permissions.allow in project .claude/settings.json is ignored by VS Code extension

Summary

The VS Code extension does not honor permissions.allow entries defined in the project-level .claude/settings.json. The same entries work correctly in the CLI version.

Steps to Reproduce

1. Add commands to permissions.allow in .claude/settings.json (project-level):

``json
"permissions": {
"allow": [
"Bash(node .claude/hooks/clear-file-history.js*)",
"Bash(node .claude/hooks/enable-sandbox.js*)"
]
}
``

1. Run those commands via Claude Code in the VS Code extension
2. Confirmation prompts appear despite being listed in permissions.allow

Expected Behavior

Commands listed in the project-level permissions.allow should be auto-approved without confirmation, consistent with CLI behavior.

Actual Behavior

Confirmation prompts appear for every listed command. Adding the same entries to the global ~/.claude/settings.json resolves the issue.

Workaround

Add the same permissions.allow entries to the global ~/.claude/settings.json.

Environment

• Platform: Windows 11
• Shell: bash (Git Bash)
• Claude Code: VS Code extension

Note

If this is intentional (e.g., for security reasons to prevent malicious repos from auto-approving commands), it would be helpful to document this difference between CLI and VS Code extension behavior.