vterm_obtain_state(m_vterm.get()));
+        m_scrollback->emplace(cols, cells);
         emit q->fullSizeChanged(q->fullSize());
         return 1;
     }
@@ -284,8 +290,6 @@ struct TerminalSurfacePrivate
         static VTermScreenCell refCell{};
         VTermPos vtp{y, x};
         vterm_screen_get_cell(m_vtermScreen, vtp, &refCell);
-        vterm_screen_convert_color_to_rgb(m_vtermScreen, &refCell.fg);
-        vterm_screen_convert_color_to_rgb(m_vtermScreen, &refCell.bg);
 
         return &refCell;
     }
@@ -295,7 +299,6 @@ struct TerminalSurfacePrivate
     VTermScreenCallbacks m_vtermScreenCallbacks;
     VTermStateFallbacks m_vtermStateFallbacks;
 
-    QColor m_defaultBgColor;
     Cursor m_cursor;
     QString m_currentCommand;
 
@@ -352,8 +355,14 @@ std::u32string::value_type TerminalSurface::fetchCharAt(int x, int y) const
 
 TerminalCell TerminalSurface::fetchCell(int x, int y) const
 {
-    static TerminalCell
-        emptyCell{1, {}, {}, false, {}, std::nullopt, QTextCharFormat::NoUnderline, false};
+    static TerminalCell emptyCell{1,
+                                  {},
+                                  {},
+                                  false,
+                                  ColorIndex::Foreground,
+                                  ColorIndex::Background,
+                                  QTextCharFormat::NoUnderline,
+                                  false};
 
     QTC_ASSERT(y >= 0, return emptyCell);
     QTC_ASSERT(y < fullSize().height() && x < fullSize().width(), return emptyCell);
@@ -400,33 +409,6 @@ void TerminalSurface::flush()
     vterm_screen_flush_damage(d->m_vtermScreen);
 }
 
-void TerminalSurface::setColors(QColor foreground, QColor background)
-{
-    VTermState *vts = vterm_obtain_state(d->m_vterm.get());
-
-    VTermColor fg;
-    VTermColor bg;
-
-    vterm_color_rgb(&fg, foreground.red(), foreground.green(), foreground.blue());
-    vterm_color_rgb(&bg, background.red(), background.green(), background.blue());
-
-    d->m_defaultBgColor = background;
-
-    vterm_state_set_default_colors(vts, &fg, &bg);
-    vterm_screen_reset(d->m_vtermScreen, 1);
-}
-
-void TerminalSurface::setAnsiColor(int index, QColor color)
-{
-    VTermState *vts = vterm_obtain_state(d->m_vterm.get());
-
-    VTermColor col;
-    vterm_color_rgb(&col, color.red(), color.green(), color.blue());
-    vterm_state_set_palette_color(vts, index, &col);
-
-    vterm_screen_reset(d->m_vtermScreen, 1);
-}
-
 void TerminalSurface::pasteFromClipboard(const QString &clipboardText)
 {
     if (clipboardText.isEmpty())
@@ -496,11 +478,6 @@ Cursor TerminalSurface::cursor() const
     return cursor;
 }
 
-QColor TerminalSurface::defaultBgColor() const
-{
-    return toQColor(d->defaultBgColor());
-}
-
 ShellIntegration *TerminalSurface::shellIntegration() const
 {
     return d->m_shellIntegration;
diff --git a/src/plugins/terminal/terminalsurface.h b/src/plugins/terminal/terminalsurface.h
index 04958582c27..01923fb538f 100644
--- a/src/plugins/terminal/terminalsurface.h
+++ b/src/plugins/terminal/terminalsurface.h
@@ -18,14 +18,16 @@ class Scrollback;
 
 struct TerminalSurfacePrivate;
 
+enum ColorIndex { Foreground = 16, Background = 17 };
+
 struct TerminalCell
 {
     int width;
     QString text;
     bool bold{false};
     bool italic{false};
-    QColor foreground;
-    std::optional<QColor> background;
+    std::variant<int, QColor> foregroundColor;
+    std::variant<int, QColor> backgroundColor;
     QTextCharFormat::UnderlineStyle underlineStyle{QTextCharFormat::NoUnderline};
     bool strikeOut{false};
 };
@@ -81,9 +83,6 @@ public:
     void dataFromPty(const QByteArray &data);
     void flush();
 
-    void setColors(QColor foreground, QColor background);
-    void setAnsiColor(int index, QColor color);
-
     void pasteFromClipboard(const QString &text);
 
     void sendKey(Qt::Key key);
@@ -94,8 +93,6 @@ public:
 
     Cursor cursor() const;
 
-    QColor defaultBgColor() const;
-
     ShellIntegration *shellIntegration() const;
 
 signals:
diff --git a/src/plugins/terminal/terminalwidget.cpp b/src/plugins/terminal/terminalwidget.cpp
index e9c86bec886..12d696c69e2 100644
--- a/src/plugins/terminal/terminalwidget.cpp
+++ b/src/plugins/terminal/terminalwidget.cpp
@@ -218,14 +218,8 @@ void TerminalWidget::setupColors()
 
     m_currentColors = newColors;
 
-    m_surface->setColors(TerminalSettings::instance().foregroundColor.value(),
-                         TerminalSettings::instance().backgroundColor.value());
-
-    for (int i = 0; i < 16; ++i) {
-        m_surface->setAnsiColor(i, TerminalSettings::instance().colors[i].value());
-    }
-
-    clearContents();
+    updateViewport();
+    update();
 }
 
 void TerminalWidget::setupActions()
@@ -336,6 +330,18 @@ void TerminalWidget::configBlinkTimer()
     }
 }
 
+QColor TerminalWidget::toQColor(std::variant<int, QColor> color) const
+{
+    if (std::holds_alternative<int>(color)) {
+        int idx = std::get<int>(color);
+        if (idx >= 0 && idx < 18)
+            return m_currentColors[idx];
+
+        return m_currentColors[Internal::ColorIndex::Background];
+    }
+    return std::get<QColor>(color);
+}
+
 void TerminalWidget::setFont(const QFont &font)
 {
     m_font = font;
@@ -747,8 +753,9 @@ void TerminalWidget::paintSelectionOrBackground(QPainter &p,
 
     if (isInSelection)
         p.fillRect(cellRect, TerminalSettings::instance().selectionColor.value());
-    else if (cell.background)
-        p.fillRect(cellRect, *cell.background);
+    else if (!(std::holds_alternative<int>(cell.backgroundColor)
+               && std::get<int>(cell.backgroundColor) == 17))
+        p.fillRect(cellRect, toQColor(cell.backgroundColor));
 }
 
 int TerminalWidget::paintCell(QPainter &p,
@@ -759,7 +766,7 @@ int TerminalWidget::paintCell(QPainter &p,
 {
     paintSelectionOrBackground(p, cell, cellRect, gridPos);
 
-    p.setPen(cell.foreground);
+    p.setPen(toQColor(cell.foregroundColor));
 
     f.setBold(cell.bold);
     f.setItalic(cell.italic);
@@ -909,12 +916,10 @@ void TerminalWidget::paintEvent(QPaintEvent *event)
 
     p.save();
 
-    const QColor defaultBgColor = m_surface->defaultBgColor();
-
     if (paintLog().isDebugEnabled())
         p.fillRect(event->rect(), QColor::fromRgb(rand() % 60, rand() % 60, rand() % 60));
     else
-        p.fillRect(event->rect(), defaultBgColor);
+        p.fillRect(event->rect(), m_currentColors[Internal::ColorIndex::Background]);
 
     int scrollOffset = verticalScrollBar()->value();
     int offset = -(scrollOffset * m_cellSize.height());
@@ -929,7 +934,8 @@ void TerminalWidget::paintEvent(QPaintEvent *event)
 
     p.restore();
 
-    p.fillRect(QRectF{{0, 0}, QSizeF{(qreal) width(), topMargin()}}, defaultBgColor);
+    p.fillRect(QRectF{{0, 0}, QSizeF{(qreal) width(), topMargin()}},
+               m_currentColors[Internal::ColorIndex::Background]);
 
     if (selectionLog().isDebugEnabled()) {
         if (m_selection)
@@ -1295,8 +1301,7 @@ bool TerminalWidget::event(QEvent *event)
 
     if (event->type() == QEvent::Paint) {
         QPainter p(this);
-        p.fillRect(QRect(QPoint(0, 0), size()),
-                   TerminalSettings::instance().backgroundColor.value());
+        p.fillRect(QRect(QPoint(0, 0), size()), m_currentColors[Internal::ColorIndex::Background]);
         return true;
     }
 
diff --git a/src/plugins/terminal/terminalwidget.h b/src/plugins/terminal/terminalwidget.h
index 34b95a2e2d2..d7aff0648b8 100644
--- a/src/plugins/terminal/terminalwidget.h
+++ b/src/plugins/terminal/terminalwidget.h
@@ -166,6 +166,8 @@ protected:
 
     void configBlinkTimer();
 
+    QColor toQColor(std::variant<int, QColor> color) const;
+
 private:
     std::unique_ptr<Utils::QtcProcess> m_process;
     std::unique_ptr<Internal::TerminalSurface> m_surface;