[BUG] Claude Code does not fall back when configured model is unavailable; status bar shows healthy session

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?

Claude Code was pinned to an unavailable model (Claude Fable 5). On launch it failed to operate but did not fall back to an available model, and it would not accept in-app model-change commands, so the session could not be corrected from inside the app. Recovery was possible but not discoverable in-app. The status bar continued to display the unavailable model and a green context-window gauge, falsely implying a healthy session. Recovery required an external override (ANTHROPIC_MODEL env var or --model flag).
Actual Behavior
No fallback occurred.

In-app model-change commands were not accepted.

The status bar still showed Fable 5 and a green context-window gauge, suggesting a healthy session when it was not.

The only working recovery was an external override:

ANTHROPIC_MODEL=claude-opus-4-8 claude

or

claude --model claude-opus-4-8

After starting on a valid model, /model worked again.

Running claude update (2.1.170 → 2.1.177) did not clear the bad state. The stuck configuration and status-bar display both persisted across the update.

What Should Happen?

Expected Behavior
One of the following:

Claude Code falls back to an available model automatically, with a notice.
Claude Code refuses to start and prints a clear error naming the unavailable model and the override commands.
In-app model-change commands remain functional so the user can self-correct.

Suggested Fixes
On startup, validate the configured model against available models. If invalid, fall back and notify, offer a model picker list with currently valid models, or fail with a clear, actionable error.
Keep in-app model-change commands functional even when the configured model is unavailable, so users can self-recover.
Fix the status bar to reflect the actual active model and a true context state. Do not show a green gauge for a non-functioning session.

Error Messages/Logs

Steps to Reproduce

Configure Claude Code to use a model the account cannot access (e.g. Fable 5).
Launch Claude Code.
Attempt to change models from inside the app (e.g. /model).

To confirm this bug, I'd suggest launching claude code and selecting a valid model. Then quit claude code. Then withdraw the selected model so claude won't be able to connect. Launch claude code again. You'll see an error message (I didnt record it, apologies), and any command you offer will just get the 'this isnt a valid model, pick another one with /model" but /model doesnt work. Quit claude code. Select the model with the --model switch on launch and progress will be restored. Note that claude update worked during the period Fable 5 was selected, updating me from 2.1.170 to 2.1.177. After the update the error persisted: claude launched bound to Fable 5, showed green in the status bar, and could not execute the /model command to select an alternate from inside claude code.

Love the product suite. Keep up the outstanding work!

Claude Model

Not sure / Multiple models

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

2.1.177

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

Environment Info
Platform: macOS (arm64), Mac Studio
Version: 2.1.170 (first observed), persisted after updating to 2.1.177
Configured model at time of failure: claude-fable-5 (unavailable to this account/session)
Working model after recovery: claude-opus-4-8