[BUG] VS Code extensions Claude resets/erases settings.local.json

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?

Claude

What Should Happen?

The settings.local.json file in VS Code frequently gets deleted without warning. This issue seems to occur specifically after selecting “Yes, don’t ask again” when Claude prompts for permission to use a tool. Once that confirmation is given, the file is sometimes erased automatically. This behavior has been happening consistently for several months.

Error Messages/Logs

Steps to Reproduce

Unclear exactly why it happens. Just occasionally when you accept "Yes, do not ask again"

Claude Model

Sonnet (default)

Is this a regression?

No, this never worked

Last Working Version

_No response_

Claude Code Version

2.0.33

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_