[BUG] Official Claude Code VS Code extension incorrectly blocked with "Third-party apps now draw from your extra usage" error
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?
Preflight Checklist
- [x] I have searched existing issues and this hasn't been reported yet
- [x] This is a single bug report
- [x] I am using the latest version of Claude Code
What's Wrong?
The official Claude Code VS Code extension (published by Anthropic) is returning a 400 invalid_request_error with the message:
"Third-party apps now draw from your extra usage, not your plan limits. We've added a $100 credit to get you started. Claim it at claude.ai/settings/usage and keep going."This is Anthropic's own first-party extension — not a third-party harness. It should be drawing from my plan limits like Claude Code in the terminal does, per the policy announced April 4, 2026.
Steps to Reproduce
- Install the official Claude Code VS Code extension (anthropic.claude-code)
- Sign in with a Claude Max account
- Submit any prompt in the Claude Code panel
- Observe the API Error: 400 response
Expected Behavior
The extension uses my Claude Max plan allocation, identical to how Claude Code works in a standalone terminal session.
Actual Behavior
Every request fails with the "third-party apps" error, blocking all usage. The extension is completely non-functional.
Attempted Fixes (none resolved the issue)
- Updated Claude Code to latest version via
npm update -g @anthropic-ai/claude-code - Ran
/logoutthen/loginto re-authenticate - Claimed the one-time extra usage credit at claude.ai/settings/usage
- Enabled extra usage in account settings
- Set an API key directly via
claude config set --global apiKey
<img width="1982" height="516" alt="Image" src="https://github.com/user-attachments/assets/8bc2a177-02a0-4cc7-9c80-e6c817dedec2" />
Environment
- Claude Code version: v2.1.1 (also reproduced after update)
- OS: Windows
- VS Code version: [your version]
- Plan: Claude Max
- Model: claude-opus-4-6
- Auth method: Claude.ai OAuth (subscription login)
Request IDs from error
req_011CZqgNhfqnAeSTeUfNLFRreq_011CZqgPre8BHY7MvncnxfBL
Additional Notes
The April 4 policy announcement explicitly states Claude Code is a first-party product exempt from the third-party harness restrictions. The VS Code extension appears to be misidentified server-side as a third-party app. Other users are likely affected but may be silently paying from their extra usage credit without realizing it.
What Should Happen?
it should work.
Error Messages/Logs
Steps to Reproduce
use visual studio claude code.
Claude Model
None
Is this a regression?
Yes, this worked in a previous version
Last Working Version
_No response_
Claude Code Version
Claude Code v2.1.1
Platform
Anthropic API
Operating System
Windows
Terminal/Shell
Windows Terminal
Additional Information
_No response_
12 Comments
Found 1 possible duplicate issue:
This issue will be automatically closed as a duplicate in 3 days.
🤖 Generated with Claude Code
Same happening to me in Ubuntu terminal (no VS code). Pure Claude code in terminal. I do run a vpn.
same thing happened to me
Has your system prompt been edited? I believe it is being scanning for things that look like a third-party app.
no, my prompt has not been edited. It is straight default Claude Code via the terminal. I am copying text from a ticket system I made on crm. It has a nice formatted structure where I can just copy and paste the issue into Claude Code and it knew where to fix it and it fix the issue.
Funny thing I pasted the same ticket information in a different console window and it works perfectly fine.
Using debian termianl. Also not working... wierdly it works in my windows machine though?
The same thing happened, but when I reinstalled the Claude extension after redeeming the credits, it worked.
Why would we need to use CREDITS when we can use our SUBSCRIPTION with claude code?
same problem, I think this is a false mark for official extensions. It is supposed to be for third-party apps like OpenClaw, etc.
Running claude install worked for me.
Closing for now — inactive for too long. Please open a new issue if this is still relevant.
This issue has been automatically locked since it was closed and has not had any activity for 7 days. If you're experiencing a similar issue, please file a new issue and reference this one if it's relevant.