[BUG] Claude Code not responsind in VS Code Extension.

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?

I try to run Claude Code from VS Code extension, it is not responding. give 60000 ms timeout. When i run it in terminal or even Claude Code Desktop app, it is running there perfectly but not in VS Code extension as well as Antigravity extension.

What Should Happen?

Claude should run in VS Code extension as it was doing till yesterday for me

Error Messages/Logs

Steps to Reproduce

just run claude code on vs code extension

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.100 (Claude Code)

Platform

Anthropic API

Operating System

Windows

Terminal/Shell

Windows Terminal

Additional Information

<img width="1060" height="413" alt="Image" src="https://github.com/user-attachments/assets/1fe284b3-aff0-4779-b88c-d1dc43a238e5" />