[BUG] "Edit/Write permission prompts in VS Code extension missing 'Always allow' option"

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?

• VS Code extension 2.1.140 on macOS
• Prompt fires for Edit/Write to any path to confirm action
• Has Yes/No only — no "always allow" / "always allow for this tool" option (screenshot attached)
• permissions.defaultMode: bypassPermissions in ~/.claude/settings.json ignored (extension launches with --permission-mode default hardcoded, visible in ps -ax | grep claude)

<img width="1082" height="287" alt="Image" src="https://github.com/user-attachments/assets/e6e76d61-c839-4a8a-ad42-cde88a3bafdb" />

What Should Happen?

• Expected: either honor the settings.json defaultMode, or always show "always allow" on these prompts

Error Messages/Logs

Steps to Reproduce

Just ask Claude to edit a project file

Claude Model

Not sure / Multiple models

Is this a regression?

No, this never worked

Last Working Version

_No response_

Claude Code Version

2.1.140

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Other

Additional Information

_No response_