[FEATURE] Show file edits as inline diffs in VSCode editor (like Copilot)

Preflight Checklist

• [x] I have searched existing requests and this feature hasn't been requested yet
• [x] This is a single feature request (not multiple features)

Problem Statement

Currently edits only appear in the Claude sidebar panel. Would like changes to be highlighted inline in the editor using VSCode's native diff decorations, similar to how GitHub Copilot shows suggested edits.

Proposed Solution

Use VSCode's vscode.diff command or the TextEditorDecorationType API to highlight changed lines directly in the active editor when Claude makes file edits — similar to how GitHub Copilot's "Apply in Editor" feature works. This would show added lines in green and removed lines in red inline, while still keeping the sidebar panel as an option.

Alternative Solutions

_No response_

Priority

Critical - Blocking my work

Feature Category

Interactive mode (TUI)

Use Case Example

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Additional Context

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