--- cloudinit/ssh_util.py.orig
+++ cloudinit/ssh_util.py
@@ -544,6 +544,10 @@ def parse_ssh_config_map(fname):
 
 
 def _includes_dconf(fname: str) -> bool:
+    # Handle cases where sshd_config is handled in /usr/etc/ssh/sshd_config
+    # so /etc/ssh/sshd_config.d/ exists but /etc/ssh/sshd_config doesn't
+    if not os.path.exists(fname) and os.path.exists(f"{fname}.d"):
+        return True
     if not os.path.isfile(fname):
         return False
     for line in util.load_text_file(fname).splitlines():
--- tests/unittests/test_ssh_util.py.orig
+++ tests/unittests/test_ssh_util.py
@@ -561,6 +561,18 @@ class TestUpdateSshConfig:
         expected_conf_file = f"{mycfg}.d/50-cloud-init.conf"
         assert not os.path.isfile(expected_conf_file)
 
+    def test_without_sshd_config(self, tmpdir):
+        """In some cases /etc/ssh/sshd_config.d exists but /etc/ssh/sshd_config
+        doesn't. In this case we shouldn't create /etc/ssh/sshd_config but make
+        /etc/ssh/sshd_config.d/50-cloud-init.conf."""
+        mycfg = tmpdir.join("sshd_config")
+        os.mkdir(os.path.join(tmpdir, "sshd_config.d"))
+        assert ssh_util.update_ssh_config({"key": "value"}, mycfg)
+        expected_conf_file = f"{mycfg}.d/50-cloud-init.conf"
+        assert os.path.isfile(expected_conf_file)
+        assert not os.path.isfile(mycfg)
+        assert "key value\n" == util.load_text_file(expected_conf_file)
+
     @pytest.mark.parametrize(
         "cfg",
         ["Include {mycfg}.d/*.conf", "Include {mycfg}.d/*.conf # comment"],