[BUG] Autocompact is thrashing: the context refilled to the limit within 3 turns of the previous compact, 3 times in a row.

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?

Autocompact is thrashing: the context refilled to the limit within 3 turns of the previous compact, 3 times in a row. A file being read or a tool output is likely too large for the context window. Try reading in smaller chunks, or use /clear to start fresh.

Claude Vscode extension version: 2.1.220

What Should Happen?

I should not get this warning and the agent should not keep compating every prompt when the context is not large at all.

Error Messages/Logs

Steps to Reproduce

1. I got this warning while doing a heavy context operation with a large file.
2. Since then i have restarted vscode, reinstalled the extension, used /clear.
3. I am getting this warning even for a much smaller and routine prompts. Almost like there is a cache which is still not clearing the threshold for the warning to clear.

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.1.220`

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_