diff --git a/xmake/core/package/package.lua b/xmake/core/package/package.lua
index 1073c0a45d..8704b3df17 100644
--- a/xmake/core/package/package.lua
+++ b/xmake/core/package/package.lua
@@ -642,7 +642,15 @@ end
 -- is local package?
 -- we will use local installdir and cachedir in current project
 function _instance:is_local()
-    return self:is_source_embed() or self:is_binary_embed() or self:is_thirdparty()
+    return self._IS_LOCAL or self:is_source_embed() or self:is_binary_embed() or self:is_thirdparty()
+end
+
+-- mark it as local package
+function _instance:_mark_as_local(is_local)
+    if self:is_local() ~= is_local then
+        self._INSTALLDIR = nil
+        self._IS_LOCAL = is_local
+    end
 end
 
 -- use external includes?
@@ -1807,6 +1815,23 @@ function _instance:fetch(opt)
         external = self:use_external_includes()
     end
 
+    -- always install to the local project directory?
+    -- @see https://github.com/xmake-io/xmake/pull/4376
+    local install_locally
+    if project and project.policy("package.install_locally") then
+        install_locally = true
+    end
+    if install_locally == nil and self:policy("package.install_locally") then
+        install_locally = true
+    end
+    if not self:is_local() and install_locally and system ~= true then
+        local has_global = os.isfile(self:manifest_file())
+        self:_mark_as_local(true)
+        if has_global and not os.isfile(self:manifest_file()) then
+            self:_mark_as_local(false)
+        end
+    end
+
     -- fetch binary tool?
     fetchinfo = nil
     local is_system = nil
diff --git a/xmake/core/project/policy.lua b/xmake/core/project/policy.lua
index 5d1e47c53e..84f29dd06d 100644
--- a/xmake/core/project/policy.lua
+++ b/xmake/core/project/policy.lua
@@ -100,6 +100,8 @@ function policy.policies()
             ["package.install_only"]              = {description = "Only install packages from remote.", type = "boolean"},
             -- Always install packages every time
             ["package.install_always"]            = {description = "Always install packages every time.", type = "boolean"},
+            -- Install packages in the local project folder
+            ["package.install_locally"]           = {description = "Install packages in the local project folder.", default = false, type = "boolean"},
             -- Set custom headers when downloading package
             ["package.download.http_headers"]     = {description = "Set the custom http headers when downloading package."},
             -- Use includes as external header files? e.g. -isystem ..