[BUG] Files of all types uploaded via both the plus (+) button and drag-and-drop cannot be recognized

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

Describe the bug

Files of all types uploaded either by clicking the plus (+) attachment button or drag-and-drop into the chat input are not recognized by the Claude Code Agent.
The UI shows that files are attached successfully, but the agent cannot access or read the file content, regardless of the file format.

To Reproduce

1. Open the Claude Code Agent chat panel in VS Code
2. Try either upload method:

• Option A: Click the plus (+) button, pick a file from the file selector
• Option B: Drag and drop a file into the chat input box

1. Send a prompt asking Claude to read the uploaded file

Tested file types: text files, markdown, source code, etc. All exhibit the same issue.

Expected behavior

Claude should be able to read and process the content of attached files of any supported type.

Actual behavior

Claude replies that it cannot see or access the uploaded file content.

Workaround

No known workaround for file uploads.

Environment

• VS Code version:
• Claude Code Agent extension version:
• Operating System:

Additional context

I can provide extension logs or screenshots if needed for debugging.

What Should Happen?

Claude should be able to read and process the content of attached files of any supported type.

Error Messages/Logs

Steps to Reproduce

1. Open the Claude Code Agent chat panel in VS Code
2. Try either upload method:

• Option A: Click the plus (+) button, pick a file from the file selector
• Option B: Drag and drop a file into the chat input box

1. Send a prompt asking Claude to read the uploaded file

Claude Model

Other

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.126 (Claude Code)

Platform

Other

Operating System

macOS

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_