[FEATURE] Option to run Claude Code in Terminal Panel

Preflight Checklist

• [x] I have searched existing requests and this feature hasn't been requested yet
• [x] This is a single feature request (not multiple features)

Problem Statement

Currently, Claude Code only runs in the VSCode sidebar. For users who prefer bottom panel layouts or have limited horizontal screen space, this can be restrictive. Many developers are accustomed to having AI assistants and terminals in the lower panel for better workflow integration.

Proposed Solution

Add an option to run Claude Code in VSCode's terminal panel (bottom panel) as an alternative to the sidebar.

Benefits

• Better screen real estate utilization for users with limited horizontal space
• Consistent layout with other terminal-based tools and workflows
• Familiar placement for users coming from terminal-based AI assistants
• More flexibility in VSCode layout customization

Alternative Solutions

This worked with the previous version of Claude Code. I could move the panel into the VSCode terminal and then switch between multiple instances of Claude Code, each with different tasks.

Priority

High - Significant impact on productivity

Feature Category

Configuration and settings

Use Case Example

_No response_

Additional Context

Suggested Implementation

• Add a command: "Claude Code: Open in Terminal Panel"
• Add a setting: claudeCode.panelLocation with options "sidebar" or "terminal"
• Optionally, add a keyboard shortcut to toggle between sidebar and terminal panel

Alternative Workarounds

Currently, users must either:

• Use the sidebar (which may be suboptimal for their workflow)
• Use the standalone CLI in a regular terminal (losing integration features)

Related

Similar to how other VSCode extensions (GitHub Copilot Chat, various terminal tools) offer panel location options.