diff --git a/.changeset/bright-pants-cry.md b/.changeset/bright-pants-cry.md
new file mode 100644
index 0000000000..53ba0c9521
--- /dev/null
+++ b/.changeset/bright-pants-cry.md
@@ -0,0 +1,5 @@
+---
+'@backstage/cli': patch
+---
+
+Fixing the error `Error: No existing version was accepted for range ^0.12.0, searching through 0.11.2,0.0.0-use.local, for package @backstage/core-components`, which can happen when there are multiple matching versions for a package, and one of them uses `workspace:^` as its range.
diff --git a/packages/cli/src/lib/versioning/Lockfile.ts b/packages/cli/src/lib/versioning/Lockfile.ts
index 016593ea8d..ab6d98521f 100644
--- a/packages/cli/src/lib/versioning/Lockfile.ts
+++ b/packages/cli/src/lib/versioning/Lockfile.ts
@@ -190,9 +190,14 @@ export class Lockfile {
       }
 
       // Find all versions currently in use
-      const versions = Array.from(new Set(entries.map(e => e.version))).sort(
-        (v1, v2) => semver.rcompare(v1, v2),
-      );
+      const versions = Array.from(new Set(entries.map(e => e.version)))
+        .map(v => {
+          // Translate workspace:^ references to the actual version
+          return v === '0.0.0-use.local'
+            ? require(`${name}/package.json`).version
+            : v;
+        })
+        .sort((v1, v2) => semver.rcompare(v1, v2));
 
       // If we're not using at least 2 different versions we're done
       if (versions.length < 2) {