A desktop image management system is described that can efficiently distribute updates to virtual desktops running on host servers in a data center. The system is comprised of a central server and multiple agents, each agent installed on a virtual machine. When a VM receives an update from the central server, the files are stored in a single instance store on the host server. The agent running on the VM then creates a corresponding stub file (empty of content) on the VM for each file in the single instance store. The agent further marks the stub file to indicate that the stub file is mapped to the single instance store. When the guest operating system requests to read the stub file, the virtual disk layer of the host server detects that the requested block has been marked and fetches the content of the file from the single instance store.