[BUG] Claude Code VS Code extension: session repeatedly stalls/hangs at async handoff points (tool dispatch, background-task notification, context compaction) — requires reload/reboot to recover

Nobody has claimed this yet.

### Preflight Checklist

- [x] I have searched [existing issues](https://github.com/anthropics/claude-code/issues?q=is%3Aissue%20state%3Aopen%20label%3Abug) 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?

**Title:**
Claude Code VS Code extension: session repeatedly stalls/hangs at async handoff points (tool dispatch, background-task notification, context compaction) — requires reload/reboot to recover

**Bug description:**

> On Windows 11 Pro (10.0.26200), the Claude Code VS Code extension has repeatedly wedged mid-session: the progress indicator keeps animating but no real work is happening (no tool call in flight to time out, no text being generated). No in-session recovery has ever worked — only closing/reloading the session or a full machine reboot clears it.
>
> Four distinct occurrences in one project, all with the same "alive indicator, dead process" symptom, but each at a different async handoff point in the client's orchestration:
>
> 1. **2026-08-31** — stalled during an in-flight tool call (`Read`). Immediately preceded by a synthetic interrupt message the user never typed: *"The user doesn't want to take this action right now. STOP..."*
> 2. **2026-09-02** — stalled between text generation and tool dispatch. The model's turn ended with stated intent ("Let's check X") but no tool-use block was actually attached. UI showed "working" for ~1 hour with nothing dispatched to ever time out.
> 3. **2026-09-03** — internal client boilerplate leaked into a real reply: a substantive user message was answered with the literal string `"No response requested."` (the client's internal marker for silently acknowledging a background-task notification), not a real answer. Occurred twice in one conversation, both times right after a user message containing the word "continue".
> 4. **2026-09-19** — stalled during automatic context compaction; the compaction step never completed.
>
> All four sit at an async handoff boundary in the extension host (tool-dispatch handoff, background-notification injection, compaction pipeline) rather than inside a normal uninterrupted model turn, suggesting a shared root cause in the client's orchestration — e.g. an unhandled promise/await, a deadlocked queue, or a dropped IPC message under load — rather than four unrelated issues.
>
> Full writeup with more detail attached / pasted below.

**Session/transcript ID:** `f31a5531-07b9-48ac-91e0-b205cf21c34f`

[claude-code-vscode-stall-bug-report.md](https://github.com/user-attachments/files/32410234/claude-code-vscode-stall-bug-report.md)

### What Should Happen?

The working session should not hang -
The front end shows me the usual - thinking, combobulating etc. on a continuing basis, but actually nothing is happening

### Error Messages/Logs

```shell
No error - that's the problem
The front end shows that Claude is working - but its not working at all - its just hanging
```

### Steps to Reproduce

This happens at random times. There's no repeatable pattern. It doesn't happen that often, but it's happened often enough that I've caught it four times in this conversation, and I run many different conversations.

### Claude Model

Sonnet (default)

### Is this a regression?

No, this never worked

### Last Working Version

This has hapened ove multiple versions ove the last month at least. I update whenever there's a new version

### Claude Code Version

Current V2.1.278 VScode extension

### Platform

Other

### Operating System

Windows

### Terminal/Shell

VS Code integrated terminal

### Additional Information

Nothing much more to add here.

Start with the attached session report and the VS Code extension host orchestration around tool dispatch, background-task notifications, and context compaction. No source file, test, reproducible sequence, or useful log is named; completion would require identifying the shared stall mechanism, reproducing it, and demonstrating that sessions recover without reloads or reboots.

Written by the indexing model from the issue text.