[BUG] API reporting ' Image was too large. Double press esc to go back and try again with a smaller image.'

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?

The above error will arise even when loading a partial screen shot in a new session with no or negligible context. Even after /compact or /clear, error will return even in just text is subsequently entered (no image). Again this will occur with very little context in place (ie even in a recently commenced session/clean terminal window). Closing the window and recommencing in a fresh window will temporarily solve the problem, but it is returning.

What Should Happen?

The session should continue. It does not. It just returns the fault message.

Error Messages/Logs

As per title.

⏺ Image was too large. Double press esc to go back and try again with a
  smaller image.

Steps to Reproduce

The first occurrence was not an image but context .. report said API limit was reached, but was not a large session and there had been a recent compression. Now even in fresh terminals it intermittently returns the above error when inputting even single <1/4 screen shots (where previously i could input several at a time in one exchange.

Claude Model

Not sure / Multiple models

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.0.70.

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_