[BUG] Claude overwrites diff editor changes made in VS Code

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?

While in manual approval mode, Claude disregards the code edits that a developer makes against Claude's suggested code changes.

What Should Happen?

Claude should preserve user code edits made to its suggested code changes.

Error Messages/Logs

Steps to Reproduce

• Connect Claude Code to VS Code, have it suggest a file edit, make manual changes in the diff editor, save the editor, then approve the edit in the terminal.
• Expected: Your modified version is applied.
• Actual: Manual changes are discarded, and Claude's original suggestion is written.

--
UX audit trail show in screenshots.

Claude suggests:
"Sprig App Homepage" should change to "Sprig Commerce"

Before saying "Yes" to the changes, I make the minor edit:
"Sprig Commerce Homepage"

Click "Yes" to have Claude write the mixed user + LLM code changes.

Claude writes "Sprig Commerce", which is its original suggested code change rather than the expected string "Sprig Commerce Homepage"

• Verified in 1.0.126

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

1.0.126

Platform

Anthropic API

Operating System

macOS

Terminal/Shell

iTerm2

Additional Information

<img width="2650" height="3220" alt="Image" src="https://github.com/user-attachments/assets/07bb7b18-0b90-4c24-a11c-3a16fc9713b5" />
<img width="2656" height="3224" alt="Image" src="https://github.com/user-attachments/assets/8b622110-8db0-44ba-a9c7-5411a0497e82" />
<img width="2680" height="1648" alt="Image" src="https://github.com/user-attachments/assets/f2b7df6f-48f2-4e29-8ee1-bc4aa542967e" />