diff --git a/changelog/5111.bugfix.rst b/changelog/5111.bugfix.rst
new file mode 100644
index 000000000000..5722b2804b5c
--- /dev/null
+++ b/changelog/5111.bugfix.rst
@@ -0,0 +1,2 @@
+Fixes ``Exception 'Loop' object has no attribute '_ready'`` error when running 
+``rasa init``.
diff --git a/requirements.txt b/requirements.txt
index f284e85e39e4..a681b299fe16 100644
--- a/requirements.txt
+++ b/requirements.txt
@@ -47,6 +47,8 @@ sanic-plugins-framework==0.8.2
 multidict==4.6.1
 aiohttp==3.5.4
 questionary==1.1.1
+# needed because of https://github.com/prompt-toolkit/python-prompt-toolkit/issues/951
+prompt-toolkit==2.0.10
 python-socketio==4.3.1
 # the below can be unpinned when python-socketio pins >=3.9.3
 python-engineio==3.9.3
diff --git a/setup.py b/setup.py
index ae57f3294b02..d227020c477a 100644
--- a/setup.py
+++ b/setup.py
@@ -78,6 +78,8 @@
     "multidict==4.6.1",
     "aiohttp~=3.5",
     "questionary>=1.1.0",
+    # needed because of https://github.com/prompt-toolkit/python-prompt-toolkit/issues/951
+    "prompt-toolkit<3.0",
     "python-socketio>=4.3.1",
     # the below can be unpinned when python-socketio pins >=3.9.3
     "python-engineio>=3.9.3",