Copilot in VS Code lost the ability to edit files directly, or access powershell.

[FlowingPixelsStudio]

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"Sorry, I can't assist with that. I'm designed to help with suggesting directory structures for projects. For file operations like opening, editing, and saving files, you'll need to use VS Code's built-in features directly."

I'm working on a wordpress child theme, and it's been doing a lot of the heavy lifting. I've set up a docker desktop container running a wordpress site on localhost. Yesterday it was opening and editing files, and then asking for approval. I would refresh the page and see the changes in my browser.

I noticed this morning it had switched from making changes and asking for approval before committing them, to suggesting changes without implementing them.

So I started a new chat and said simply "what are your capabilities". This was the response:

GitHub Copilot Capabilities

As your AI programming assistant, I can help with:

Code Tasks

• Explain code in your active editor
• Make changes to existing code
• Generate new code based on requirements
• Scaffold new projects or files
• Review selected code
• Generate unit tests
• Propose fixes for problematic code

File & Workspace Support

• Answer questions about files in your workspace
• Create new files including Jupyter Notebooks
• Generate query parameters for workspace search

Terminal Assistance

• Explain terminal outputs
• Help with terminal commands
• Guide you through terminal tasks

General Support

• Answer programming questions
• Provide VS Code usage guidance
• Suggest best practices

Would you like help with a specific task?

So I responded with: "Add a file named test.md, and fill it with a heading, subheadings, and 3-5 paragraphs explaining our conversation so far."

To which it replied: Sorry, I can only help with generating directory structures for projects. I can't create or modify the content of specific files. If you'd like me to suggest a directory structure for a project, please let me know what type of project you're working on.

We went back and forth, but I can't seem to figure out what's not connecting. I'm on day 2 of a 30 day trial before I'm billed. Day 1 was as expected, Day 2 I'm considering switching to a competitor.

[FlowingPixelsStudio]

I'm dumb. It's a setting: Ask, Edit, or Agent in the bottom left of the chat window. I'll have to test the difference between Agent and Edit.

[vpexxi]

hmm, that sintersting.. GitHub Copilot itself doesn’t run off and magically drop files into your project – it lives in your editor and offers up code snippets or file templates that you explicitly accept or reject. Even in “Edit” or “Agent” modes, you’ll still trigger the action (like “Create file” or “Add code here”), Copilot will draft the content, and then you paste or confirm it into your workspace. It won’t overwrite or add files on its own without your go-ahead......

[abarke]

I also ran into this one 🙈 oh man, I thought Agent was default and was so used to it, but since VSCode updated it defaulted back to "Ask"

[abarke]

I was like "Apply the changes to the project... Now implement the changes", I thought it was a bug 😆

[abarke]

After the giant refactoring that "Ask" mode performed, I simply went back to the last comment after the refactor, edited it and switched it to "Agent" mode, that way the context was kept, thankfully 🙏

[mechaDoodle2005]

It turns out the behavior you're experiencing is caused by the mode selection in Copilot Chat. In the toolbar (bottom-left of the chat window), you have options like Ask, Edit, and Agent. Each of these modes governs what Copilot is allowed to do:

Ask: Copilot behaves like a traditional chat assistant—it can answer questions and explain code, but it will not modify files.

Edit: Copilot can suggest and apply edits directly to your files. This is what allowed file creation and inline code changes yesterday.

Agent: This mode elevates Copilot’s capabilities, letting it use the terminal, run commands, and orchestrate more complex workflows in your environment.

It sounds like your session switched from Edit to Ask, which is why Copilot is now generating suggestions without executing them. To restore full file-editing functionality:

Click the mode selector in the bottom-left corner of the Copilot Chat panel.

Choose Edit if you'd like it to apply changes to the active file directly.

Choose Agent for the broadest capabilities, including file and terminal operations.

[crmdepllc]

**Click the mode selector in the bottom-left corner of the Copilot Chat panel.

Choose Edit if you'd like it to apply changes to the active file directly.

Choose Agent for the broadest capabilities, including file and terminal operations.**

This solve my issue 😊. Thank you so much. Appreciate that!

[AhtiAhdeElisa]

This seems to have a bug afterall, sometimes you have to re-select the Agent mode, probably after logging in again. Might also be that sometimes selections in other windows affect the selections in others, but those are not visible in the UI.

[buttawb]

That's super frustrating! I've seen this exact issue happen to several people recently. The good news is it's usually fixable without switching away from Copilot.

Quick fixes to try:

1. Restart VS Code completely - not just reload window, fully quit and reopen
2. Check your Copilot extension version - there was a recent update that caused some capability issues. Try downgrading to the previous version if you just updated
3. Sign out and back into Copilot - Command palette → "GitHub Copilot: Sign Out" then sign back in

The real culprit is usually workspace context. Copilot sometimes gets "confused" about what it can do in different workspaces. Try:

• Opening a completely new folder/workspace
• Test the same commands there
• If it works in the new workspace, there's something in your WordPress project config that's limiting it

Also check:

• Is your workspace in a restricted folder? (Some system folders limit extensions)
• Any .vscode/settings.json files that might have Copilot restrictions?
• Docker container file permissions - sometimes Copilot can't write to mounted volumes

The fact that it worked perfectly on day 1 then suddenly changed suggests either an extension update or workspace permissions issue rather than a fundamental capability loss.

Let me know if the restart/sign-out doesn't work - there are a few other things to try before jumping ship!

[bowale01]

I was able to do this by following this step Step-by-Step: Enable Copilot Workspace Edits on Windows
1️⃣ Install VS Code Insiders

Go to 👉 https://code.visualstudio.com/insiders/

Click “Windows – User Installer” (the recommended one).

When prompted, choose:

✅ Add to PATH

✅ Register as default editor for supported file types (optional)

Finish installation and launch VS Code Insiders.
You’ll see a green icon instead of blue.