Visual Studio Code 1.104, the latest release of Microsoft’s popular code editor, features flexibility for models in chat and a security capability to confirm edits.

Released September 11, the August 2025 release of VS Code can be downloaded at code.visualstudio.com for Windows, Linux, and Mac operating systems. This version previews an automatic model selection capability in chat. When developers choose “Auto” in the model picker, VS Code automatically selects a model for optimal performance and avoidance of rate limits. Automatic model selection is being rolled out to all GitHub Copilot users in VS Code in the following weeks. The model picker will choose between Claude Sonnet 4, GPT-5, GPT-5 mini, and GPT-4.1 and Gemini Pro 2.5, unless access to any of these models was disabled by the organization. The new release also features the finalized LanguageModelChatProviders API, which lets extensions contribute one or more language models, whether local or cloud-hosted. By installing the extension, users can select these models through the model picker in chat.

VS Code 1.104 emphasizes agent security. When in agent mode, the agent can autonomously edit files in a VS Code workspace. This might include accidentally or maliciously modifying or deleting important files such as configuration files, which could cause negative side-effects. But this release adds a layer of security by having the agent explicitly asking for user confirmation before editing certain files. Additionally for security, this release introduces improvements to the terminal auto approve setting to enhance both security and usability. Among other improvements, users now can enable or disable the setting.

VS Code 1.104 follows the August 7 unveiling of VS Code 1.103, which allowed configuration of autostart behavior for MCP (Model Context Protocol) servers. Other capabilities in VS Code 1.104 include the following:

• When developers have an AGENTS.md file in one or more workspace roots, it is automatically picked up as context for chat requests. This can be useful for teams using multiple AI agents.
• When running a task or terminal command in agent mode, the agent now detects when the process requests user input. The developer is prompted to respond in chat.
• The changed files list has been reworked with several quality-of-life features. These changes should improve developer experience when working in agent mode.
• VS Code now reads MCP server instructions and will include them in the base prompt.
• Rendering of mathematical equations in chat responses is generally available and enabled by default.
• For code editing, an editor.inlineSuggest.minShowDelay setting lets developers configure how quickly inline suggestions can appear after typing. This can be useful if suggestions are appearing too quickly and getting in the way of typing.
• The #codebase tool was updated to use a new embeddings model for semantic searching for code in the workspace. The new model provides better results for code searches.
• For terminal support, the terminalSelection and terminalLastCommandtools were moved from the extension to core. This should provide general reliability improvements.