CLAUDE_CODE_DISABLE_MOUSE_CLICKS=1 no longer preserves text selection in VS Code terminal

Bug Report

Environment

• Claude Code version: 2.1.195
• OS: macOS (Darwin 25.5.0)
• Terminal: VS Code integrated terminal (panel mode)
• Claude Code TUI mode: fullscreen

Description

CLAUDE_CODE_DISABLE_MOUSE_CLICKS=1 no longer allows text selection in VS Code's integrated terminal. Click-to-submit is correctly disabled and mouse wheel scrolling works, but I cannot select any text from the chat output with the mouse at all.

This was working prior to the current release. The setting is configured in ~/.claude/settings.json:

{
  "env": {
    "CLAUDE_CODE_DISABLE_MOUSE_CLICKS": "1"
  }
}

Expected behavior

Per #71687 and the changelog for v2.1.195, CLAUDE_CODE_DISABLE_MOUSE_CLICKS=1 should:

• ❌ Disable click/drag/hover (click-to-submit)
• ✅ Preserve mouse wheel scrolling
• ✅ Preserve terminal's native copy-on-select / text selection

Actual behavior

• ❌ Click-to-submit disabled (correct)
• ✅ Mouse wheel scrolling works (correct)
• ❌ Text selection is broken — cannot select any text with the mouse

Steps to reproduce

1. Set CLAUDE_CODE_DISABLE_MOUSE_CLICKS=1 in settings
2. Launch Claude Code in VS Code integrated terminal (fullscreen TUI)
3. Try to select text from the conversation output with the mouse

Related

• #71687