[BUG] [Claude Code VS Code Extension]Keep asking for login even if I am using third party provider [vertex]

[DigitalWNZ]

Preflight Checklist

• I have searched existing issues and this hasn't been reported yet
• This is a single bug report (please file separate reports for different bugs)
• I am using the latest version of Claude Code

What's Wrong?

In the past, I am using an older version of "Claude Code for VS code" extension together with "Claude Code" which worked perfect. I used vertex as the model provider for Claude Code.

One week ago I upgraded the extension to the latest version (2.0.10) and followed the instruction to update the VS Code setting as below

{
    "claude-code.environmentVariables": [      
      {
          "ANTHROPIC_MODEL": "claude-sonnet-4-5@20250929",
          "CLAUDE_CODE_USE_VERTEX": "1",
          "CLOUD_ML_REGION": "us-east5",
          "ANTHROPIC_VERTEX_PROJECT_ID": "XXX"
      }
    ]
}

I am sure this setting works because claude code still worked. However, ""Claude Code for VS code" extension" keep asking for login. Please kindly take a look and fix it ASAP.

What Should Happen?

Given the instruction , there is no need for login if I am using third-party provider.

Error Messages/Logs

No error message.

Steps to Reproduce

1. Upgraded the extension to the latest version (2.0.10)
2. Followed the instruction to update the VS Code setting as below

{
    "claude-code.environmentVariables": [      
      {
          "ANTHROPIC_MODEL": "claude-sonnet-4-5@20250929",
          "CLAUDE_CODE_USE_VERTEX": "1",
          "CLOUD_ML_REGION": "us-east5",
          "ANTHROPIC_VERTEX_PROJECT_ID": "XXX"
      }
    ]
}

3. completely quit vscode and re-enter.

Claude Model

None

Is this a regression?

Yes, this worked in a previous version

Last Working Version

No response

Claude Code Version

2.0.1

Platform

Google Vertex AI

Operating System

macOS

Terminal/Shell

iTerm2

Additional Information

No response

[github-actions]

Found 3 possible duplicate issues:

1. [BUG] [VS Code Extension] LLM Gateway/Custom ANTHROPIC_BASE_URL not working in v2.0.0+ #9010
2. [BUG] New VS Code Extension does not recognize ANTHROPIC_BASE_URL and shows login screen #8522
3. [BUG] Environment Variables No Longer Override settings.json in v2.0.1 #8500

This issue will be automatically closed as a duplicate in 3 days.

• If your issue is a duplicate, please close it and 👍 the existing issue instead
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🤖 Generated with Claude Code

[DigitalWNZ]

This case is different from the issues above.

In my case, I am using third-party service provider (vertex) so there is no need for ANTHROPIC_BASE_URL.

[dusanslad]

I want to say that I and my colleagues also have issues with the one stated here..
We are using aws Bedrock but the issue is the same..

[github-actions]

This issue has been inactive for 30 days. If the issue is still occurring, please comment to let us know. Otherwise, this issue will be automatically closed in 30 days for housekeeping purposes.

[github-actions]

This issue has been automatically closed due to 60 days of inactivity. If you're still experiencing this issue, please open a new issue with updated information.