Diffusion-based visuomotor policies operating directly in raw action spaces conflate scene comprehension with trajectory generation within a single denoising process. The resulting velocity field must simultaneously encode scene information and generate precise trajectories, increasing learning complexity and limiting performance on tasks demanding precise temporal coordination across multiple arms. To simplify this joint learning problem, we introduce Latent Diffusion Policy (LDP), a two-stage framework performing flow matching in a deliberately shaped latent space. By absorbing scene understanding into an observation-conditioned CVAE encoder, LDP concentrates the conditional distribution of each observation. Consequently, the flow model avoids implicitly resolving scene-dependent structures; instead, it generates within a pre-concentrated distribution featuring a smoother velocity field, simplifying learning from limited demonstrations. Furthermore, to capture temporal dependencies among latent tokens, LDP trains with per-token diffusion forcing and employs staircase inference sampling to resolve the resulting distributional mismatch. We also propose reconstruction FID (rFID) as a lightweight proxy predicting downstream task success solely from latent space statistics. On coordination-intensive tasks from RoboTwin 2.0, LDP outperforms DP3 by a substantial margin and transfers effectively to real-world bimanual deployments.