[BUG] Critical authentication loop after latest Cloud Code VS Code update

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?

Subject: Critical authentication loop after latest Cloud Code VS Code update

Hello Cloud Code Support Team,

After installing the latest Cloud Code extension for VS Code (released yesterday), the extension is no longer usable due to what appears to be a regression in the authentication flow.

What is happening:

1. Cloud Code prompts me to log in via the Cloud Console.
2. I complete the login successfully in the browser.
3. The browser confirms that authentication succeeded and instructs me to return to VS Code.
4. Upon returning to VS Code, the extension:

• Either immediately prompts me to log in again (authentication loop), or
• Previously reported an “API key is invalid” error, and now provides no meaningful error at all.

1. Any attempt to use Cloud Code functionality triggers the login flow again, as if no authentication ever occurred.

Important notes:

• This behavior started only after upgrading to the latest version.
• Login through the Cloud Console itself works correctly.
• The issue appears to be entirely on the extension side, not user configuration.
• The extension is currently blocking all usage.

This strongly indicates a bug introduced in the most recent release, likely related to token handling or session persistence between the browser and the VS Code extension.

Impact:

Cloud Code is currently unusable in our development workflow. If this issue is not resolved promptly, we will unfortunately need to consider alternative tooling, as this is a blocking problem.

Please advise:

• Whether this issue is already known
• If a fix or rollback is planned
• Or if there is a temporary workaround (e.g., downgrade path)

Happy to provide logs, screenshots, or version details if needed.

Thank you,
Benjamin Steinberg

What Should Happen?

Its need to login me

Error Messages/Logs

Steps to Reproduce

Subject: Steps to Reproduce – Cloud Code VS Code authentication loop

Steps to Reproduce

1. Open VS Code (tested on the latest stable VS Code).
2. Install or update to the latest version of the Cloud Code extension from the VS Code Marketplace (version released yesterday).
3. Reload VS Code after installation.
4. Open the Cloud Code extension (or trigger any Cloud Code action that requires authentication).
5. When prompted, click Log in.
6. A browser window opens to the Cloud Console login page.
7. Complete authentication successfully in the browser.
8. The browser displays a confirmation message indicating login succeeded and instructs: “You can return to VS Code.”
9. Return to VS Code.

Actual Result

• VS Code immediately prompts for login again, as if authentication never occurred.
• In earlier attempts, the extension showed “API key is invalid”.
• In subsequent attempts, no explicit error is shown, but:

• Any attempt to use Cloud Code functionality triggers the login flow again.
• Authentication never persists.
• This creates an infinite authentication loop, making the extension unusable.

Expected Result

• After successful browser authentication, VS Code should recognize the authenticated session.
• Cloud Code functionality should be available without re-prompting for login.

Additional Context

• Login to the Cloud Console itself works correctly.
• Issue started only after updating to the latest Cloud Code extension.
• No configuration changes were made.
• Restarting VS Code and repeating the flow produces the same result.
• This appears to be a regression related to token/session handling between the browser and the VS Code extension.

Impact

This issue blocks all usage of Cloud Code in VS Code and is a critical workflow blocker.

Please let me know if logs, screenshots, or extension diagnostics are required.

Thank you,
Benjamin Steinberg

Claude Model

None

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.1.3

Platform

Other

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_