VS Code: Edit tool prompts for permission despite bypassPermissions mode

Bug Description

Edit tool operations prompt for user permission in VS Code despite bypassPermissions being configured through multiple mechanisms simultaneously.

Environment

• Claude Code version: 2.1.79
• Platform: macOS (Darwin 25.3.0)
• IDE: VS Code with Claude Code extension
• Working directory: ~/.claude (git repo)

Configuration

All three permission bypass mechanisms are enabled:

1. VS Code setting: Claude Code: Allow Dangerously Skip Permissions = enabled
2. VS Code setting: Claude Code: Initial Permission Mode = bypassPermissions
3. settings.json: "defaultMode": "bypassPermissions" under permissions

Additionally, Edit is explicitly in the allow list:

"permissions": {
  "allow": ["Bash", "Read", "Write", "Edit", "MultiEdit", ...],
  "defaultMode": "bypassPermissions"
}

Steps to Reproduce

1. Configure all three bypass mechanisms as described above
2. Start a new conversation in VS Code
3. Have Claude attempt an Edit operation on any file in the working directory
4. Result: Permission prompt appears asking user to approve/deny the edit
5. Expected: Edit executes without any prompt

Debugging Performed

• Confirmed settings.json is valid JSON with correct schema
• Confirmed no project-level settings.local.json overriding settings
• Removed all PreToolUse hooks (including a SecurityValidator hook on Edit) — issue persists
• Upgraded from 2.1.77 to 2.1.79 — issue persists
• Started new conversations after each config change — issue persists
• Bash and Read tools appear to work without prompting; the issue is specifically with Edit (and possibly Write)

Notes

• The permission prompt is the standard Claude Code approval UI, not a hook-generated prompt
• Clicking "Deny" on the prompt produces the standard rejection message: "The user doesn't want to proceed with this tool use"
• This occurs on every Edit attempt, not intermittently