Microsoft has updated Visual Studio Code (VS Code) to version 1.102 with another bundle of Copilot features including general availability of MCP (Model Context Protocol) support.
In the summary of key features in this release, 8 out of 9 are Copilot related, leaving just one (scroll the editor on middle click) as a non-AI feature.
MCP support is now generally available, and there is a new MCP Servers section in the VS Code Extensions view. This links to an MCP list on the VS Code website, with an install button for each. Microsoft describes this as a curated list, though at the time of writing only 37 MCP servers are included. MCP support includes the elicitation feature, which enables MCP servers to request input from developers via their clients.
Custom instructions, defined in markdown files, enable developers to specify rules and conventions which should be automatically respected by AI suggestions. They are treated as part of every prompt sent to Copilot. Instructions for tasks that do not generate code, such as pull request prompts, can be defined in VS Code settings. New in this release is the ability to generate instructions using Copilot Chat, which it will do by analyzing the codebase and reflecting its existing structure and patterns.
The VS Code team is also working on auto-approval for terminal commands considered safe, when executed by AI agents. This feature is experimental and includes an allow list for commands such as cd (change directory) and ls (list files) and a deny list for commands such as rm (remove) – though in the current experiment, the allow list is empty. Plans include a UI for adding commands and an option to have the LLM (large language model) itself evaluate the safety of a command. The feature touches on a difficult aspect of agentic AI: for safety, every action should be subject to human review, but for productivity, auto-allow saves time and effort.
Is VS Code development now too much dominated by AI features? Some devs think so. “Yay, more AI bloat,” said one. The counter-argument is in Microsoft’s FAQ which claims that “from usage telemetry, we can see that more users are actually using AI features in VS Code than some other features like debugging or testing.”
It is telling that VS Code product manager Isidor Nikolic, remarking on a bug in the Live Share extension, said “that extension has limited resourcing to my knowledge.” Live Share was touted as a huge feature of VS Code when it was introduced, but today AI appears to absorb most of the team’s energy. Live Share is broken in the new release with an error “cannot read properties of null:” this has been fixed in the preview Insiders build but the fix has introduced another error “argument does not match.”
Another key trend is increasing interest in CLI (command line interface) tools for AI coding. “Claude Code has absolutely exploded … dead simple to onboard (use whatever IDE you’re using now, with a simple extension for some UX improvements)” said one developer, commenting on the future of Cursor, which forks VS Code.
Microsoft said in May that it intends VS Code to be the “open source AI editor,” in support of which it is making more of the AI features open source, including Copilot Chat (client only). A side-effect is that VS Code has become a promotional vehicle for GitHub Copilot. Some might prefer the team to work on decoupling the IDE from the AI features, removing bloat for those not using Copilot.