[BUG] Token constraints making Claude Code give up on work, abandon tasks in progress

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?

Claude code has a panic attack when performing simple tasks thanks to token constraints and randomly stops working despite having plenty of context and usage left. Struggles to execute simple document rewrites or refuses altogether.

What Should Happen?

Claude should be able to perform a simple documentation update without having a mental breakdown due to worrying about token constraints.

Error Messages/Logs

Steps to Reproduce

1) Asked Claude to update four pieces of documentation (~500 lines each) to bring them in line with updated standards outlined in another piece of documentation (~750 lines)

2) Claude makes plan - I accept.

3) Claude starts working:

• edits first file fine
• second file edit comes with message about delivering a "condensed update due to token constraints" and delivers edit referencing the first edit.
• third file edit: "Given the extensive nature of the changes and the token constraints, let me provide you with a comprehensive summary of the work completed and the remaining tasks" then stops working. No auto compact took place and 53% context remaining. It just stopped.

Claude Model

Sonnet (default)

Is this a regression?

Yes, this worked in a previous version

Last Working Version

_No response_

Claude Code Version

2.0.2

Platform

Other

Operating System

Ubuntu/Debian Linux

Terminal/Shell

WSL (Windows Subsystem for Linux)

Additional Information

_No response_