[BUG] Opus 4.8 unavailable via /model in VS Code extension, despite working in Desktop app and CLI

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?

/model claude-opus-4-8 fails inside the Claude Code VS Code extension with the generic message "/model isn't available in this environment" — even though the same Anthropic account has full (100%) org-confirmed access to Opus 4.8, and that same account can already select and use Opus 4.8 successfully in both the Claude Desktop app and the Claude Code CLI (terminal). The failure is isolated to this one VS Code extension session. It's also not a blanket extension bug — other users in the same org, on the same plan entitlement and the same auto-updated extension version, are able to switch to Opus 4.8 in the extension without issue. Toggling the one related-looking local setting (switchModelsOnFlag in ~/.claude/settings.json) from false to true had no effect. This points to a session- or account-binding bug specific to how the VS Code extension resolves available models, rather than a plan/entitlement restriction.

What Should Happen?

Running /model claude-opus-4-8 in the VS Code extension should succeed and switch the active model to Opus 4.8 — matching the behavior already seen for this same account in the Claude Desktop app and the Claude Code CLI, and matching what other users in the org see when doing the same thing in the same extension.

Error Messages/Logs

Steps to Reproduce

1. Open the Claude Code VS Code extension chat.
2. Run: /model claude-opus-4-8
3. Observe response: "/model isn't available in this environment."
4. Check org/Anthropic console — confirms 100% plan access to Opus 4.8 for this account.
5. Check ~/.claude/settings.json — found "switchModelsOnFlag": false.
6. Toggle switchModelsOnFlag to true via the extension's UI settings.
7. Re-run: /model claude-opus-4-8 — same failure, no change.
8. Open Claude Desktop app (same account) — Opus 4.8 selects and works fine.
9. Open Claude Code CLI in terminal (same account) — Opus 4.8 selects and works fine.
10. Ask a colleague on the same org plan, same auto-updated VS Code extension, to run /model claude-opus-4-8 — succeeds for them.

Claude Model

Other

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.198 (the VS Code extension version — this is what's actually failing).

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

Terminal.app (macOS)

Additional Information

_No response_