--- a/pppd/ccp.c
+++ b/pppd/ccp.c
@@ -993,6 +988,8 @@ ccp_ackci(f, p, len)
 		&& p[5] != ((go->mppe_128 ? MPPE_128BIT : 0) |
 			    (go->mppc ? MPPE_MPPC : 0))))
 	    return 0;
+	if (go->mppe_40 || go->mppe_56 || go->mppe_128)
+	    go->mppe = 1;
 	p += CILEN_MPPE;
 	len -= CILEN_MPPE;
 	/* Cope with first/fast ack */