[BUG] WebFetch permission denied in "Ask before edits" mode (VSCode extension)

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 in the VSCode extension with "Ask before edits" permission mode, the WebFetch tool is blocked with the message:

"Permission to use WebFetch has been denied because Claude Code is running in don't ask mode"

The permission mode is set to "Ask before edits", NOT "don't ask". The tool should either execute or prompt for confirmation, not be silently denied with an incorrect error message.

Screenshot of the current permission mode:

<img width="196" height="56" alt="Image" src="https://github.com/user-attachments/assets/6db15243-b246-44b9-9d5b-ef7c712c461b" />

What Should Happen?

WebFetch should either:

1. Execute normally (since "Ask before edits" only restricts file edits, not read/fetch operations), or
2. Prompt the user for confirmation before executing

It should NOT be denied with an error message referencing "don't ask mode" when the user is in "Ask before edits" mode.

Error Messages/Logs

Permission to use WebFetch has been denied because Claude Code is running in don't ask mode

Steps to Reproduce

1. Open Claude Code in VSCode extension
2. Set permission mode to "Ask before edits" (the toggle button at the bottom of the chat)
3. Ask Claude to fetch a URL, e.g.: "fetch https://codeigniter.com/user_guide/general/configuration.html"
4. WebFetch is denied with error message referencing "don't ask mode" instead of prompting or executing

Claude Model

Opus

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.1.74

Claude Code Version

2.1.81 (Claude Code)

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

• Running Claude Code as VSCode native extension, not CLI
• Other tools (Read, Write, Edit, Grep, Glob, Bash, Agent) work fine with the "Ask before edits" mode
• WebSearch also appears to be blocked with the same error
• The error message itself is incorrect — it says "don't ask mode" but the actual mode is "Ask before edits"