[BUG] Claude Code proposes edits inline in terminal instead of opening VS Code diff editor on Windows 11

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?

When using Claude Code CLI within the VS Code integrated terminal on Windows 11, the tool proposes file changes directly as an inline text diff in the terminal. Usually, it is expected to trigger the VS Code diff editor for a side-by-side comparison, but this is not happening.

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Environment:

• OS: Windows 11
• Terminal: VS Code Integrated Terminal
• Tool: Claude Code CLI (2.1.25 (Claude Code)) . installed by using this method irm https://claude.ai/install.ps1 | iex
• IDE: Visual Studio Code 1.108.2, c9d77990917f3102ada88be140d28b038d1dd7c7, x64

Actual Behavior:
The diff is shown as plain text directly in the terminal (see attached screenshot).

What Should Happen?

Expected Behavior:
Claude should open a new tab in VS Code showing the diff (side-by-side) before asking for confirmation.

Error Messages/Logs

Steps to Reproduce

Steps to Reproduce:

• Open a project in VS Code on Windows 11.
• Run a command in the Claude Code CLI that requires file edits (e.g., "Update todo.md").
• Observe the output in the terminal.

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Claude Model

None

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.1.25

Platform

Other

Operating System

Windows

Terminal/Shell

PowerShell

Additional Information

_No response_