VS Code Extension: MCP permissions not persisting despite settings

Description

MCP tool permissions are not being respected in the VS Code extension despite being configured in settings files.

Steps to Reproduce

1. Configure MCP servers in .mcp.json
2. Add permissions to .claude/settings.json and/or ~/.claude/settings.json:

``json
{
"permissions": {
"allow": [
"mcp__chrome-devtools",
"mcp__chrome-devtools__list_pages"
]
},
"enableAllProjectMcpServers": true
}
``

1. Restart VS Code extension
2. Use an MCP tool

Expected Behavior

MCP tools listed in permissions.allow should execute without prompting.

Actual Behavior

Every MCP tool call prompts for permission, even after:

• Clicking "Yes" on previous prompts
• Configuring permissions in .claude/settings.json (project scope)
• Configuring permissions in ~/.claude/settings.json (user scope)
• Using both server-level (mcp__servername) and tool-level (mcp__servername__toolname) formats

Environment

• VS Code Extension
• macOS

Notes

The CLI may work differently - this issue is specific to the VS Code extension.