[BUG] VS Code extension /model does not change the active model when ANTHROPIC_MODEL is set (v2.1.168)

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?

In the Claude Code VS Code extension, the /model selector does not actually change the active model if ANTHROPIC_MODEL is configured in VS Code settings via claudeCode.environmentVariables.

Instead, the extension appears to keep using the model from ANTHROPIC_MODEL, regardless of what is selected through /model.

This does not reproduce in Claude Terminal, where /model works as expected.

What Should Happen?

The model selected via /model should become the active model for the session.

Error Messages/Logs

The session continues using the model from `ANTHROPIC_MODEL`, and the `/model` selection does not take effect.

Steps to Reproduce

1. Install Claude Code VS Code extension 2.1.168
2. Configure Claude Code in VS Code with Bedrock-related environment variables
3. Add ANTHROPIC_MODEL to claudeCode.environmentVariables
4. Open a new Claude Code session in VS Code
5. Run /model
6. Select a different model than the one set in ANTHROPIC_MODEL
7. Send a prompt

Claude Model

None

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.1.168

Platform

AWS Bedrock

Operating System

macOS

Terminal/Shell

VS Code integrated terminal

Additional Information

If I remove ANTHROPIC_MODEL from claudeCode.environmentVariables, /model starts working again in the VS Code extension.

This strongly suggests that ANTHROPIC_MODEL from extension-injected environment variables overrides the model selected via /model.

Comparison with Claude Terminal

The same issue does not occur in Claude Terminal.

In Terminal, /model changes the active model correctly, which suggests the problem is specific to the VS Code extension integration layer.

Suspected cause

After reverse engineering the extension bundle, it looks like:

• the extension injects claudeCode.environmentVariables into the spawned Claude process environment
• /model in the VS Code extension does not appear to use a live session-level model switch path
• the effective model seems to remain pinned to ANTHROPIC_MODEL when that env var is present

So this may be a precedence issue between:

• model selected via /model
• extension-applied flag/settings updates
• environment variable ANTHROPIC_MODEL

Workaround

Remove ANTHROPIC_MODEL from:

• claudeCode.environmentVariables

After that, /model works correctly again in the VS Code extension.