[BUG] Claude Code VS Code extension signs out automatically every time VS Code is closed and reopened

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?

Every time I close VS Code and reopen it, the Claude Code extension signs me out automatically. It then takes a long time to load the sign-in page again, forcing me to re-authenticate on every single session.

What Should Happen?

Claude Code should remain authenticated across VS Code sessions and not require re-login every time.

Error Messages/Logs

Extension signs out on every close. Login page loads slowly on reopen. This happens consistently on every restart.
What I've Already Tried:

Updated the extension to the latest version (2.1.86)
Extension is set to auto-update

Steps to Reproduce

1. Open VS Code with Claude Code extension installed and signed in
2. Close VS Code completely
3. Reopen VS Code
4. Claude Code extension is signed out and shows the login screen

Claude Model

Sonnet (default)

Is this a regression?

No, this never worked

Last Working Version

2.1.80

Claude Code Version

2.1.86

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

VS Code integrated terminal

Additional Information

Environment:

Claude Code Extension Version: 2.1.86
VS Code Version: 1.113
OS: Windows 10 Home 22H2
Auth Method: OAuth (Claude subscription)
Related Issues: #33291, #36489