VS Code extension prompts for edit permission despite auto-approve mode

Bug Description

When using Claude Code in the VS Code extension with edit auto-approve mode enabled, the extension still prompts the user for permission on Edit and Write tool calls. This happens consistently across multiple sequential edit attempts to the same file.

Steps to Reproduce

1. Enable edit auto-approve mode in VS Code Claude Code extension
2. Ask Claude to make multiple edits to a markdown file (e.g., replacing --- with ______________________________________________________________________ across several locations)
3. Observe that each Edit tool call triggers a permission prompt despite auto-approve being enabled

Expected Behavior

All Edit and Write tool calls should execute automatically without prompting when edit auto-approve mode is enabled.

Actual Behavior

The user is prompted for permission on each edit, even though auto-approve mode is active. The rejection message says "The user doesn't want to proceed with this tool use" — but the user did not manually reject; the permission prompt itself is the issue.

Environment

• Platform: Linux (Ubuntu, kernel 6.17.0-20-generic)
• Claude Code: VS Code native extension
• Model: Claude Opus 4.6

Additional Context

Attempted Edit (single replacement), Edit with replace_all, and Write (full file rewrite) — all were blocked by the permission prompt. The user confirmed multiple times that auto-approve was enabled.