Command line `--install-extension` & `--list-extensions` options do not work within VSCode integrated terminal

[Supermanuu]

Type: Bug

1. Open a powershell terminal inside vscode terminal
2. Run code --list-extensions or code --install-extension "ms-vscode.cpptools"
3. Code UI opens but the powershell command do not return nothing

Outside VSCode, in a powershell terminal, the command works well.

My problem is that I use a task to check and install the extensions from extensions.json. This is the code of the task:

{
            "label": "Install All Recommended Extensions",
            "type": "shell",
            "windows": {
                "command": "foreach ($ext in (Get-Content -Raw .vscode/extensions.json | ConvertFrom-Json).recommendations) { Write-Host Installing $ext; code --install-extension $ext; }"
            },
            "linux": {
                // This needs jq to be installed, you must run: sudo apt install jq
                "command": "cat .vscode/extensions.json | jq .recommendations[] | xargs -n 1 code . --install-extension"
            },
            "runOptions": {
                "runOn": "folderOpen"
            },
            "presentation": {
                "reveal": "silent",
                "close": true
            },
            "problemMatcher": []
        },

This only happens in Windows, on WSL this does not fail.

VS Code version: Code 1.111.0 (ce099c1, 2026-03-06T23:06:10Z)
OS version: Windows_NT x64 10.0.26100
Modes:

System Info

Item	Value
CPUs	11th Gen Intel(R) Core(TM) i7-11800H @ 2.30GHz (16 x 2304)
GPU Status	2d_canvas: enabled GPU0: VENDOR= 0x8086, DEVICE=0x9a60 [Intel(R) UHD Graphics], DRIVER_VENDOR=Intel, DRIVER_VERSION=32.0.101.7082 ACTIVE GPU1: VENDOR= 0x10de, DEVICE=0x25b8 [NVIDIA RTX A2000 Laptop GPU], DRIVER_VERSION=32.0.15.7357 GPU2: VENDOR= 0x1414, DEVICE=0x008c [Microsoft Basic Render Driver], DRIVER_VERSION=10.0.26100.7309 Machine model name: Machine model version: direct_rendering_display_compositor: disabled_off_ok gpu_compositing: enabled multiple_raster_threads: enabled_on opengl: enabled_on rasterization: enabled raw_draw: disabled_off_ok skia_graphite: disabled_off trees_in_viz: disabled_off video_decode: enabled video_encode: enabled webgl: enabled webgl2: enabled webgpu: enabled webnn: disabled_off
Load (avg)	undefined
Memory (System)	31.73GB (15.56GB free)
Screen Reader	no
VM	0%

Extensions (28)

Extension	Author (truncated)	Version
cmake-test-adapter	fre	1.1.2
todo-tree	Gru	0.0.226
h2o-wave	h2o	1.6.1
debug-tracker-vscode	mcu	0.0.15
memory-view	mcu	0.0.29
rainbow-csv	mec	3.24.1
git-graph	mhu	1.30.0
black-formatter	ms-	2025.2.0
debugpy	ms-	2025.18.0
python	ms-	2026.2.0
vscode-pylance	ms-	2026.1.1
vscode-python-envs	ms-	1.22.0
remote-wsl	ms-	0.104.3
cmake-tools	ms-	1.22.28
cpp-devtools	ms-	0.3.6
cpptools	ms-	1.30.5
cpptools-extension-pack	ms-	1.5.1
hexeditor	ms-	1.11.1
vscode-serial-monitor	ms-	0.13.1
gitpatch	par	0.2.1
tcl	ras	0.1.0
vscode-yaml	red	1.21.0
vscode-coverage-gutters	rya	2.14.0
auto-reload	seb	0.0.5
vscode-input-sequence	tom	0.2.0
cmake	twx	0.0.17
debug	web	0.27.0
file-auto-scrolling	zon	0.0.12

(1 theme extensions excluded)

A/B Experiments

vsliv368cf:30146710
binariesv615:30325510
nativeloc1:31344060
dwcopilot:31170013
dwoutputs:31242946
copilot_t_ci:31333650
e5gg6876:31282496
pythonrdcb7:31342333
6518g693:31463988
aj953862:31281341
6abeh943:31336334
envsdeactivate2:31464701
cloudbuttont:31379625
aihoversummaries_t:31469308
3efgi100_wstrepl:31403338
use-responses-api:31390855
ec5jj548:31422691
cp_cls_t_966_ss:31454198
4je02754:31466945
7a04d226_do_not_restore_last_panel_session:31438103
cp_cls_c_1081:31454833
a43f0576c:31442824
e9c30283:31461165
test_treatment2:31471001
idci7584:31464702
edit_mode_hidden:31461530
864ei723_large_tool_results_to_disk:31460878
showingstats:31471631
b1f5h706:31471673
chat:31457767
jdddd261:31472041
cpptoolson-v2:31475363
githubstableflight:31469463
hover1:31474145
c3257622:31473910
commenticon:31473926
nes-notsn-1:31475122

[caspinos]

I've encountered the same issue.
Running these commands in Windows terminal works as intended but in terminal panel inside vscode it just opens new vscode window.

Update:
Running these commands with code.cmd works as intended even inside vscode terminal panel.

[Supermanuu]

Update: Running these commands with code.cmd works as intended even inside vscode terminal panel.

Same here!