[BUG] VSCode Extension: Power BI MCP server write confirmation prompts are silently declined instead of surfaced to user

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?

Environment

Claude Code VSCode Extension (latest)
MCP server: powerbi-modeling-mcp (stdio transport)
Claude Code CLI: works correctly
Summary
When an MCP server issues a write confirmation prompt during a tool call, the VSCode extension chat interface silently declines it without surfacing the prompt to the user. The same flow works correctly in the CLI.

Steps to Reproduce

Configure an MCP server that requires user confirmation before write operations (e.g. powerbi-modeling-mcp)
Open a chat session in the VSCode extension
Ask Claude to perform a write operation via that MCP server (e.g. create a measure)
Observe: the tool call returns an error — "The user requested a write operation but declined when asked to confirm"
Repeat the same request in the CLI (claude in terminal)
Observe: a confirmation prompt appears inline, user types y, operation succeeds
Expected Behavior
The VSCode extension should surface the MCP server's confirmation prompt to the user — either as an inline dialog, a banner, or a chat message — and wait for approval before proceeding.

Actual Behavior
The confirmation prompt is never shown. The operation is silently declined and Claude receives an error response, making write operations via confirmation-gated MCP servers impossible in the VSCode extension.

Workaround
Use the CLI (claude) instead of the VSCode extension for any session involving MCP servers that require write confirmations.

What Should Happen?

The confirmation prompt is shown so the user can accept and proceed

Error Messages/Logs

Observed: the tool call returns an error — "The user requested a write operation but declined when asked to confirm"

Steps to Reproduce

Steps to Reproduce

Configure an MCP server that requires user confirmation before write operations (e.g. powerbi-modeling-mcp)
Open a chat session in the VSCode extension
Ask Claude to perform a write operation via that MCP server (e.g. create a measure)
Observe: the tool call returns an error — "The user requested a write operation but declined when asked to confirm"
Repeat the same request in the CLI (claude in terminal)
Observe: a confirmation prompt appears inline, user types y, operation succeeds
Expected Behavior
The VSCode extension should surface the MCP server's confirmation prompt to the user — either as an inline dialog, a banner, or a chat message — and wait for approval before proceeding.

Claude Model

Opus

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

Claude Code CLI version 2.1.76. VSCode extension = 2.1.81

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

PowerShell

Additional Information

_No response_