News

Claude AI Gets Yet Another Boost in VS Code 1.128

• By David Ramel
• 07/08/2026

The July 2026 Visual Studio Code update expands agent workflows, chat attachments, browser-tab controls, OS-level shortcuts and enterprise telemetry management.

We've noticed before how Microsoft's VS Code team seems to have extended a special embrace for Anthropic's Claude AI, and that trend continues with the July 8, 2026, release of Visual Studio Code 1.128. The update post leads with multi-chat support for Claude agent sessions.

"With multiple chats, a session can contain related chats, so you can compare approaches, branch from an earlier turn, and run work in parallel," the team said. "You can add chats, fork a chat from an existing turn, switch between peer chats, and send turns concurrently. Each chat keeps its own history, title, and model selection, and restores with the parent session after restart. Peer chats stay grouped under the Claude session and don't appear as separate top-level sessions."

Other highlights include generally available Copilot Vision support in Chat, configurable placement for integrated browser tabs, OS-level keyboard shortcuts and enterprise controls for Copilot telemetry export, but the Claude-related updates certainly extend the trend.

Agent Sessions Get Multi-Chat Support
VS Code 1.128 adds support for multiple chats in a Claude agent-host session in the Agents window. The release notes say the feature is designed to keep related conversation threads within one session instead of spreading them across separate top-level sessions. A session can contain related chats that let developers compare approaches, branch from an earlier turn and run work in parallel.

Each chat keeps its own history, title and model selection, and the chats restore with the parent session after restart. Peer chats stay grouped under the Claude session and do not appear as separate top-level sessions.

The release also adds quick chats in the Agents window for questions that are not tied to a folder. These workspace-less chats appear in the Chats section and open ready for input. Because they are not associated with a workspace, the release notes say they do not show the workspace-specific Changes or Files side pane. Quick chats are restored with other sessions after reload and remain separate from workspace sessions.

Quick chats without a workspace are supported only by agent host sessions, and the release notes say the experience is available when the agent host is enabled with the chat.agentHost.enabled setting. Microsoft also documented a setting, sessions.list.showEmptyDefaultGroups, for hiding empty Pinned and Chats groups until they contain sessions.

VS Code 1.128 also introduces read-only subagent chats in preview. When an agent delegates work to subagents, their transcripts can appear as read-only peer chats. Microsoft said these chats are hidden from the tab strip until opened from the Conversations menu, the running-subagents chip or an inline subagent pill in the parent transcript. Opened subagent chats show live progress, use the subagent title when available, and omit the composer and mutating chat actions so the transcript remains view-only.

Copilot Vision Reaches General Availability
Copilot Vision is now generally available in VS Code Chat as part of the 1.128 release. Microsoft said users can attach images and PDFs to Chat by pasting them, dragging and dropping them, or using the context menu. The release notes also say images may be read by the agent through a tool call.

A related GitHub changelog entry says Copilot Vision supports JPEG, PNG, GIF and WebP image files, along with PDF documents. The changelog says GitHub Copilot Chat in VS Code supports image attachment in the chat panel through paste, drag-and-drop or right-click actions, and that the capability works in ask, plan and agent modes. The same changelog says Copilot Vision is available to Copilot Free, Pro, Pro+, Business and Enterprise subscribers, with no policy changes or admin actions required to turn it on.

The release adds experimental support for bring-your-own-key models in agent host Copilot sessions. Users can enable the chat.agentHost.byokModels.enabled setting and restart the agent host process for the change to take effect. The release notes mark the feature experimental and say it remains under active development.

VS Code 1.128 also expands custom endpoint model configuration. Users can configure temperature and top_p for each custom endpoint model by adding a modelOptions object to the model's JSON configuration. A property can be set to a number to override the default value sent by VS Code, or to null to omit the parameter from requests and use the model server's default. The release notes say the options apply to Chat Completions, Responses and Messages-compatible endpoints.

Another new BYOK setting, chat.byokUtilityModelDefault, lets users change behavior for built-in utility flows when a BYOK model is used as the main agent model. Microsoft cited chat-title generation and commit-message generation as examples of those utility flows. The release notes say the setting has no effect when the main agent model is provided by GitHub Copilot.

Editor Updates Include Browser Placement and System-Wide Shortcuts
In the editor experience, VS Code 1.128 adds workbench.browser.newTabPlacement, a setting that controls where integrated browser tabs open. The setting can use activeGroup, sideGroup or window. The default activeGroup opens browser tabs in the active editor group. The sideGroup option opens browser tabs in a dedicated locked group to the side, while window opens them in a dedicated auxiliary window.

The update also allows VS Code to contribute OS-level keyboard shortcuts. These shortcuts take effect even when VS Code is not focused. Developers can add systemWide to a keybinding definition in keybindings.json to make it OS-level. Microsoft provided an example for focusing the Agents window on macOS with cmd+shift+a and the workbench.action.openAgentsWindow command.

VS Code 1.128 adds keyboard shortcuts for chats in the Agents window. The release notes say users can create a chat, reopen the last closed chat, navigate to next or previous chats, switch between open chats, close the active chat tab, delete an active non-main chat and open a searchable picker for open and closed chats. Those shortcuts are scoped to the Agents window and fall back to existing session-level behavior when no chat-specific action is available.

Enterprise Controls Target Copilot Telemetry
For enterprise users, VS Code 1.128 adds managed controls for Copilot telemetry export with OpenTelemetry. Organizations can mandate where GitHub Copilot sends OpenTelemetry data so telemetry flows to an approved collector without each developer setting OTEL_* environment variables.

The release notes say administrators deliver the settings through the telemetry block in Copilot managed settings. The block controls the OTLP export endpoint and protocol, the OpenTelemetry service name and resource attributes, exporter headers, whether prompt and response content is captured, and whether developers can change that content-capture setting. Microsoft said a managed value takes precedence over environment variables and user settings.

The related OpenTelemetry monitoring documentation says Copilot Chat can export traces, metrics and events through OpenTelemetry, giving visibility into agent interactions, large language model calls, tool executions and token usage. The documentation says signal names and attributes follow OpenTelemetry GenAI Semantic Conventions so the data works with any OpenTelemetry-compatible backend.

Microsoft's broader Agents window documentation describes the Agents window as a dedicated VS Code window for an agent-first workflow, separate from the editor window that is optimized for code-centric work in a single workspace. The documentation says the Agents window gives access to workspaces from one place and lets users run and track multiple sessions in parallel across projects without opening each workspace in a separate window.