diff --git a/bundles/org.eclipse.equinox.p2.engine/src/org/eclipse/equinox/internal/p2/engine/SurrogateProfileHandler.java b/bundles/org.eclipse.equinox.p2.engine/src/org/eclipse/equinox/internal/p2/engine/SurrogateProfileHandler.java
index 4fe495f..c3674bd 100644
--- a/bundles/org.eclipse.equinox.p2.engine/src/org/eclipse/equinox/internal/p2/engine/SurrogateProfileHandler.java
+++ b/bundles/org.eclipse.equinox.p2.engine/src/org/eclipse/equinox/internal/p2/engine/SurrogateProfileHandler.java
@@ -9,8 +9,7 @@
 package org.eclipse.equinox.internal.p2.engine;
 
 import java.io.File;
-import java.net.MalformedURLException;
-import java.net.URL;
+import java.net.*;
 import java.util.Iterator;
 import org.eclipse.core.runtime.IProgressMonitor;
 import org.eclipse.equinox.internal.p2.core.helpers.ServiceHelper;
@@ -129,10 +128,12 @@
 			String installArea = EngineActivator.getContext().getProperty(OSGI_INSTALL_AREA);
 			try {
 				URL registryURL = new URL(installArea + P2_ENGINE_DIR + SimpleProfileRegistry.DEFAULT_STORAGE_DIR);
-				File sharedRegistryDirectory = new File(registryURL.getPath());
+				File sharedRegistryDirectory = URIUtil.toFile(URIUtil.toURI(registryURL));
 				profileRegistry = new SimpleProfileRegistry(sharedRegistryDirectory, null, false);
 			} catch (MalformedURLException e) {
 				//this is not possible because we know the above URL is valid
+			} catch (URISyntaxException e) {
+				//this is not possible because we know the above URL is valid
 			}
 		}
 		return profileRegistry;
diff --git a/bundles/org.eclipse.equinox.p2.engine/src/org/eclipse/equinox/internal/p2/engine/URIUtil.java b/bundles/org.eclipse.equinox.p2.engine/src/org/eclipse/equinox/internal/p2/engine/URIUtil.java
new file mode 100644
index 0000000..06f3ddf
--- /dev/null
+++ b/bundles/org.eclipse.equinox.p2.engine/src/org/eclipse/equinox/internal/p2/engine/URIUtil.java
@@ -0,0 +1,111 @@
+/*******************************************************************************
+ * Copyright (c) 2011 IBM Corporation and others.
+ * All rights reserved. This program and the accompanying materials
+ * are made available under the terms of the Eclipse Public License v1.0
+ * which accompanies this distribution, and is available at
+ * http://www.eclipse.org/legal/epl-v10.html
+ *
+ * Contributors:
+ *     IBM Corporation - initial API and implementation
+ *******************************************************************************/
+package org.eclipse.equinox.internal.p2.engine;
+
+import java.io.File;
+import java.net.*;
+
+/**
+ * A utility class for manipulating URIs. This class works around some of the
+ * undesirable behavior of the {@link java.net.URI} class, and provides
+ * additional path manipulation methods that are not available on the URI class.
+ * <p>
+ * Note: Class copied (and trimmed) from org.eclipse.equinox.common (URIUtil 1.18) 
+ * in order to fix https://bugs.eclipse.org/342542.
+ * 
+ * @noinstantiate This class is not intended to be instantiated by clients.
+ */
+public final class URIUtil {
+
+	private static final String UNC_PREFIX = "//"; //$NON-NLS-1$
+	private static final String SCHEME_FILE = "file"; //$NON-NLS-1$
+
+	private URIUtil() {
+		// prevent instantiation
+	}
+
+	/**
+	 * Ensures the given path string starts with exactly four leading slashes.
+	 */
+	private static String ensureUNCPath(String path) {
+		int len = path.length();
+		StringBuffer result = new StringBuffer(len);
+		for (int i = 0; i < 4; i++) {
+			// if we have hit the first non-slash character, add another leading
+			// slash
+			if (i >= len || result.length() > 0 || path.charAt(i) != '/')
+				result.append('/');
+		}
+		result.append(path);
+		return result.toString();
+	}
+
+	/**
+	 * Returns whether the given URI refers to a local file system URI.
+	 * 
+	 * @param uri
+	 *            The URI to check
+	 * @return <code>true</code> if the URI is a local file system location, and
+	 *         <code>false</code> otherwise
+	 */
+	private static boolean isFileURI(URI uri) {
+		return SCHEME_FILE.equalsIgnoreCase(uri.getScheme());
+	}
+
+	/**
+	 * Returns the URI as a local file, or <code>null</code> if the given URI
+	 * does not represent a local file.
+	 * 
+	 * @param uri
+	 *            The URI to return the file for
+	 * @return The local file corresponding to the given URI, or
+	 *         <code>null</code>
+	 */
+	public static File toFile(URI uri) {
+		if (!isFileURI(uri))
+			return null;
+		// assume all illegal characters have been properly encoded, so use URI
+		// class to unencode
+		return new File(uri.getSchemeSpecificPart());
+	}
+
+	/**
+	 * Returns the URL as a URI. This method will handle URLs that are not
+	 * properly encoded (for example they contain unencoded space characters).
+	 * 
+	 * @param url
+	 *            The URL to convert into a URI
+	 * @return A URI representing the given URL
+	 */
+	public static URI toURI(URL url) throws URISyntaxException {
+		// URL behaves differently across platforms so for file: URLs we parse
+		// from string form
+		if (SCHEME_FILE.equals(url.getProtocol())) {
+			String pathString = url.toExternalForm().substring(5);
+			// ensure there is a leading slash to handle common malformed URLs
+			// such as file:c:/tmp
+			if (pathString.indexOf('/') != 0)
+				pathString = '/' + pathString;
+			else if (pathString.startsWith(UNC_PREFIX) && !pathString.startsWith(UNC_PREFIX, 2)) {
+				// URL encodes UNC path with two slashes, but URI uses four (see
+				// bug 207103)
+				pathString = ensureUNCPath(pathString);
+			}
+			return new URI(SCHEME_FILE, null, pathString, null);
+		}
+		try {
+			return new URI(url.toExternalForm());
+		} catch (URISyntaxException e) {
+			// try multi-argument URI constructor to perform encoding
+			return new URI(url.getProtocol(), url.getUserInfo(), url.getHost(), url.getPort(), url.getPath(), url.getQuery(), url.getRef());
+		}
+	}
+}
\ No newline at end of file