Copilot Agent (Claude Sonnet 5) freezes forever on "Thinking" - Needs help!

Hi everyone, I need some help.
I am trying to use the GitHub Copilot Agent mode (in VS Code) with Claude Sonnet 5. It used to work perfectly, but recently it started freezing completely right in the middle of "Thinking".
The agent simply gets stuck for hours doing nothing. It doesn't take new turns, and it ignores new prompts. Sometimes, if I restart and send a "continue" message, it works for 1 to 3 turns and then freezes all over again.
This bug makes it impossible to work. I keep losing my context cache and wasting a lot of tokens trying to get it to respond.
I haven't made any changes to my system or settings that would explain this. It just stopped working smoothly out of nowhere.
To help identify the issue, I am attaching:
GitHub Copilot Chat Output
Agent Debug Log
My PC specs and VS Code info:
- VS Code Version: 1.136.0-insider
- Architecture: x64
- OS: Windows
- GitHub Copilot Chat Version: 0.64.2026082807
- Model: Claude Sonnet 5 (High Reasoning / 200k context limit)
https://drive.google.com/drive/folders/1v4OjiNAVhlCSEboN2Mjh7a-CjuRqClfi?usp=sharing
Has anyone experienced this exact freeze lately? Does anyone know how to fix this? Any help is appreciated!