[BUG] VS Code extension 2.1.178: Edit tool calls open unwanted diff tabs

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?

Summary
Version 2.1.178 introduced new behavior where every Edit tool call opens a new diff tab in the editor. Not present in 2.1.177 and disruptive to workflow.

Steps to Reproduce

Install Claude Code VS Code extension 2.1.178
Ask Claude to make any file edit
Observe a new diff tab opens in VS Code for each Edit tool call

What Should Happen?

Expected Behavior
Edit tool calls apply changes without opening new tabs, as they did in 2.1.177.

Actual Behavior
Each Edit tool call opens a new diff tab, cluttering the editor and interrupting workflow. Tabs accumulate rapidly during multi-file edits. Users who are unaware of the diff-tab/approval UX can inadvertently reject edits while trying to approve them in chat.

Impact
Severe enough to require rolling back to 2.1.177.

Environment

Extension: 2.1.178 (regression from 2.1.177)
OS: Linux 6.17.0-35-generic
claudeCode.preferredLocation: "panel"
Workaround
Delete the 2.1.178 extension directory so VS Code falls back to 2.1.177.

Error Messages/Logs

Steps to Reproduce

Steps to Reproduce

Install Claude Code VS Code extension 2.1.178
Ask Claude to make any file edit
Observe a new diff tab opens in VS Code for each Edit tool call

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

2.1.177

Claude Code Version

2.1.178

Platform

Anthropic API

Operating System

Ubuntu/Debian Linux

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_