[BUG] files diffs no longer showing after latest VS code update

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?

After updating VS Code to 1.113.0 the green/red diffs preview tab is no longer opening, meaning I can't review changes anymore before accepting, rendering Claude completely and utterly useless! I knew I shouldn't have updated this VS code
UPDATE: the diffs are visible when running Claude from the terminal only, not from the chat pane

What Should Happen?

I should see gree/red diffs

Error Messages/Logs

Steps to Reproduce

1. Ask Claude to change something

Claude Model

Sonnet (default)

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.1.85

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

This worked in a previous version of VS Code