diff --git a/.github/copilot-instructions.md b/.github/copilot-instructions.md
index a100345f459b1..8dbae58b45f6b 100644
--- a/.github/copilot-instructions.md
+++ b/.github/copilot-instructions.md
@@ -28,6 +28,7 @@ Visual Studio Code is built with a layered architecture using TypeScript, web AP
 The core architecture follows these principles:
 - **Layered architecture** - from `base`, `platform`, `editor`, to `workbench`
 - **Dependency injection** - Services are injected through constructor parameters
+    - If non-service parameters are needed, they need to come after the service parameters
 - **Contribution model** - Features contribute to registries and extension points
 - **Cross-platform compatibility** - Abstractions separate platform-specific code
 
diff --git a/.gitignore b/.gitignore
index 1dbe527cb8ade..3d97a65e02779 100644
--- a/.gitignore
+++ b/.gitignore
@@ -6,6 +6,7 @@ node_modules/
 .build/
 .vscode/extensions/**/out/
 extensions/**/dist/
+src/vs/base/browser/ui/codicons/codicon/codicon.ttf
 /out*/
 /extensions/**/out/
 build/node_modules
diff --git a/build/gulpfile.editor.ts b/build/gulpfile.editor.ts
index 5096f8caa1e80..338c678b7de3f 100644
--- a/build/gulpfile.editor.ts
+++ b/build/gulpfile.editor.ts
@@ -36,6 +36,14 @@ const BUNDLED_FILE_HEADER = [
 ].join('\n');
 
 const extractEditorSrcTask = task.define('extract-editor-src', () => {
+	// Ensure codicon.ttf is copied from node_modules (needed when node_modules is cached and postinstall doesn't run)
+	const codiconSource = path.join(root, 'node_modules', '@vscode', 'codicons', 'dist', 'codicon.ttf');
+	const codiconDest = path.join(root, 'src', 'vs', 'base', 'browser', 'ui', 'codicons', 'codicon', 'codicon.ttf');
+	if (fs.existsSync(codiconSource)) {
+		fs.mkdirSync(path.dirname(codiconDest), { recursive: true });
+		fs.copyFileSync(codiconSource, codiconDest);
+	}
+
 	const apiusages = monacoapi.execute().usageContent;
 	const extrausages = fs.readFileSync(path.join(root, 'build', 'monaco', 'monaco.usage.recipe')).toString();
 	standalone.extractEditor({
diff --git a/build/npm/postinstall.ts b/build/npm/postinstall.ts
index c4bbbf5296024..e94aaaf54c065 100644
--- a/build/npm/postinstall.ts
+++ b/build/npm/postinstall.ts
@@ -184,3 +184,21 @@ for (const dir of dirs) {
 
 child_process.execSync('git config pull.rebase merges');
 child_process.execSync('git config blame.ignoreRevsFile .git-blame-ignore-revs');
+
+// Copy codicon.ttf from @vscode/codicons package
+const codiconSource = path.join(root, 'node_modules', '@vscode', 'codicons', 'dist', 'codicon.ttf');
+const codiconDest = path.join(root, 'src', 'vs', 'base', 'browser', 'ui', 'codicons', 'codicon', 'codicon.ttf');
+
+if (!fs.existsSync(codiconSource)) {
+	console.error(`ERR codicon.ttf not found at ${codiconSource}`);
+	process.exit(1);
+}
+
+try {
+	fs.mkdirSync(path.dirname(codiconDest), { recursive: true });
+	fs.copyFileSync(codiconSource, codiconDest);
+	log('.', `Copied codicon.ttf to ${codiconDest}`);
+} catch (error) {
+	console.error(`ERR Failed to copy codicon.ttf from ${codiconSource} to ${codiconDest}:`, error);
+	process.exit(1);
+}
diff --git a/extensions/git/package.json b/extensions/git/package.json
index 47dbceb909276..36a8bcf872463 100644
--- a/extensions/git/package.json
+++ b/extensions/git/package.json
@@ -3592,11 +3592,12 @@
           "items": {
             "type": "string"
           },
-          "default": [
-            "**/node_modules/**"
-          ],
+          "default": [],
+          "markdownDescription": "%config.worktreeIncludeFiles%",
           "scope": "resource",
-          "markdownDescription": "%config.worktreeIncludeFiles%"
+          "tags": [
+            "experimental"
+          ]
         },
         "git.alwaysShowStagedChangesResourceGroup": {
           "type": "boolean",
diff --git a/extensions/git/src/askpass.ts b/extensions/git/src/askpass.ts
index d9c852031e384..1cb1890e24245 100644
--- a/extensions/git/src/askpass.ts
+++ b/extensions/git/src/askpass.ts
@@ -5,10 +5,10 @@
 
 import { window, InputBoxOptions, Uri, Disposable, workspace, QuickPickOptions, l10n, LogOutputChannel } from 'vscode';
 import { IDisposable, EmptyDisposable, toDisposable, extractFilePathFromArgs } from './util';
-import * as path from 'path';
 import { IIPCHandler, IIPCServer } from './ipc/ipcServer';
 import { CredentialsProvider, Credentials } from './api/git';
 import { ITerminalEnvironmentProvider } from './terminal';
+import { AskpassPaths } from './askpassManager';
 
 export class Askpass implements IIPCHandler, ITerminalEnvironmentProvider {
 
@@ -20,23 +20,30 @@ export class Askpass implements IIPCHandler, ITerminalEnvironmentProvider {
 
 	readonly featureDescription = 'git auth provider';
 
-	constructor(private ipc: IIPCServer | undefined, private readonly logger: LogOutputChannel) {
+	constructor(
+		private ipc: IIPCServer | undefined,
+		private readonly logger: LogOutputChannel,
+		askpassPaths: AskpassPaths
+	) {
 		if (ipc) {
 			this.disposable = ipc.registerHandler('askpass', this);
 		}
 
+		const askpassScript = this.ipc ? askpassPaths.askpass : askpassPaths.askpassEmpty;
+		const sshAskpassScript = this.ipc ? askpassPaths.sshAskpass : askpassPaths.sshAskpassEmpty;
+
 		this.env = {
 			// GIT_ASKPASS
-			GIT_ASKPASS: path.join(__dirname, this.ipc ? 'askpass.sh' : 'askpass-empty.sh'),
+			GIT_ASKPASS: askpassScript,
 			// VSCODE_GIT_ASKPASS
 			VSCODE_GIT_ASKPASS_NODE: process.execPath,
 			VSCODE_GIT_ASKPASS_EXTRA_ARGS: '',
-			VSCODE_GIT_ASKPASS_MAIN: path.join(__dirname, 'askpass-main.js')
+			VSCODE_GIT_ASKPASS_MAIN: askpassPaths.askpassMain
 		};
 
 		this.sshEnv = {
 			// SSH_ASKPASS
-			SSH_ASKPASS: path.join(__dirname, this.ipc ? 'ssh-askpass.sh' : 'ssh-askpass-empty.sh'),
+			SSH_ASKPASS: sshAskpassScript,
 			SSH_ASKPASS_REQUIRE: 'force'
 		};
 	}
diff --git a/extensions/git/src/askpassManager.ts b/extensions/git/src/askpassManager.ts
new file mode 100644
index 0000000000000..15a6b2fa0e60b
--- /dev/null
+++ b/extensions/git/src/askpassManager.ts
@@ -0,0 +1,233 @@
+/*---------------------------------------------------------------------------------------------
+ *  Copyright (c) Microsoft Corporation. All rights reserved.
+ *  Licensed under the MIT License. See License.txt in the project root for license information.
+ *--------------------------------------------------------------------------------------------*/
+
+import * as crypto from 'crypto';
+import * as fs from 'fs';
+import * as path from 'path';
+import * as cp from 'child_process';
+import { env, LogOutputChannel } from 'vscode';
+
+/**
+ * Manages content-addressed copies of askpass scripts in a user-controlled folder.
+ *
+ * This solves the problem on Windows user/system setups where environment variables
+ * like GIT_ASKPASS point to scripts inside the VS Code installation directory, which
+ * changes on each update. By copying the scripts to a content-addressed location in
+ * user storage, the paths remain stable across updates (as long as the script contents
+ * don't change).
+ *
+ * This feature is only enabled on Windows user and system setups (not archive or portable)
+ * because those are the only configurations where the installation path changes on each update.
+ *
+ * Security considerations:
+ * - Scripts are placed in user-controlled storage (not TEMP to avoid TOCTOU attacks)
+ * - On Windows, ACLs are set to allow only the current user to modify the files
+ */
+
+/**
+ * Checks if the current VS Code installation is a Windows user or system setup.
+ * Returns false for archive, portable, or non-Windows installations.
+ */
+function isWindowsUserOrSystemSetup(): boolean {
+	if (process.platform !== 'win32') {
+		return false;
+	}
+
+	try {
+		const productJsonPath = path.join(env.appRoot, 'product.json');
+		const productJson = JSON.parse(fs.readFileSync(productJsonPath, 'utf8'));
+		const target = productJson.target as string | undefined;
+
+		// Target is 'user' or 'system' for Inno Setup installations.
+		// Archive and portable builds don't have a target property.
+		return target === 'user' || target === 'system';
+	} catch {
+		// If we can't read product.json, assume not applicable
+		return false;
+	}
+}
+
+interface SourceAskpassPaths {
+	askpass: string;
+	askpassMain: string;
+	sshAskpass: string;
+	askpassEmpty: string;
+	sshAskpassEmpty: string;
+}
+
+/**
+ * Computes a SHA-256 hash of the combined contents of all askpass-related files.
+ * This hash is used to create content-addressed directories.
+ */
+function computeContentHash(sourcePaths: SourceAskpassPaths): string {
+	const hash = crypto.createHash('sha256');
+
+	// Hash all source files in a deterministic order
+	const files = [
+		sourcePaths.askpass,
+		sourcePaths.askpassMain,
+		sourcePaths.sshAskpass,
+		sourcePaths.askpassEmpty,
+		sourcePaths.sshAskpassEmpty,
+	];
+
+	for (const file of files) {
+		const content = fs.readFileSync(file);
+		hash.update(content);
+		// Include filename in hash to ensure different files with same content produce different hash
+		hash.update(path.basename(file));
+	}
+
+	return hash.digest('hex').substring(0, 16);
+}
+
+/**
+ * Sets restrictive file permissions on Windows using icacls.
+ * Grants full control only to the current user and removes inherited permissions.
+ */
+async function setWindowsPermissions(filePath: string, logger: LogOutputChannel): Promise<void> {
+	const username = process.env['USERNAME'];
+	if (!username) {
+		logger.warn(`[askpassManager] Cannot set Windows permissions: USERNAME not set`);
+		return;
+	}
+
+	return new Promise<void>((resolve) => {
+		// icacls <file> /inheritance:r /grant:r "<username>:F"
+		// /inheritance:r - Remove all inherited permissions
+		// /grant:r - Replace (not add) permissions, giving Full control to user
+		const args = [filePath, '/inheritance:r', '/grant:r', `${username}:F`];
+
+		cp.execFile('icacls', args, (error, _stdout, stderr) => {
+			if (error) {
+				logger.warn(`[askpassManager] Failed to set permissions on ${filePath}: ${error.message}`);
+				if (stderr) {
+					logger.warn(`[askpassManager] icacls stderr: ${stderr}`);
+				}
+			} else {
+				logger.trace(`[askpassManager] Set permissions on ${filePath}`);
+			}
+			resolve();
+		});
+	});
+}
+
+/**
+ * Copies a file to the destination, creating parent directories as needed.
+ * Sets restrictive permissions on the copied file.
+ */
+async function copyFileSecure(
+	source: string,
+	dest: string,
+	logger: LogOutputChannel
+): Promise<void> {
+	const content = await fs.promises.readFile(source);
+	await fs.promises.writeFile(dest, content);
+	await setWindowsPermissions(dest, logger);
+}
+
+export interface AskpassPaths {
+	readonly askpass: string;
+	readonly askpassMain: string;
+	readonly sshAskpass: string;
+	readonly askpassEmpty: string;
+	readonly sshAskpassEmpty: string;
+}
+
+/**
+ * Ensures that content-addressed copies of askpass scripts exist in user storage.
+ * Returns the paths to the content-addressed copies.
+ *
+ * @param sourceDir The directory containing the original askpass scripts (__dirname)
+ * @param storageDir The user-controlled storage directory (context.storageUri.fsPath)
+ * @param logger Logger for diagnostic output
+ */
+async function ensureAskpassScripts(
+	sourceDir: string,
+	storageDir: string,
+	logger: LogOutputChannel
+): Promise<AskpassPaths> {
+	const sourcePaths: SourceAskpassPaths = {
+		askpass: path.join(sourceDir, 'askpass.sh'),
+		askpassMain: path.join(sourceDir, 'askpass-main.js'),
+		sshAskpass: path.join(sourceDir, 'ssh-askpass.sh'),
+		askpassEmpty: path.join(sourceDir, 'askpass-empty.sh'),
+		sshAskpassEmpty: path.join(sourceDir, 'ssh-askpass-empty.sh'),
+	};
+
+	// Compute content hash
+	const contentHash = computeContentHash(sourcePaths);
+	logger.trace(`[askpassManager] Content hash: ${contentHash}`);
+
+	// Create content-addressed directory
+	const askpassDir = path.join(storageDir, 'askpass', contentHash);
+
+	const destPaths: AskpassPaths = {
+		askpass: path.join(askpassDir, 'askpass.sh'),
+		askpassMain: path.join(askpassDir, 'askpass-main.js'),
+		sshAskpass: path.join(askpassDir, 'ssh-askpass.sh'),
+		askpassEmpty: path.join(askpassDir, 'askpass-empty.sh'),
+		sshAskpassEmpty: path.join(askpassDir, 'ssh-askpass-empty.sh'),
+	};
+
+	// Check if already exists (fast path for subsequent activations)
+	try {
+		const stat = await fs.promises.stat(destPaths.askpass);
+		if (stat.isFile()) {
+			logger.trace(`[askpassManager] Using existing content-addressed askpass at ${askpassDir}`);
+			return destPaths;
+		}
+	} catch {
+		// Directory doesn't exist, create it
+	}
+
+	logger.info(`[askpassManager] Creating content-addressed askpass scripts at ${askpassDir}`);
+
+	// Create directory and set Windows ACLs
+	await fs.promises.mkdir(askpassDir, { recursive: true });
+	await setWindowsPermissions(askpassDir, logger);
+
+	// Copy all files
+	await Promise.all([
+		copyFileSecure(sourcePaths.askpass, destPaths.askpass, logger),
+		copyFileSecure(sourcePaths.askpassMain, destPaths.askpassMain, logger),
+		copyFileSecure(sourcePaths.sshAskpass, destPaths.sshAskpass, logger),
+		copyFileSecure(sourcePaths.askpassEmpty, destPaths.askpassEmpty, logger),
+		copyFileSecure(sourcePaths.sshAskpassEmpty, destPaths.sshAskpassEmpty, logger),
+	]);
+
+	logger.info(`[askpassManager] Successfully created content-addressed askpass scripts`);
+
+	return destPaths;
+}
+
+/**
+ * Returns the askpass script paths. Uses content-addressed copies
+ * on Windows user/system setups (to keep paths stable across updates),
+ * otherwise returns paths relative to the source directory.
+ */
+export async function getAskpassPaths(
+	sourceDir: string,
+	storagePath: string | undefined,
+	logger: LogOutputChannel
+): Promise<AskpassPaths> {
+	// Try content-addressed paths on Windows user/system setups
+	if (storagePath && isWindowsUserOrSystemSetup()) {
+		try {
+			return await ensureAskpassScripts(sourceDir, storagePath, logger);
+		} catch (err) {
+			logger.error(`[askpassManager] Failed to create content-addressed askpass scripts: ${err}`);
+		}
+	}
+
+	// Fallback to source directory paths (for development or non-Windows setups)
+	return {
+		askpass: path.join(sourceDir, 'askpass.sh'),
+		askpassMain: path.join(sourceDir, 'askpass-main.js'),
+		sshAskpass: path.join(sourceDir, 'ssh-askpass.sh'),
+		askpassEmpty: path.join(sourceDir, 'askpass-empty.sh'),
+		sshAskpassEmpty: path.join(sourceDir, 'ssh-askpass-empty.sh'),
+	};
+}
diff --git a/extensions/git/src/main.ts b/extensions/git/src/main.ts
index 535c0f2f30e5d..b37ae9c79c5b7 100644
--- a/extensions/git/src/main.ts
+++ b/extensions/git/src/main.ts
@@ -28,6 +28,7 @@ import { GitEditSessionIdentityProvider } from './editSessionIdentityProvider';
 import { GitCommitInputBoxCodeActionsProvider, GitCommitInputBoxDiagnosticsManager } from './diagnostics';
 import { GitBlameController } from './blame';
 import { CloneManager } from './cloneManager';
+import { getAskpassPaths } from './askpassManager';
 
 const deactivateTasks: { (): Promise<void> }[] = [];
 
@@ -71,7 +72,8 @@ async function createModel(context: ExtensionContext, logger: LogOutputChannel,
 		logger.error(`[main] Failed to create git IPC: ${err}`);
 	}
 
-	const askpass = new Askpass(ipcServer, logger);
+	const askpassPaths = await getAskpassPaths(__dirname, context.globalStorageUri.fsPath, logger);
+	const askpass = new Askpass(ipcServer, logger, askpassPaths);
 	disposables.push(askpass);
 
 	const gitEditor = new GitEditor(ipcServer);
diff --git a/extensions/git/src/repository.ts b/extensions/git/src/repository.ts
index 04b310e502446..862223a2fcaeb 100644
--- a/extensions/git/src/repository.ts
+++ b/extensions/git/src/repository.ts
@@ -1902,7 +1902,7 @@ export class Repository implements Disposable {
 
 	private async _getWorktreeIncludePaths(): Promise<Set<string>> {
 		const config = workspace.getConfiguration('git', Uri.file(this.root));
-		const worktreeIncludeFiles = config.get<string[]>('worktreeIncludeFiles', ['**/node_modules/**']);
+		const worktreeIncludeFiles = config.get<string[]>('worktreeIncludeFiles', []);
 
 		if (worktreeIncludeFiles.length === 0) {
 			return new Set<string>();
diff --git a/extensions/git/src/repositoryCache.ts b/extensions/git/src/repositoryCache.ts
index 5e3f8cbe59452..bf5d74b6c683b 100644
--- a/extensions/git/src/repositoryCache.ts
+++ b/extensions/git/src/repositoryCache.ts
@@ -10,6 +10,7 @@ import { isDescendant } from './util';
 
 export interface RepositoryCacheInfo {
 	workspacePath: string; // path of the workspace folder or workspace file
+	lastTouchedTime?: number; // timestamp when the repository was last touched
 }
 
 function isRepositoryCacheInfo(obj: unknown): obj is RepositoryCacheInfo {
@@ -17,7 +18,8 @@ function isRepositoryCacheInfo(obj: unknown): obj is RepositoryCacheInfo {
 		return false;
 	}
 	const rec = obj as Record<string, unknown>;
-	return typeof rec.workspacePath === 'string';
+	return typeof rec.workspacePath === 'string' &&
+		(rec.lastOpenedTime === undefined || typeof rec.lastOpenedTime === 'number');
 }
 
 export class RepositoryCache {
@@ -70,7 +72,8 @@ export class RepositoryCache {
 		}
 
 		foldersLru.set(folderPathOrWorkspaceFile, {
-			workspacePath: folderPathOrWorkspaceFile
+			workspacePath: folderPathOrWorkspaceFile,
+			lastTouchedTime: Date.now()
 		}); // touch entry
 		this.lru.set(key, foldersLru);
 		this.save();
diff --git a/extensions/theme-2026/themes/2026-dark.json b/extensions/theme-2026/themes/2026-dark.json
index ae0cba932f510..fd3dc657eb153 100644
--- a/extensions/theme-2026/themes/2026-dark.json
+++ b/extensions/theme-2026/themes/2026-dark.json
@@ -4,7 +4,7 @@
 	"type": "dark",
 	"colors": {
 		"foreground": "#bfbfbf",
-		"disabledForeground": "#444444",
+		"disabledForeground": "#666666",
 		"errorForeground": "#f48771",
 		"descriptionForeground": "#888888",
 		"icon.foreground": "#888888",
@@ -46,6 +46,13 @@
 		"inputValidation.warningBackground": "#191A1B",
 		"inputValidation.warningBorder": "#2A2B2CFF",
 		"inputValidation.warningForeground": "#bfbfbf",
+		"gauge.foreground": "#59a4f9",
+		"gauge.background": "#59a4f94D",
+		"gauge.border": "#2A2B2CFF",
+		"gauge.warningForeground": "#e5ba7d",
+		"gauge.warningBackground": "#e5ba7d4D",
+		"gauge.errorForeground": "#f48771",
+		"gauge.errorBackground": "#f487714D",
 		"scrollbar.shadow": "#191B1D4D",
 		"scrollbarSlider.background": "#83848533",
 		"scrollbarSlider.hoverBackground": "#83848566",
@@ -124,7 +131,7 @@
 		"editorCodeLens.foreground": "#888888",
 		"editorBracketMatch.background": "#3994BC55",
 		"editorBracketMatch.border": "#2A2B2CFF",
-		"editorWidget.background": "#202122",
+		"editorWidget.background": "#20212266",
 		"editorWidget.border": "#2A2B2CFF",
 		"editorWidget.foreground": "#bfbfbf",
 		"editorSuggestWidget.background": "#202122",
@@ -229,8 +236,16 @@
 		"gitDecoration.stageDeletedResourceForeground": "#f48771",
 		"quickInputTitle.background": "#202122",
 		"quickInput.border": "#333536",
-		"chat.requestBubbleBackground": "#3994BC26",
-		"chat.requestBubbleHoverBackground": "#3994BC46"
+		"chat.requestBubbleBackground": "#498FAE26",
+		"chat.requestBubbleHoverBackground": "#498FAE46",
+		"charts.foreground": "#CCCCCC",
+		"charts.lines": "#CCCCCC80",
+		"charts.blue": "#59a4f9",
+		"charts.red": "#f48771",
+		"charts.yellow": "#e5ba7d",
+		"charts.orange": "#d18616",
+		"charts.green": "#89D185",
+		"charts.purple": "#B180D7"
 	},
 	"tokenColors": [
 		{
@@ -331,4 +346,4 @@
 		"customLiteral": "#DCDCAA",
 		"numberLiteral": "#b5cea8"
 	}
-}
\ No newline at end of file
+}
diff --git a/extensions/theme-2026/themes/2026-light.json b/extensions/theme-2026/themes/2026-light.json
index 172450999487f..89b0ead93c7a0 100644
--- a/extensions/theme-2026/themes/2026-light.json
+++ b/extensions/theme-2026/themes/2026-light.json
@@ -8,217 +8,224 @@
 		"errorForeground": "#ad0707",
 		"descriptionForeground": "#666666",
 		"icon.foreground": "#666666",
-		"focusBorder": "#4466CCFF",
+		"focusBorder": "#1A5CFFFF",
 		"textBlockQuote.background": "#EDEDED",
 		"textBlockQuote.border": "#E9EAEBFF",
 		"textCodeBlock.background": "#EDEDED",
-		"textLink.foreground": "#3457C0",
-		"textLink.activeForeground": "#3355BA",
+		"textLink.foreground": "#1A5CFF",
+		"textLink.activeForeground": "#0D4FE8",
 		"textPreformat.foreground": "#666666",
-		"textSeparator.foreground": "#ebebebFF",
-		"button.background": "#4466CC",
+		"textSeparator.foreground": "#EEEEEEFF",
+		"button.background": "#1A5CFF",
 		"button.foreground": "#FFFFFF",
-		"button.hoverBackground": "#3E61CA",
-		"button.border": "#E9EAEBFF",
+		"button.hoverBackground": "#0D4FE8",
+		"button.border": "#ECEDEEFF",
 		"button.secondaryBackground": "#EDEDED",
 		"button.secondaryForeground": "#202020",
 		"button.secondaryHoverBackground": "#E6E6E6",
 		"checkbox.background": "#EDEDED",
 		"checkbox.border": "#E9EAEBFF",
 		"checkbox.foreground": "#202020",
-		"dropdown.background": "#F9F9F9",
+		"dropdown.background": "#FFFFFF",
 		"dropdown.border": "#D6D7D8",
 		"dropdown.foreground": "#202020",
-		"dropdown.listBackground": "#FCFCFC",
-		"input.background": "#F9F9F9",
+		"dropdown.listBackground": "#FFFFFF",
+		"input.background": "#FFFFFF",
 		"input.border": "#D6D7D880",
 		"input.foreground": "#202020",
 		"input.placeholderForeground": "#999999",
-		"inputOption.activeBackground": "#4466CC33",
+		"inputOption.activeBackground": "#1A5CFF33",
 		"inputOption.activeForeground": "#202020",
-		"inputOption.activeBorder": "#E9EAEBFF",
-		"inputValidation.errorBackground": "#F9F9F9",
-		"inputValidation.errorBorder": "#E9EAEBFF",
+		"inputOption.activeBorder": "#ECEDEEFF",
+		"inputValidation.errorBackground": "#FFFFFF",
+		"inputValidation.errorBorder": "#ECEDEEFF",
 		"inputValidation.errorForeground": "#202020",
-		"inputValidation.infoBackground": "#F9F9F9",
-		"inputValidation.infoBorder": "#E9EAEBFF",
+		"inputValidation.infoBackground": "#FFFFFF",
+		"inputValidation.infoBorder": "#ECEDEEFF",
 		"inputValidation.infoForeground": "#202020",
-		"inputValidation.warningBackground": "#F9F9F9",
-		"inputValidation.warningBorder": "#E9EAEBFF",
+		"inputValidation.warningBackground": "#FFFFFF",
+		"inputValidation.warningBorder": "#ECEDEEFF",
 		"inputValidation.warningForeground": "#202020",
+		"gauge.foreground": "#1A5CFF",
+		"gauge.background": "#1A5CFF4D",
+		"gauge.border": "#ECEDEEFF",
+		"gauge.warningForeground": "#B69500",
+		"gauge.warningBackground": "#B695004D",
+		"gauge.errorForeground": "#ad0707",
+		"gauge.errorBackground": "#ad07074D",
 		"scrollbar.shadow": "#F5F6F84D",
-		"scrollbarSlider.background": "#4466CC33",
-		"scrollbarSlider.hoverBackground": "#4466CC4D",
-		"scrollbarSlider.activeBackground": "#4466CC4D",
-		"badge.background": "#4466CC",
+		"scrollbarSlider.background": "#1A5CFF33",
+		"scrollbarSlider.hoverBackground": "#1A5CFF4D",
+		"scrollbarSlider.activeBackground": "#1A5CFF4D",
+		"badge.background": "#1A5CFF",
 		"badge.foreground": "#FFFFFF",
-		"progressBar.background": "#666666",
-		"list.activeSelectionBackground": "#4466CC26",
+		"progressBar.background": "#1A5CFF",
+		"list.activeSelectionBackground": "#1A5CFF26",
 		"list.activeSelectionForeground": "#202020",
 		"list.inactiveSelectionBackground": "#EDEDED",
 		"list.inactiveSelectionForeground": "#202020",
 		"list.hoverBackground": "#F2F2F2",
 		"list.hoverForeground": "#202020",
-		"list.dropBackground": "#4466CC1A",
-		"list.focusBackground": "#4466CC26",
+		"list.dropBackground": "#1A5CFF1A",
+		"list.focusBackground": "#1A5CFF26",
 		"list.focusForeground": "#202020",
-		"list.focusOutline": "#4466CCFF",
-		"list.highlightForeground": "#202020",
+		"list.focusOutline": "#1A5CFFFF",
+		"list.highlightForeground": "#1A5CFF",
 		"list.invalidItemForeground": "#BBBBBB",
 		"list.errorForeground": "#ad0707",
 		"list.warningForeground": "#667309",
-		"activityBar.background": "#F9F9F9",
+		"activityBar.background": "#FFFFFF",
 		"activityBar.foreground": "#202020",
 		"activityBar.inactiveForeground": "#666666",
-		"activityBar.border": "#E9EAEBFF",
-		"activityBar.activeBorder": "#E9EAEBFF",
-		"activityBar.activeFocusBorder": "#4466CCFF",
-		"activityBarBadge.background": "#4466CC",
+		"activityBar.border": "#ECEDEEFF",
+		"activityBar.activeBorder": "#ECEDEEFF",
+		"activityBar.activeFocusBorder": "#1A5CFFFF",
+		"activityBarBadge.background": "#1A5CFF",
 		"activityBarBadge.foreground": "#FFFFFF",
-		"sideBar.background": "#F9F9F9",
+		"sideBar.background": "#FFFFFF",
 		"sideBar.foreground": "#202020",
 		"sideBar.border": "#E9EAEBFF",
 		"sideBarTitle.foreground": "#202020",
-		"sideBarSectionHeader.background": "#F9F9F9",
+		"sideBarSectionHeader.background": "#FFFFFF",
 		"sideBarSectionHeader.foreground": "#202020",
-		"sideBarSectionHeader.border": "#E9EAEBFF",
-		"titleBar.activeBackground": "#F9F9F9",
+		"sideBarSectionHeader.border": "#ECEDEEFF",
+		"titleBar.activeBackground": "#FFFFFF",
 		"titleBar.activeForeground": "#424242",
-		"titleBar.inactiveBackground": "#F9F9F9",
+		"titleBar.inactiveBackground": "#FFFFFF",
 		"titleBar.inactiveForeground": "#666666",
 		"titleBar.border": "#E9EAEBFF",
 		"menubar.selectionBackground": "#EDEDED",
 		"menubar.selectionForeground": "#202020",
-		"menu.background": "#FCFCFC",
+		"menu.background": "#FFFFFF",
 		"menu.foreground": "#202020",
-		"menu.selectionBackground": "#4466CC26",
+		"menu.selectionBackground": "#1A5CFF26",
 		"menu.selectionForeground": "#202020",
 		"menu.separatorBackground": "#F4F4F4",
 		"menu.border": "#E9EAEBFF",
 		"commandCenter.foreground": "#202020",
 		"commandCenter.activeForeground": "#202020",
-		"commandCenter.background": "#F9F9F9",
+		"commandCenter.background": "#FFFFFF",
 		"commandCenter.activeBackground": "#F2F2F2",
 		"commandCenter.border": "#D6D7D880",
-		"editor.background": "#FDFDFD",
+		"editor.background": "#F5F6F8",
 		"editor.foreground": "#202123",
 		"editorLineNumber.foreground": "#656668",
 		"editorLineNumber.activeForeground": "#202123",
 		"editorCursor.foreground": "#202123",
-		"editor.selectionBackground": "#4466CC26",
-		"editor.inactiveSelectionBackground": "#4466CC26",
-		"editor.selectionHighlightBackground": "#4466CC1A",
-		"editor.wordHighlightBackground": "#4466CC33",
-		"editor.wordHighlightStrongBackground": "#4466CC33",
-		"editor.findMatchBackground": "#4466CC4D",
-		"editor.findMatchHighlightBackground": "#4466CC26",
+		"editor.selectionBackground": "#1A5CFF26",
+		"editor.inactiveSelectionBackground": "#1A5CFF26",
+		"editor.selectionHighlightBackground": "#1A5CFF1A",
+		"editor.wordHighlightBackground": "#1A5CFF33",
+		"editor.wordHighlightStrongBackground": "#1A5CFF33",
+		"editor.findMatchBackground": "#1A5CFF4D",
+		"editor.findMatchHighlightBackground": "#1A5CFF26",
 		"editor.findRangeHighlightBackground": "#EDEDED",
 		"editor.hoverHighlightBackground": "#EDEDED",
 		"editor.lineHighlightBackground": "#EDEDED55",
 		"editor.rangeHighlightBackground": "#EDEDED",
-		"editorLink.activeForeground": "#4466CC",
+		"editorLink.activeForeground": "#1A5CFF",
 		"editorWhitespace.foreground": "#6666664D",
 		"editorIndentGuide.background": "#F4F4F44D",
 		"editorIndentGuide.activeBackground": "#F4F4F4",
 		"editorRuler.foreground": "#F4F4F4",
 		"editorCodeLens.foreground": "#666666",
-		"editorBracketMatch.background": "#4466CC55",
-		"editorBracketMatch.border": "#E9EAEBFF",
-		"editorWidget.background": "#FCFCFC",
-		"editorWidget.border": "#E9EAEBFF",
+		"editorBracketMatch.background": "#1A5CFF55",
+		"editorBracketMatch.border": "#ECEDEEFF",
+		"editorWidget.background": "#FFFFFF33",
+		"editorWidget.border": "#ECEDEEFF",
 		"editorWidget.foreground": "#202020",
-		"editorSuggestWidget.background": "#FCFCFC",
-		"editorSuggestWidget.border": "#E9EAEBFF",
+		"editorSuggestWidget.background": "#FFFFFF",
+		"editorSuggestWidget.border": "#ECEDEEFF",
 		"editorSuggestWidget.foreground": "#202020",
-		"editorSuggestWidget.highlightForeground": "#202020",
-		"editorSuggestWidget.selectedBackground": "#4466CC26",
-		"editorHoverWidget.background": "#FCFCFC55",
-		"editorHoverWidget.border": "#E9EAEBFF",
-		"peekView.border": "#E9EAEBFF",
-		"peekViewEditor.background": "#F9F9F9",
-		"peekViewEditor.matchHighlightBackground": "#4466CC33",
-		"peekViewResult.background": "#EDEDED",
+		"editorSuggestWidget.highlightForeground": "#1A5CFF",
+		"editorSuggestWidget.selectedBackground": "#1A5CFF26",
+		"editorHoverWidget.background": "#FFFFFF55",
+		"editorHoverWidget.border": "#ECEDEEFF",
+		"peekView.border": "#1A5CFF",
+		"peekViewEditor.background": "#FFFFFF",
+		"peekViewEditor.matchHighlightBackground": "#1A5CFF33",
+		"peekViewResult.background": "#FFFFFF",
 		"peekViewResult.fileForeground": "#202020",
 		"peekViewResult.lineForeground": "#666666",
-		"peekViewResult.matchHighlightBackground": "#4466CC33",
-		"peekViewResult.selectionBackground": "#4466CC26",
+		"peekViewResult.matchHighlightBackground": "#1A5CFF33",
+		"peekViewResult.selectionBackground": "#1A5CFF26",
 		"peekViewResult.selectionForeground": "#202020",
-		"peekViewTitle.background": "#EDEDED",
+		"peekViewTitle.background": "#FFFFFF",
 		"peekViewTitleDescription.foreground": "#666666",
 		"peekViewTitleLabel.foreground": "#202020",
-		"editorGutter.background": "#FDFDFD",
+		"editorGutter.background": "#F5F6F8",
 		"editorGutter.addedBackground": "#587c0c",
 		"editorGutter.deletedBackground": "#ad0707",
 		"diffEditor.insertedTextBackground": "#587c0c26",
 		"diffEditor.removedTextBackground": "#ad070726",
-		"editorOverviewRuler.border": "#E9EAEBFF",
-		"editorOverviewRuler.findMatchForeground": "#4466CC99",
-		"editorOverviewRuler.modifiedForeground": "#007acc",
+		"editorOverviewRuler.border": "#ECEDEEFF",
+		"editorOverviewRuler.findMatchForeground": "#1A5CFF99",
+		"editorOverviewRuler.modifiedForeground": "#1A5CFF",
 		"editorOverviewRuler.addedForeground": "#587c0c",
 		"editorOverviewRuler.deletedForeground": "#ad0707",
 		"editorOverviewRuler.errorForeground": "#ad0707",
 		"editorOverviewRuler.warningForeground": "#667309",
-		"panel.background": "#F9F9F9",
-		"panel.border": "#E9EAEBFF",
-		"panelTitle.activeBorder": "#4466CC",
+		"panel.background": "#FFFFFF",
+		"panel.border": "#ECEDEEFF",
+		"panelTitle.activeBorder": "#1A5CFF",
 		"panelTitle.activeForeground": "#202020",
 		"panelTitle.inactiveForeground": "#666666",
-		"statusBar.background": "#F9F9F9",
+		"statusBar.background": "#FFFFFF",
 		"statusBar.foreground": "#202020",
-		"statusBar.border": "#E9EAEBFF",
-		"statusBar.focusBorder": "#4466CCFF",
-		"statusBar.debuggingBackground": "#4466CC",
+		"statusBar.border": "#ECEDEEFF",
+		"statusBar.focusBorder": "#1A5CFFFF",
+		"statusBar.debuggingBackground": "#1A5CFF",
 		"statusBar.debuggingForeground": "#FFFFFF",
-		"statusBar.noFolderBackground": "#F9F9F9",
+		"statusBar.noFolderBackground": "#FFFFFF",
 		"statusBar.noFolderForeground": "#202020",
 		"statusBarItem.activeBackground": "#E0E0E0",
 		"statusBarItem.hoverBackground": "#F2F2F2",
-		"statusBarItem.focusBorder": "#4466CCFF",
-		"statusBarItem.prominentBackground": "#4466CC",
+		"statusBarItem.focusBorder": "#1A5CFFFF",
+		"statusBarItem.prominentBackground": "#1A5CFF",
 		"statusBarItem.prominentForeground": "#FFFFFF",
-		"statusBarItem.prominentHoverBackground": "#4466CC",
-		"tab.activeBackground": "#FDFDFD",
+		"statusBarItem.prominentHoverBackground": "#1A5CFF",
+		"tab.activeBackground": "#F5F6F8",
 		"tab.activeForeground": "#202020",
-		"tab.inactiveBackground": "#F9F9F9",
+		"tab.inactiveBackground": "#FFFFFF",
 		"tab.inactiveForeground": "#666666",
-		"tab.border": "#E9EAEBFF",
-		"tab.lastPinnedBorder": "#E9EAEBFF",
-		"tab.activeBorder": "#FBFBFD",
+		"tab.border": "#ECEDEEFF",
+		"tab.lastPinnedBorder": "#ECEDEEFF",
+		"tab.activeBorder": "#F5F6F8",
 		"tab.hoverBackground": "#F2F2F2",
 		"tab.hoverForeground": "#202020",
-		"tab.unfocusedActiveBackground": "#FDFDFD",
+		"tab.unfocusedActiveBackground": "#F5F6F8",
 		"tab.unfocusedActiveForeground": "#666666",
-		"tab.unfocusedInactiveBackground": "#F9F9F9",
+		"tab.unfocusedInactiveBackground": "#FFFFFF",
 		"tab.unfocusedInactiveForeground": "#BBBBBB",
-		"editorGroupHeader.tabsBackground": "#F9F9F9",
-		"editorGroupHeader.tabsBorder": "#E9EAEBFF",
+		"editorGroupHeader.tabsBackground": "#FFFFFF",
+		"editorGroupHeader.tabsBorder": "#ECEDEEFF",
 		"breadcrumb.foreground": "#666666",
-		"breadcrumb.background": "#FDFDFD",
+		"breadcrumb.background": "#F5F6F8",
 		"breadcrumb.focusForeground": "#202020",
 		"breadcrumb.activeSelectionForeground": "#202020",
-		"breadcrumbPicker.background": "#FCFCFC",
-		"notificationCenter.border": "#E9EAEBFF",
+		"breadcrumbPicker.background": "#FFFFFF",
+		"notificationCenter.border": "#ECEDEEFF",
 		"notificationCenterHeader.foreground": "#202020",
-		"notificationCenterHeader.background": "#EDEDED",
-		"notificationToast.border": "#E9EAEBFF",
+		"notificationCenterHeader.background": "#FFFFFF",
+		"notificationToast.border": "#ECEDEEFF",
 		"notifications.foreground": "#202020",
-		"notifications.background": "#FCFCFC",
-		"notifications.border": "#E9EAEBFF",
-		"notificationLink.foreground": "#4466CC",
-		"extensionButton.prominentBackground": "#4466CC",
+		"notifications.background": "#FFFFFF",
+		"notifications.border": "#ECEDEEFF",
+		"notificationLink.foreground": "#1A5CFF",
+		"extensionButton.prominentBackground": "#1A5CFF",
 		"extensionButton.prominentForeground": "#FFFFFF",
-		"extensionButton.prominentHoverBackground": "#3E61CA",
-		"pickerGroup.border": "#E9EAEBFF",
+		"extensionButton.prominentHoverBackground": "#0D4FE8",
+		"pickerGroup.border": "#ECEDEEFF",
 		"pickerGroup.foreground": "#202020",
-		"quickInput.background": "#FCFCFC",
+		"quickInput.background": "#FFFFFF",
 		"quickInput.foreground": "#202020",
-		"quickInputList.focusBackground": "#4466CC26",
+		"quickInputList.focusBackground": "#1A5CFF26",
 		"quickInputList.focusForeground": "#202020",
 		"quickInputList.focusIconForeground": "#202020",
 		"quickInputList.hoverBackground": "#E7E7E7",
-		"terminal.selectionBackground": "#4466CC33",
+		"terminal.selectionBackground": "#1A5CFF33",
 		"terminalCursor.foreground": "#202020",
-		"terminalCursor.background": "#F9F9F9",
+		"terminalCursor.background": "#FFFFFF",
 		"gitDecoration.addedResourceForeground": "#587c0c",
 		"gitDecoration.modifiedResourceForeground": "#667309",
 		"gitDecoration.deletedResourceForeground": "#ad0707",
@@ -227,10 +234,18 @@
 		"gitDecoration.conflictingResourceForeground": "#ad0707",
 		"gitDecoration.stageModifiedResourceForeground": "#667309",
 		"gitDecoration.stageDeletedResourceForeground": "#ad0707",
-		"quickInputTitle.background": "#FCFCFC",
+		"quickInputTitle.background": "#FFFFFF",
 		"quickInput.border": "#D6D7D8",
-		"chat.requestBubbleBackground": "#4466CC1A",
-		"chat.requestBubbleHoverBackground": "#4466CC26"
+		"chat.requestBubbleBackground": "#1A5CFF1A",
+		"chat.requestBubbleHoverBackground": "#1A5CFF26",
+		"charts.foreground": "#202020",
+		"charts.lines": "#20202080",
+		"charts.blue": "#1A5CFF",
+		"charts.red": "#ad0707",
+		"charts.yellow": "#667309",
+		"charts.orange": "#d18616",
+		"charts.green": "#388A34",
+		"charts.purple": "#652D90"
 	},
 	"tokenColors": [
 		{
@@ -331,4 +346,4 @@
 		"customLiteral": "#795E26",
 		"numberLiteral": "#098658"
 	}
-}
\ No newline at end of file
+}
diff --git a/extensions/theme-2026/themes/styles.css b/extensions/theme-2026/themes/styles.css
index fd7ffafb11af8..fc1228f279030 100644
--- a/extensions/theme-2026/themes/styles.css
+++ b/extensions/theme-2026/themes/styles.css
@@ -156,7 +156,11 @@
 .monaco-workbench.vs .monaco-editor .suggest-widget { background: rgba(252, 252, 253, 0.85) !important; }
 
 /* Find Widget */
-.monaco-workbench .monaco-editor .find-widget { box-shadow: 0 0 8px rgba(0, 0, 0, 0.12); border: none; border-radius: 8px; }
+.monaco-workbench .monaco-editor .find-widget {
+	box-shadow: 0 0 8px rgba(0, 0, 0, 0.12); border: none; border-radius: 8px;
+	backdrop-filter: blur(20px) saturate(180%); -webkit-backdrop-filter: blur(20px) saturate(180%);
+	top: 4px !important;
+}
 
 /* Dialog */
 .monaco-workbench .monaco-dialog-box { box-shadow: 0 0 20px rgba(0, 0, 0, 0.18); border: none; border-radius: 12px; overflow: hidden; }
@@ -182,7 +186,6 @@
 .monaco-workbench .extensions-list .extension-list-item:hover { box-shadow: 0 0 6px rgba(0, 0, 0, 0.10); }
 
 /* Breadcrumbs */
-.monaco-workbench .part.editor > .content .editor-group-container > .title .breadcrumbs-control { box-shadow: 0 0 6px rgba(0, 0, 0, 0.08) !important; background: rgba(252, 252, 253, 0.65) !important; backdrop-filter: blur(40px) saturate(180%) !important; -webkit-backdrop-filter: blur(40px) saturate(180%) !important; }
 .monaco-workbench.vs-dark .part.editor > .content .editor-group-container > .title .breadcrumbs-control,
 
 /* Input Boxes */
diff --git a/package-lock.json b/package-lock.json
index 532300c6956bf..cf7940c36d8a0 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -15,11 +15,12 @@
         "@microsoft/1ds-post-js": "^3.2.13",
         "@parcel/watcher": "^2.5.4",
         "@types/semver": "^7.5.8",
+        "@vscode/codicons": "^0.0.44",
         "@vscode/deviceid": "^0.1.1",
         "@vscode/iconv-lite-umd": "0.7.1",
         "@vscode/native-watchdog": "^1.4.6",
         "@vscode/policy-watcher": "^1.3.2",
-        "@vscode/proxy-agent": "^0.36.0",
+        "@vscode/proxy-agent": "^0.37.0",
         "@vscode/ripgrep": "^1.15.13",
         "@vscode/spdlog": "^0.15.2",
         "@vscode/sqlite3": "5.1.12-vscode",
@@ -2946,6 +2947,12 @@
         "win32"
       ]
     },
+    "node_modules/@vscode/codicons": {
+      "version": "0.0.44",
+      "resolved": "https://registry.npmjs.org/@vscode/codicons/-/codicons-0.0.44.tgz",
+      "integrity": "sha512-F7qPRumUK3EHjNdopfICLGRf3iNPoZQt+McTHAn4AlOWPB3W2kL4H0S7uqEqbyZ6rCxaeDjpAn3MCUnwTu/VJQ==",
+      "license": "CC-BY-4.0"
+    },
     "node_modules/@vscode/deviceid": {
       "version": "0.1.4",
       "resolved": "https://registry.npmjs.org/@vscode/deviceid/-/deviceid-0.1.4.tgz",
@@ -3358,9 +3365,9 @@
       }
     },
     "node_modules/@vscode/proxy-agent": {
-      "version": "0.36.0",
-      "resolved": "https://registry.npmjs.org/@vscode/proxy-agent/-/proxy-agent-0.36.0.tgz",
-      "integrity": "sha512-W4mls/+zErqTYcKC41utdmoYnBWZRH1dRF9U4cBAyKU5EhcnWfVsPBvUnXXw1CffI3djmMWnu9JrF/Ynw7lkcg==",
+      "version": "0.37.0",
+      "resolved": "https://registry.npmjs.org/@vscode/proxy-agent/-/proxy-agent-0.37.0.tgz",
+      "integrity": "sha512-FDBc/3qf7fLMp4fmdRBav2dy3UZ/Vao4PN6a5IeTYvcgh9erd9HfOcVoU3ogy2uwCii6vZNvmEeF9+gr64spVQ==",
       "license": "MIT",
       "dependencies": {
         "@tootallnate/once": "^3.0.0",
@@ -11731,10 +11738,11 @@
       }
     },
     "node_modules/lodash": {
-      "version": "4.17.21",
-      "resolved": "https://registry.npmjs.org/lodash/-/lodash-4.17.21.tgz",
-      "integrity": "sha512-v2kDEe57lecTulaDIuNTPy3Ry4gLGJ6Z1O3vE1krgXZNrsQ+LFTGHVxVjcXPs17LhbZVGedAJv8XZ1tvj5FvSg==",
-      "dev": true
+      "version": "4.17.23",
+      "resolved": "https://registry.npmjs.org/lodash/-/lodash-4.17.23.tgz",
+      "integrity": "sha512-LgVTMpQtIopCi79SJeDiP0TfWi5CNEc/L/aRdTh3yIvmZXTnheWpKjSZhnvMl8iXbC1tFg9gdHHDMLoV7CnG+w==",
+      "dev": true,
+      "license": "MIT"
     },
     "node_modules/lodash-es": {
       "version": "4.17.22",
diff --git a/package.json b/package.json
index da6081bc2d24d..3fc2a6c88cbf7 100644
--- a/package.json
+++ b/package.json
@@ -78,11 +78,12 @@
     "@microsoft/1ds-post-js": "^3.2.13",
     "@parcel/watcher": "^2.5.4",
     "@types/semver": "^7.5.8",
+    "@vscode/codicons": "^0.0.44",
     "@vscode/deviceid": "^0.1.1",
     "@vscode/iconv-lite-umd": "0.7.1",
     "@vscode/native-watchdog": "^1.4.6",
     "@vscode/policy-watcher": "^1.3.2",
-    "@vscode/proxy-agent": "^0.36.0",
+    "@vscode/proxy-agent": "^0.37.0",
     "@vscode/ripgrep": "^1.15.13",
     "@vscode/spdlog": "^0.15.2",
     "@vscode/sqlite3": "5.1.12-vscode",
diff --git a/remote/package-lock.json b/remote/package-lock.json
index c53948ab5ce8f..48d67c84737ad 100644
--- a/remote/package-lock.json
+++ b/remote/package-lock.json
@@ -14,7 +14,7 @@
         "@vscode/deviceid": "^0.1.1",
         "@vscode/iconv-lite-umd": "0.7.1",
         "@vscode/native-watchdog": "^1.4.6",
-        "@vscode/proxy-agent": "^0.36.0",
+        "@vscode/proxy-agent": "^0.37.0",
         "@vscode/ripgrep": "^1.15.13",
         "@vscode/spdlog": "^0.15.2",
         "@vscode/tree-sitter-wasm": "^0.3.0",
@@ -417,9 +417,9 @@
       "license": "MIT"
     },
     "node_modules/@vscode/proxy-agent": {
-      "version": "0.36.0",
-      "resolved": "https://registry.npmjs.org/@vscode/proxy-agent/-/proxy-agent-0.36.0.tgz",
-      "integrity": "sha512-W4mls/+zErqTYcKC41utdmoYnBWZRH1dRF9U4cBAyKU5EhcnWfVsPBvUnXXw1CffI3djmMWnu9JrF/Ynw7lkcg==",
+      "version": "0.37.0",
+      "resolved": "https://registry.npmjs.org/@vscode/proxy-agent/-/proxy-agent-0.37.0.tgz",
+      "integrity": "sha512-FDBc/3qf7fLMp4fmdRBav2dy3UZ/Vao4PN6a5IeTYvcgh9erd9HfOcVoU3ogy2uwCii6vZNvmEeF9+gr64spVQ==",
       "license": "MIT",
       "dependencies": {
         "@tootallnate/once": "^3.0.0",
diff --git a/remote/package.json b/remote/package.json
index 8d18d28dd394a..16ddeb22af32c 100644
--- a/remote/package.json
+++ b/remote/package.json
@@ -9,7 +9,7 @@
     "@vscode/deviceid": "^0.1.1",
     "@vscode/iconv-lite-umd": "0.7.1",
     "@vscode/native-watchdog": "^1.4.6",
-    "@vscode/proxy-agent": "^0.36.0",
+    "@vscode/proxy-agent": "^0.37.0",
     "@vscode/ripgrep": "^1.15.13",
     "@vscode/spdlog": "^0.15.2",
     "@vscode/tree-sitter-wasm": "^0.3.0",
diff --git a/remote/web/package-lock.json b/remote/web/package-lock.json
index 78bef5ccc5d5f..83542d2fc50c5 100644
--- a/remote/web/package-lock.json
+++ b/remote/web/package-lock.json
@@ -10,6 +10,7 @@
       "dependencies": {
         "@microsoft/1ds-core-js": "^3.2.13",
         "@microsoft/1ds-post-js": "^3.2.13",
+        "@vscode/codicons": "^0.0.44",
         "@vscode/iconv-lite-umd": "0.7.1",
         "@vscode/tree-sitter-wasm": "^0.3.0",
         "@vscode/vscode-languagedetection": "1.0.21",
@@ -71,6 +72,12 @@
       "resolved": "https://registry.npmjs.org/@microsoft/dynamicproto-js/-/dynamicproto-js-1.1.9.tgz",
       "integrity": "sha512-n1VPsljTSkthsAFYdiWfC+DKzK2WwcRp83Y1YAqdX552BstvsDjft9YXppjUzp11BPsapDoO1LDgrDB0XVsfNQ=="
     },
+    "node_modules/@vscode/codicons": {
+      "version": "0.0.44",
+      "resolved": "https://registry.npmjs.org/@vscode/codicons/-/codicons-0.0.44.tgz",
+      "integrity": "sha512-F7qPRumUK3EHjNdopfICLGRf3iNPoZQt+McTHAn4AlOWPB3W2kL4H0S7uqEqbyZ6rCxaeDjpAn3MCUnwTu/VJQ==",
+      "license": "CC-BY-4.0"
+    },
     "node_modules/@vscode/iconv-lite-umd": {
       "version": "0.7.1",
       "resolved": "https://registry.npmjs.org/@vscode/iconv-lite-umd/-/iconv-lite-umd-0.7.1.tgz",
diff --git a/remote/web/package.json b/remote/web/package.json
index e91442d01d77f..13438c634deb2 100644
--- a/remote/web/package.json
+++ b/remote/web/package.json
@@ -5,6 +5,7 @@
   "dependencies": {
     "@microsoft/1ds-core-js": "^3.2.13",
     "@microsoft/1ds-post-js": "^3.2.13",
+    "@vscode/codicons": "^0.0.44",
     "@vscode/iconv-lite-umd": "0.7.1",
     "@vscode/tree-sitter-wasm": "^0.3.0",
     "@vscode/vscode-languagedetection": "1.0.21",
diff --git a/src/vs/base/browser/ui/codicons/codicon/README.md b/src/vs/base/browser/ui/codicons/codicon/README.md
new file mode 100644
index 0000000000000..8c0ffcb3b8778
--- /dev/null
+++ b/src/vs/base/browser/ui/codicons/codicon/README.md
@@ -0,0 +1,5 @@
+# Codicons
+
+## Where does the codicon.ttf come from?
+
+It is added via the `@vscode/codicons` npm package, then copied to this directory during the postinstall script.
diff --git a/src/vs/base/browser/ui/codicons/codicon/codicon.ttf b/src/vs/base/browser/ui/codicons/codicon/codicon.ttf
deleted file mode 100644
index 0c9d65f81c2f3..0000000000000
Binary files a/src/vs/base/browser/ui/codicons/codicon/codicon.ttf and /dev/null differ
diff --git a/src/vs/editor/contrib/codeAction/browser/codeActionCommands.ts b/src/vs/editor/contrib/codeAction/browser/codeActionCommands.ts
index 6b5c45ccd79b0..cce59aaa131ce 100644
--- a/src/vs/editor/contrib/codeAction/browser/codeActionCommands.ts
+++ b/src/vs/editor/contrib/codeAction/browser/codeActionCommands.ts
@@ -8,15 +8,17 @@ import { IJSONSchema, TypeFromJsonSchema } from '../../../../base/common/jsonSch
 import { KeyCode, KeyMod } from '../../../../base/common/keyCodes.js';
 import { escapeRegExpCharacters } from '../../../../base/common/strings.js';
 import { ICodeEditor } from '../../../browser/editorBrowser.js';
-import { EditorAction, EditorCommand, ServicesAccessor } from '../../../browser/editorExtensions.js';
+import { EditorAction, EditorAction2, EditorCommand, ServicesAccessor } from '../../../browser/editorExtensions.js';
 import { EditorContextKeys } from '../../../common/editorContextKeys.js';
 import { autoFixCommandId, codeActionCommandId, fixAllCommandId, organizeImportsCommandId, quickFixCommandId, refactorCommandId, sourceActionCommandId } from './codeAction.js';
 import * as nls from '../../../../nls.js';
+import { MenuId } from '../../../../platform/actions/common/actions.js';
 import { ContextKeyExpr } from '../../../../platform/contextkey/common/contextkey.js';
 import { KeybindingWeight } from '../../../../platform/keybinding/common/keybindingsRegistry.js';
 import { CodeActionAutoApply, CodeActionCommandArgs, CodeActionFilter, CodeActionKind, CodeActionTriggerSource } from '../common/types.js';
 import { CodeActionController } from './codeActionController.js';
 import { SUPPORTED_CODE_ACTIONS } from './codeActionModel.js';
+import { Codicon } from '../../../../base/common/codicons.js';
 
 function contextKeyForSupportedActions(kind: HierarchicalKind) {
 	return ContextKeyExpr.regex(
@@ -64,22 +66,30 @@ function triggerCodeActionsForEditorSelection(
 	}
 }
 
-export class QuickFixAction extends EditorAction {
+export class QuickFixAction extends EditorAction2 {
 
 	constructor() {
 		super({
 			id: quickFixCommandId,
-			label: nls.localize2('quickfix.trigger.label', "Quick Fix..."),
+			title: nls.localize2('quickfix.trigger.label', "Quick Fix..."),
 			precondition: ContextKeyExpr.and(EditorContextKeys.writable, EditorContextKeys.hasCodeActionsProvider),
-			kbOpts: {
-				kbExpr: EditorContextKeys.textInputFocus,
+			icon: Codicon.lightBulb,
+			f1: true,
+			keybinding: {
+				when: EditorContextKeys.textInputFocus,
 				primary: KeyMod.CtrlCmd | KeyCode.Period,
 				weight: KeybindingWeight.EditorContrib
+			},
+			menu: {
+				id: MenuId.InlineChatEditorAffordance,
+				group: '0_quickfix',
+				order: 0,
+				when: ContextKeyExpr.and(EditorContextKeys.writable, EditorContextKeys.hasCodeActionsProvider)
 			}
 		});
 	}
 
-	public run(_accessor: ServicesAccessor, editor: ICodeEditor): void {
+	override runEditorCommand(_accessor: ServicesAccessor, editor: ICodeEditor): void {
 		return triggerCodeActionsForEditorSelection(editor, nls.localize('editor.action.quickFix.noneMessage', "No code actions available"), undefined, undefined, CodeActionTriggerSource.QuickFix);
 	}
 }
diff --git a/src/vs/editor/contrib/codeAction/browser/codeActionContributions.ts b/src/vs/editor/contrib/codeAction/browser/codeActionContributions.ts
index ca5a06c9817f8..67d30044566e7 100644
--- a/src/vs/editor/contrib/codeAction/browser/codeActionContributions.ts
+++ b/src/vs/editor/contrib/codeAction/browser/codeActionContributions.ts
@@ -4,6 +4,7 @@
  *--------------------------------------------------------------------------------------------*/
 
 import { EditorContributionInstantiation, registerEditorAction, registerEditorCommand, registerEditorContribution } from '../../../browser/editorExtensions.js';
+import { registerAction2 } from '../../../../platform/actions/common/actions.js';
 import { editorConfigurationBaseNode } from '../../../common/config/editorConfigurationSchema.js';
 import { AutoFixAction, CodeActionCommand, FixAllAction, OrganizeImportsAction, QuickFixAction, RefactorAction, SourceAction } from './codeActionCommands.js';
 import { CodeActionController } from './codeActionController.js';
@@ -14,7 +15,7 @@ import { Registry } from '../../../../platform/registry/common/platform.js';
 
 registerEditorContribution(CodeActionController.ID, CodeActionController, EditorContributionInstantiation.Eventually);
 registerEditorContribution(LightBulbWidget.ID, LightBulbWidget, EditorContributionInstantiation.Lazy);
-registerEditorAction(QuickFixAction);
+registerAction2(QuickFixAction);
 registerEditorAction(RefactorAction);
 registerEditorAction(SourceAction);
 registerEditorAction(OrganizeImportsAction);
diff --git a/src/vs/editor/contrib/find/browser/findWidget.css b/src/vs/editor/contrib/find/browser/findWidget.css
index a8f936985138e..f1dd6191b9580 100644
--- a/src/vs/editor/contrib/find/browser/findWidget.css
+++ b/src/vs/editor/contrib/find/browser/findWidget.css
@@ -11,7 +11,7 @@
 	overflow: hidden;
 	line-height: 19px;
 	transition: transform 200ms linear;
-	padding: 0 4px;
+	padding: 0 4px 0 9px;
 	box-sizing: border-box;
 	transform: translateY(calc(-100% - 10px)); /* shadow (10px) */
 	box-shadow: 0 0 8px 2px var(--vscode-widget-shadow);
@@ -151,8 +151,7 @@
 }
 
 .monaco-editor .find-widget .button.left {
-	margin-left: 0;
-	margin-right: 3px;
+	margin: 4px 0 4px 5px;
 }
 
 .monaco-editor .find-widget .button.wide {
@@ -164,10 +163,10 @@
 .monaco-editor .find-widget .button.toggle {
 	position: absolute;
 	top: 0;
-	left: 3px;
+	left: 0;
 	width: 18px;
-	height: 100%;
-	border-radius: 0;
+	height: -webkit-fill-available;
+	border-radius: var(--vscode-cornerRadius-small);
 	box-sizing: border-box;
 }
 
diff --git a/src/vs/platform/actions/common/actions.ts b/src/vs/platform/actions/common/actions.ts
index 4fc359bba4685..7297c8b72676d 100644
--- a/src/vs/platform/actions/common/actions.ts
+++ b/src/vs/platform/actions/common/actions.ts
@@ -279,6 +279,7 @@ export class MenuId {
 	static readonly ChatEditorInlineGutter = new MenuId('ChatEditorInlineGutter');
 	static readonly ChatEditorInlineExecute = new MenuId('ChatEditorInputExecute');
 	static readonly ChatEditorInlineInputSide = new MenuId('ChatEditorInputSide');
+	static readonly InlineChatEditorAffordance = new MenuId('InlineChatEditorAffordance');
 	static readonly AccessibleView = new MenuId('AccessibleView');
 	static readonly MultiDiffEditorContent = new MenuId('MultiDiffEditorContent');
 	static readonly MultiDiffEditorFileToolbar = new MenuId('MultiDiffEditorFileToolbar');
diff --git a/src/vs/platform/menubar/electron-main/menubar.ts b/src/vs/platform/menubar/electron-main/menubar.ts
index 772e21dcb0e37..e32d1b03b4fc3 100644
--- a/src/vs/platform/menubar/electron-main/menubar.ts
+++ b/src/vs/platform/menubar/electron-main/menubar.ts
@@ -648,6 +648,7 @@ export class Menubar extends Disposable {
 				})];
 
 			case StateType.Downloading:
+			case StateType.Overwriting:
 				return [new MenuItem({ label: nls.localize('miDownloadingUpdate', "Downloading Update..."), enabled: false })];
 
 			case StateType.Downloaded:
diff --git a/src/vs/platform/update/common/update.ts b/src/vs/platform/update/common/update.ts
index 199f433a462df..38ad531a08cb1 100644
--- a/src/vs/platform/update/common/update.ts
+++ b/src/vs/platform/update/common/update.ts
@@ -8,9 +8,8 @@ import { upcast } from '../../../base/common/types.js';
 import { createDecorator } from '../../instantiation/common/instantiation.js';
 
 export interface IUpdate {
-	// Windows and Linux: 9a19815253d91900be5ec1016e0ecc7cc9a6950 (Commit Hash). Mac: 1.54.0 (Product Version)
-	version: string;
-	productVersion?: string;
+	version: string; // Build commit ID
+	productVersion?: string; // Product version like 1.2.3
 	timestamp?: number;
 	url?: string;
 	sha256hash?: string;
@@ -25,13 +24,16 @@ export interface IUpdate {
  *          ↓  ↑
  *   Checking for Updates  →  Available for Download
  *         ↓
- *     Downloading  →   Ready
- *         ↓               ↑
- *     Downloaded   →  Updating
+ *                     ←   Overwriting
+ *     Downloading             ↑
+ *                     →     Ready
+ *         ↓               ↑      ↓
+ *     Downloaded   →  Updating   Overwriting → Downloading
  *
  * Available: There is an update available for download (linux).
  * Ready: Code will be updated as soon as it restarts (win32, darwin).
  * Downloaded: There is an update ready to be installed in the background (win32).
+ * Overwriting: A newer update is being downloaded to replace the pending update (darwin).
  */
 
 export const enum StateType {
@@ -44,6 +46,7 @@ export const enum StateType {
 	Downloaded = 'downloaded',
 	Updating = 'updating',
 	Ready = 'ready',
+	Overwriting = 'overwriting',
 }
 
 export const enum UpdateType {
@@ -66,12 +69,13 @@ export type Disabled = { type: StateType.Disabled; reason: DisablementReason };
 export type Idle = { type: StateType.Idle; updateType: UpdateType; error?: string };
 export type CheckingForUpdates = { type: StateType.CheckingForUpdates; explicit: boolean };
 export type AvailableForDownload = { type: StateType.AvailableForDownload; update: IUpdate };
-export type Downloading = { type: StateType.Downloading };
-export type Downloaded = { type: StateType.Downloaded; update: IUpdate };
+export type Downloading = { type: StateType.Downloading; explicit: boolean; overwrite: boolean };
+export type Downloaded = { type: StateType.Downloaded; update: IUpdate; explicit: boolean; overwrite: boolean };
 export type Updating = { type: StateType.Updating; update: IUpdate };
-export type Ready = { type: StateType.Ready; update: IUpdate };
+export type Ready = { type: StateType.Ready; update: IUpdate; explicit: boolean; overwrite: boolean };
+export type Overwriting = { type: StateType.Overwriting; explicit: boolean };
 
-export type State = Uninitialized | Disabled | Idle | CheckingForUpdates | AvailableForDownload | Downloading | Downloaded | Updating | Ready;
+export type State = Uninitialized | Disabled | Idle | CheckingForUpdates | AvailableForDownload | Downloading | Downloaded | Updating | Ready | Overwriting;
 
 export const State = {
 	Uninitialized: upcast<Uninitialized>({ type: StateType.Uninitialized }),
@@ -79,10 +83,11 @@ export const State = {
 	Idle: (updateType: UpdateType, error?: string): Idle => ({ type: StateType.Idle, updateType, error }),
 	CheckingForUpdates: (explicit: boolean): CheckingForUpdates => ({ type: StateType.CheckingForUpdates, explicit }),
 	AvailableForDownload: (update: IUpdate): AvailableForDownload => ({ type: StateType.AvailableForDownload, update }),
-	Downloading: upcast<Downloading>({ type: StateType.Downloading }),
-	Downloaded: (update: IUpdate): Downloaded => ({ type: StateType.Downloaded, update }),
+	Downloading: (explicit: boolean, overwrite: boolean): Downloading => ({ type: StateType.Downloading, explicit, overwrite }),
+	Downloaded: (update: IUpdate, explicit: boolean, overwrite: boolean): Downloaded => ({ type: StateType.Downloaded, update, explicit, overwrite }),
 	Updating: (update: IUpdate): Updating => ({ type: StateType.Updating, update }),
-	Ready: (update: IUpdate): Ready => ({ type: StateType.Ready, update }),
+	Ready: (update: IUpdate, explicit: boolean, overwrite: boolean): Ready => ({ type: StateType.Ready, update, explicit, overwrite }),
+	Overwriting: (explicit: boolean): Overwriting => ({ type: StateType.Overwriting, explicit }),
 };
 
 export interface IAutoUpdater extends Event.NodeEventEmitter {
diff --git a/src/vs/platform/update/electron-main/abstractUpdateService.ts b/src/vs/platform/update/electron-main/abstractUpdateService.ts
index ed8043f262322..cf250380b3b09 100644
--- a/src/vs/platform/update/electron-main/abstractUpdateService.ts
+++ b/src/vs/platform/update/electron-main/abstractUpdateService.ts
@@ -3,8 +3,8 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { timeout } from '../../../base/common/async.js';
-import { CancellationToken } from '../../../base/common/cancellation.js';
+import { IntervalTimer, timeout } from '../../../base/common/async.js';
+import { CancellationToken, CancellationTokenSource } from '../../../base/common/cancellation.js';
 import { Emitter, Event } from '../../../base/common/event.js';
 import { IConfigurationService } from '../../configuration/common/configuration.js';
 import { IEnvironmentMainService } from '../../environment/electron-main/environmentMainService.js';
@@ -14,8 +14,18 @@ import { IProductService } from '../../product/common/productService.js';
 import { IRequestService } from '../../request/common/request.js';
 import { AvailableForDownload, DisablementReason, IUpdateService, State, StateType, UpdateType } from '../common/update.js';
 
-export function createUpdateURL(platform: string, quality: string, productService: IProductService): string {
-	return `${productService.updateUrl}/api/update/${platform}/${quality}/${productService.commit}`;
+export interface IUpdateURLOptions {
+	readonly background?: boolean;
+}
+
+export function createUpdateURL(baseUpdateUrl: string, platform: string, quality: string, commit: string, options?: IUpdateURLOptions): string {
+	const url = new URL(`${baseUpdateUrl}/api/update/${platform}/${quality}/${commit}`);
+
+	if (options?.background) {
+		url.searchParams.set('bg', 'true');
+	}
+
+	return url.toString();
 }
 
 export type UpdateErrorClassification = {
@@ -28,9 +38,12 @@ export abstract class AbstractUpdateService implements IUpdateService {
 
 	declare readonly _serviceBrand: undefined;
 
-	protected url: string | undefined;
+	protected quality: string | undefined;
 
 	private _state: State = State.Uninitialized;
+	protected _overwrite: boolean = false;
+	private _hasCheckedForOverwriteOnQuit: boolean = false;
+	private readonly overwriteUpdatesCheckInterval = new IntervalTimer();
 
 	private readonly _onStateChange = new Emitter<State>();
 	readonly onStateChange: Event<State> = this._onStateChange.event;
@@ -43,6 +56,15 @@ export abstract class AbstractUpdateService implements IUpdateService {
 		this.logService.info('update#setState', state.type);
 		this._state = state;
 		this._onStateChange.fire(state);
+
+		// Schedule 5-minute checks when in Ready state and overwrite is supported
+		if (this.supportsUpdateOverwrite) {
+			if (state.type === StateType.Ready) {
+				this.overwriteUpdatesCheckInterval.cancelAndSet(() => this.checkForOverwriteUpdates(), 5 * 60 * 1000);
+			} else {
+				this.overwriteUpdatesCheckInterval.cancel();
+			}
+		}
 	}
 
 	constructor(
@@ -51,7 +73,8 @@ export abstract class AbstractUpdateService implements IUpdateService {
 		@IEnvironmentMainService protected environmentMainService: IEnvironmentMainService,
 		@IRequestService protected requestService: IRequestService,
 		@ILogService protected logService: ILogService,
-		@IProductService protected readonly productService: IProductService
+		@IProductService protected readonly productService: IProductService,
+		protected readonly supportsUpdateOverwrite: boolean,
 	) {
 		lifecycleMainService.when(LifecycleMainPhase.AfterWindowOpen)
 			.finally(() => this.initialize());
@@ -89,19 +112,13 @@ export abstract class AbstractUpdateService implements IUpdateService {
 			return;
 		}
 
-		this.url = this.buildUpdateFeedUrl(quality);
-		if (!this.url) {
+		if (!this.buildUpdateFeedUrl(quality, this.productService.commit!)) {
 			this.setState(State.Disabled(DisablementReason.InvalidConfiguration));
 			this.logService.info('update#ctor - updates are disabled as the update URL is badly formed');
 			return;
 		}
 
-		// hidden setting
-		if (this.configurationService.getValue<boolean>('_update.prss')) {
-			const url = new URL(this.url);
-			url.searchParams.set('prss', 'true');
-			this.url = url.toString();
-		}
+		this.quality = quality;
 
 		this.setState(State.Idle(this.getUpdateType()));
 
@@ -174,11 +191,21 @@ export abstract class AbstractUpdateService implements IUpdateService {
 		// noop
 	}
 
-	quitAndInstall(): Promise<void> {
+	async quitAndInstall(): Promise<void> {
 		this.logService.trace('update#quitAndInstall, state = ', this.state.type);
 
 		if (this.state.type !== StateType.Ready) {
-			return Promise.resolve(undefined);
+			return undefined;
+		}
+
+		if (this.supportsUpdateOverwrite && !this._hasCheckedForOverwriteOnQuit) {
+			this._hasCheckedForOverwriteOnQuit = true;
+			const didOverwrite = await this.checkForOverwriteUpdates(true);
+
+			if (didOverwrite) {
+				this.logService.info('update#quitAndInstall(): overwrite update detected, postponing quitAndInstall');
+				return;
+			}
 		}
 
 		this.logService.trace('update#quitAndInstall(): before lifecycle quit()');
@@ -196,19 +223,57 @@ export abstract class AbstractUpdateService implements IUpdateService {
 		return Promise.resolve(undefined);
 	}
 
-	async isLatestVersion(): Promise<boolean | undefined> {
-		if (!this.url) {
+	private async checkForOverwriteUpdates(explicit: boolean = false): Promise<boolean> {
+		if (this._state.type !== StateType.Ready) {
+			return false;
+		}
+
+		const pendingUpdateCommit = this._state.update.version;
+
+		let isLatest: boolean | undefined;
+
+		try {
+			const cts = new CancellationTokenSource();
+			const timeoutPromise = timeout(2000).then(() => { cts.cancel(); return undefined; });
+			isLatest = await Promise.race([this.isLatestVersion(pendingUpdateCommit, cts.token), timeoutPromise]);
+			cts.dispose();
+		} catch (error) {
+			this.logService.warn('update#checkForOverwriteUpdates(): failed to check for updates, proceeding with restart');
+			this.logService.warn(error);
+			return false;
+		}
+
+		if (isLatest === false && this._state.type === StateType.Ready) {
+			this.logService.info('update#readyStateCheck: newer update available, restarting update machinery');
+			await this.cancelPendingUpdate();
+			this._overwrite = true;
+			this.setState(State.Overwriting(explicit));
+			this.doCheckForUpdates(explicit, pendingUpdateCommit);
+			return true;
+		}
+
+		return false;
+	}
+
+	async isLatestVersion(commit?: string, token: CancellationToken = CancellationToken.None): Promise<boolean | undefined> {
+		if (!this.quality) {
 			return undefined;
 		}
 
 		const mode = this.configurationService.getValue<'none' | 'manual' | 'start' | 'default'>('update.mode');
 
 		if (mode === 'none') {
-			return false;
+			return undefined;
+		}
+
+		const url = this.buildUpdateFeedUrl(this.quality, commit ?? this.productService.commit!);
+
+		if (!url) {
+			return undefined;
 		}
 
 		try {
-			const context = await this.requestService.request({ url: this.url }, CancellationToken.None);
+			const context = await this.requestService.request({ url }, token);
 			// The update server replies with 204 (No Content) when no
 			// update is available - that's all we want to know.
 			return context.res.statusCode === 204;
@@ -236,6 +301,10 @@ export abstract class AbstractUpdateService implements IUpdateService {
 		// noop
 	}
 
-	protected abstract buildUpdateFeedUrl(quality: string): string | undefined;
-	protected abstract doCheckForUpdates(explicit: boolean): void;
+	protected async cancelPendingUpdate(): Promise<void> {
+		// noop
+	}
+
+	protected abstract buildUpdateFeedUrl(quality: string, commit: string, options?: IUpdateURLOptions): string | undefined;
+	protected abstract doCheckForUpdates(explicit: boolean, pendingCommit?: string): void;
 }
diff --git a/src/vs/platform/update/electron-main/updateService.darwin.ts b/src/vs/platform/update/electron-main/updateService.darwin.ts
index b78ebc526fca7..537b46b1a8627 100644
--- a/src/vs/platform/update/electron-main/updateService.darwin.ts
+++ b/src/vs/platform/update/electron-main/updateService.darwin.ts
@@ -16,7 +16,7 @@ import { IProductService } from '../../product/common/productService.js';
 import { IRequestService } from '../../request/common/request.js';
 import { ITelemetryService } from '../../telemetry/common/telemetry.js';
 import { IUpdate, State, StateType, UpdateType } from '../common/update.js';
-import { AbstractUpdateService, createUpdateURL, UpdateErrorClassification } from './abstractUpdateService.js';
+import { AbstractUpdateService, createUpdateURL, IUpdateURLOptions, UpdateErrorClassification } from './abstractUpdateService.js';
 
 export class DarwinUpdateService extends AbstractUpdateService implements IRelaunchHandler {
 
@@ -25,7 +25,7 @@ export class DarwinUpdateService extends AbstractUpdateService implements IRelau
 	@memoize private get onRawError(): Event<string> { return Event.fromNodeEventEmitter(electron.autoUpdater, 'error', (_, message) => message); }
 	@memoize private get onRawUpdateNotAvailable(): Event<void> { return Event.fromNodeEventEmitter<void>(electron.autoUpdater, 'update-not-available'); }
 	@memoize private get onRawUpdateAvailable(): Event<void> { return Event.fromNodeEventEmitter(electron.autoUpdater, 'update-available'); }
-	@memoize private get onRawUpdateDownloaded(): Event<IUpdate> { return Event.fromNodeEventEmitter(electron.autoUpdater, 'update-downloaded', (_, releaseNotes, version, timestamp) => ({ version, productVersion: version, timestamp })); }
+	@memoize private get onRawUpdateDownloaded(): Event<IUpdate> { return Event.fromNodeEventEmitter(electron.autoUpdater, 'update-downloaded', (_, version: string, productVersion: string, timestamp: number) => ({ version, productVersion, timestamp })); }
 
 	constructor(
 		@ILifecycleMainService lifecycleMainService: ILifecycleMainService,
@@ -36,7 +36,7 @@ export class DarwinUpdateService extends AbstractUpdateService implements IRelau
 		@ILogService logService: ILogService,
 		@IProductService productService: IProductService
 	) {
-		super(lifecycleMainService, configurationService, environmentMainService, requestService, logService, productService);
+		super(lifecycleMainService, configurationService, environmentMainService, requestService, logService, productService, true);
 
 		lifecycleMainService.setRelaunchHandler(this);
 	}
@@ -73,14 +73,9 @@ export class DarwinUpdateService extends AbstractUpdateService implements IRelau
 		this.setState(State.Idle(UpdateType.Archive, message));
 	}
 
-	protected buildUpdateFeedUrl(quality: string): string | undefined {
-		let assetID: string;
-		if (!this.productService.darwinUniversalAssetId) {
-			assetID = process.arch === 'x64' ? 'darwin' : 'darwin-arm64';
-		} else {
-			assetID = this.productService.darwinUniversalAssetId;
-		}
-		const url = createUpdateURL(assetID, quality, this.productService);
+	protected buildUpdateFeedUrl(quality: string, commit: string, options?: IUpdateURLOptions): string | undefined {
+		const assetID = this.productService.darwinUniversalAssetId ?? (process.arch === 'x64' ? 'darwin' : 'darwin-arm64');
+		const url = createUpdateURL(this.productService.updateUrl!, assetID, quality, commit, options);
 		try {
 			electron.autoUpdater.setFeedURL({ url });
 		} catch (e) {
@@ -91,24 +86,38 @@ export class DarwinUpdateService extends AbstractUpdateService implements IRelau
 		return url;
 	}
 
-	protected doCheckForUpdates(explicit: boolean): void {
-		if (!this.url) {
+	override async checkForUpdates(explicit: boolean): Promise<void> {
+		this.logService.trace('update#checkForUpdates, state = ', this.state.type);
+
+		if (this.state.type !== StateType.Idle) {
+			return;
+		}
+
+		this.doCheckForUpdates(explicit);
+	}
+
+	protected doCheckForUpdates(explicit: boolean, pendingCommit?: string): void {
+		if (!this.quality) {
 			return;
 		}
 
 		this.setState(State.CheckingForUpdates(explicit));
 
-		const url = explicit ? this.url : `${this.url}?bg=true`;
-		electron.autoUpdater.setFeedURL({ url });
+		const url = this.buildUpdateFeedUrl(this.quality, pendingCommit ?? this.productService.commit!, { background: !explicit });
+
+		if (!url) {
+			return;
+		}
+
 		electron.autoUpdater.checkForUpdates();
 	}
 
 	private onUpdateAvailable(): void {
-		if (this.state.type !== StateType.CheckingForUpdates) {
+		if (this.state.type !== StateType.CheckingForUpdates && this.state.type !== StateType.Overwriting) {
 			return;
 		}
 
-		this.setState(State.Downloading);
+		this.setState(State.Downloading(this.state.explicit, this._overwrite));
 	}
 
 	private onUpdateDownloaded(update: IUpdate): void {
@@ -116,16 +125,10 @@ export class DarwinUpdateService extends AbstractUpdateService implements IRelau
 			return;
 		}
 
-		this.setState(State.Downloaded(update));
-
-		type UpdateDownloadedClassification = {
-			owner: 'joaomoreno';
-			newVersion: { classification: 'SystemMetaData'; purpose: 'FeatureInsight'; comment: 'The version number of the new VS Code that has been downloaded.' };
-			comment: 'This is used to know how often VS Code has successfully downloaded the update.';
-		};
-		this.telemetryService.publicLog2<{ newVersion: String }, UpdateDownloadedClassification>('update:downloaded', { newVersion: update.version });
+		this.setState(State.Downloaded(update, this.state.explicit, this._overwrite));
+		this.logService.info(`Update downloaded: ${JSON.stringify(update)}`);
 
-		this.setState(State.Ready(update));
+		this.setState(State.Ready(update, this.state.explicit, this._overwrite));
 	}
 
 	private onUpdateNotAvailable(): void {
diff --git a/src/vs/platform/update/electron-main/updateService.linux.ts b/src/vs/platform/update/electron-main/updateService.linux.ts
index 8550ace2f4307..6845ba2569329 100644
--- a/src/vs/platform/update/electron-main/updateService.linux.ts
+++ b/src/vs/platform/update/electron-main/updateService.linux.ts
@@ -12,7 +12,7 @@ import { INativeHostMainService } from '../../native/electron-main/nativeHostMai
 import { IProductService } from '../../product/common/productService.js';
 import { asJson, IRequestService } from '../../request/common/request.js';
 import { AvailableForDownload, IUpdate, State, UpdateType } from '../common/update.js';
-import { AbstractUpdateService, createUpdateURL } from './abstractUpdateService.js';
+import { AbstractUpdateService, createUpdateURL, IUpdateURLOptions } from './abstractUpdateService.js';
 
 export class LinuxUpdateService extends AbstractUpdateService {
 
@@ -25,19 +25,19 @@ export class LinuxUpdateService extends AbstractUpdateService {
 		@INativeHostMainService private readonly nativeHostMainService: INativeHostMainService,
 		@IProductService productService: IProductService
 	) {
-		super(lifecycleMainService, configurationService, environmentMainService, requestService, logService, productService);
+		super(lifecycleMainService, configurationService, environmentMainService, requestService, logService, productService, false);
 	}
 
-	protected buildUpdateFeedUrl(quality: string): string {
-		return createUpdateURL(`linux-${process.arch}`, quality, this.productService);
+	protected buildUpdateFeedUrl(quality: string, commit: string, options?: IUpdateURLOptions): string {
+		return createUpdateURL(this.productService.updateUrl!, `linux-${process.arch}`, quality, commit, options);
 	}
 
-	protected doCheckForUpdates(explicit: boolean): void {
-		if (!this.url) {
+	protected doCheckForUpdates(explicit: boolean, _pendingCommit?: string): void {
+		if (!this.quality) {
 			return;
 		}
 
-		const url = explicit ? this.url : `${this.url}?bg=true`;
+		const url = this.buildUpdateFeedUrl(this.quality, this.productService.commit!, { background: !explicit });
 		this.setState(State.CheckingForUpdates(explicit));
 
 		this.requestService.request({ url }, CancellationToken.None)
diff --git a/src/vs/platform/update/electron-main/updateService.snap.ts b/src/vs/platform/update/electron-main/updateService.snap.ts
index 4ca2a34a7a92c..2a394e2bde405 100644
--- a/src/vs/platform/update/electron-main/updateService.snap.ts
+++ b/src/vs/platform/update/electron-main/updateService.snap.ts
@@ -162,7 +162,7 @@ export class SnapUpdateService extends AbstractUpdateService {
 		this.setState(State.CheckingForUpdates(false));
 		this.isUpdateAvailable().then(result => {
 			if (result) {
-				this.setState(State.Ready({ version: 'something' }));
+				this.setState(State.Ready({ version: 'something' }, false, false));
 			} else {
 				this.setState(State.Idle(UpdateType.Snap));
 			}
diff --git a/src/vs/platform/update/electron-main/updateService.win32.ts b/src/vs/platform/update/electron-main/updateService.win32.ts
index 5bf91910dd730..c55bf9c08ac2b 100644
--- a/src/vs/platform/update/electron-main/updateService.win32.ts
+++ b/src/vs/platform/update/electron-main/updateService.win32.ts
@@ -26,7 +26,7 @@ import { IProductService } from '../../product/common/productService.js';
 import { asJson, IRequestService } from '../../request/common/request.js';
 import { ITelemetryService } from '../../telemetry/common/telemetry.js';
 import { AvailableForDownload, DisablementReason, IUpdate, State, StateType, UpdateType } from '../common/update.js';
-import { AbstractUpdateService, createUpdateURL, UpdateErrorClassification } from './abstractUpdateService.js';
+import { AbstractUpdateService, createUpdateURL, IUpdateURLOptions, UpdateErrorClassification } from './abstractUpdateService.js';
 
 async function pollUntil(fn: () => boolean, millis = 1000): Promise<void> {
 	while (!fn()) {
@@ -71,7 +71,7 @@ export class Win32UpdateService extends AbstractUpdateService implements IRelaun
 		@INativeHostMainService private readonly nativeHostMainService: INativeHostMainService,
 		@IProductService productService: IProductService
 	) {
-		super(lifecycleMainService, configurationService, environmentMainService, requestService, logService, productService);
+		super(lifecycleMainService, configurationService, environmentMainService, requestService, logService, productService, false);
 
 		lifecycleMainService.setRelaunchHandler(this);
 	}
@@ -152,7 +152,7 @@ export class Win32UpdateService extends AbstractUpdateService implements IRelaun
 		}
 	}
 
-	protected buildUpdateFeedUrl(quality: string): string | undefined {
+	protected buildUpdateFeedUrl(quality: string, commit: string, options?: IUpdateURLOptions): string | undefined {
 		let platform = `win32-${process.arch}`;
 
 		if (getUpdateType() === UpdateType.Archive) {
@@ -161,15 +161,15 @@ export class Win32UpdateService extends AbstractUpdateService implements IRelaun
 			platform += '-user';
 		}
 
-		return createUpdateURL(platform, quality, this.productService);
+		return createUpdateURL(this.productService.updateUrl!, platform, quality, commit, options);
 	}
 
 	protected doCheckForUpdates(explicit: boolean): void {
-		if (!this.url) {
+		if (!this.quality) {
 			return;
 		}
 
-		const url = explicit ? this.url : `${this.url}?bg=true`;
+		const url = this.buildUpdateFeedUrl(this.quality, this.productService.commit!, { background: !explicit });
 		this.setState(State.CheckingForUpdates(explicit));
 
 		this.requestService.request({ url }, CancellationToken.None)
@@ -187,7 +187,7 @@ export class Win32UpdateService extends AbstractUpdateService implements IRelaun
 					return Promise.resolve(null);
 				}
 
-				this.setState(State.Downloading);
+				this.setState(State.Downloading(explicit, this._overwrite));
 
 				return this.cleanup(update.version).then(() => {
 					return this.getUpdatePackagePath(update.version).then(updatePackagePath => {
@@ -206,7 +206,7 @@ export class Win32UpdateService extends AbstractUpdateService implements IRelaun
 						});
 					}).then(packagePath => {
 						this.availableUpdate = { packagePath };
-						this.setState(State.Downloaded(update));
+						this.setState(State.Downloaded(update, explicit, this._overwrite));
 
 						const fastUpdatesEnabled = this.configurationService.getValue('update.enableWindowsBackgroundUpdates');
 						if (fastUpdatesEnabled) {
@@ -214,7 +214,7 @@ export class Win32UpdateService extends AbstractUpdateService implements IRelaun
 								this.doApplyUpdate();
 							}
 						} else {
-							this.setState(State.Ready(update));
+							this.setState(State.Ready(update, explicit, this._overwrite));
 						}
 					});
 				});
@@ -268,6 +268,7 @@ export class Win32UpdateService extends AbstractUpdateService implements IRelaun
 		}
 
 		const update = this.state.update;
+		const explicit = this.state.explicit;
 		this.setState(State.Updating(update));
 
 		const cachePath = await this.cachePath;
@@ -292,7 +293,7 @@ export class Win32UpdateService extends AbstractUpdateService implements IRelaun
 
 		// poll for mutex-ready
 		pollUntil(() => mutex.isActive(readyMutexName))
-			.then(() => this.setState(State.Ready(update)));
+			.then(() => this.setState(State.Ready(update, explicit, this._overwrite)));
 	}
 
 	protected override doQuitAndInstall(): void {
@@ -324,16 +325,16 @@ export class Win32UpdateService extends AbstractUpdateService implements IRelaun
 		const fastUpdatesEnabled = this.configurationService.getValue('update.enableWindowsBackgroundUpdates');
 		const update: IUpdate = { version: 'unknown', productVersion: 'unknown' };
 
-		this.setState(State.Downloading);
+		this.setState(State.Downloading(true, false));
 		this.availableUpdate = { packagePath };
-		this.setState(State.Downloaded(update));
+		this.setState(State.Downloaded(update, true, false));
 
 		if (fastUpdatesEnabled) {
 			if (this.productService.target === 'user') {
 				this.doApplyUpdate();
 			}
 		} else {
-			this.setState(State.Ready(update));
+			this.setState(State.Ready(update, true, false));
 		}
 	}
 }
diff --git a/src/vs/workbench/api/common/extHost.api.impl.ts b/src/vs/workbench/api/common/extHost.api.impl.ts
index b119a46852eb6..5a58eb5125102 100644
--- a/src/vs/workbench/api/common/extHost.api.impl.ts
+++ b/src/vs/workbench/api/common/extHost.api.impl.ts
@@ -1890,6 +1890,7 @@ export function createApiFactoryAndRegisterActors(accessor: ServicesAccessor): I
 			InteractiveSessionVoteDirection: extHostTypes.InteractiveSessionVoteDirection,
 			ChatCopyKind: extHostTypes.ChatCopyKind,
 			ChatSessionChangedFile: extHostTypes.ChatSessionChangedFile,
+			ChatSessionChangedFile2: extHostTypes.ChatSessionChangedFile2,
 			ChatEditingSessionActionOutcome: extHostTypes.ChatEditingSessionActionOutcome,
 			InteractiveEditorResponseFeedbackKind: extHostTypes.InteractiveEditorResponseFeedbackKind,
 			DebugStackFrame: extHostTypes.DebugStackFrame,
diff --git a/src/vs/workbench/api/common/extHostTypes.ts b/src/vs/workbench/api/common/extHostTypes.ts
index 86ea71b91c82c..81e8d303d59b3 100644
--- a/src/vs/workbench/api/common/extHostTypes.ts
+++ b/src/vs/workbench/api/common/extHostTypes.ts
@@ -3437,6 +3437,10 @@ export class ChatSessionChangedFile {
 	constructor(public readonly modifiedUri: vscode.Uri, public readonly insertions: number, public readonly deletions: number, public readonly originalUri?: vscode.Uri) { }
 }
 
+export class ChatSessionChangedFile2 {
+	constructor(public readonly uri: vscode.Uri, public readonly originalUri: vscode.Uri | undefined, public readonly modifiedUri: vscode.Uri | undefined, public readonly insertions: number, public readonly deletions: number) { }
+}
+
 export enum ChatResponseReferencePartStatusKind {
 	Complete = 1,
 	Partial = 2,
diff --git a/src/vs/workbench/browser/parts/titlebar/menubarControl.ts b/src/vs/workbench/browser/parts/titlebar/menubarControl.ts
index 07137d30ebb4b..92fe6a1737718 100644
--- a/src/vs/workbench/browser/parts/titlebar/menubarControl.ts
+++ b/src/vs/workbench/browser/parts/titlebar/menubarControl.ts
@@ -478,6 +478,7 @@ export class CustomMenubarControl extends MenubarControl {
 				});
 
 			case StateType.Downloading:
+			case StateType.Overwriting:
 				return toAction({ id: 'update.downloading', label: localize('DownloadingUpdate', "Downloading Update..."), enabled: false, run: () => { } });
 
 			case StateType.Downloaded:
diff --git a/src/vs/workbench/browser/parts/views/viewPane.ts b/src/vs/workbench/browser/parts/views/viewPane.ts
index 2f3f9b52751cc..2c4678c419e63 100644
--- a/src/vs/workbench/browser/parts/views/viewPane.ts
+++ b/src/vs/workbench/browser/parts/views/viewPane.ts
@@ -107,6 +107,7 @@ class ViewWelcomeController {
 	private _enabled: boolean = false;
 	private element: HTMLElement | undefined;
 	private scrollableElement: DomScrollableElement | undefined;
+	private _wide: boolean = false;
 
 	private readonly disposables = new DisposableStore();
 	private readonly enabledDisposables = this.disposables.add(new DisposableStore());
@@ -131,7 +132,8 @@ class ViewWelcomeController {
 
 		this.element!.style.height = `${height}px`;
 		this.element!.style.width = `${width}px`;
-		this.element!.classList.toggle('wide', width > 640);
+		this._wide = width > 640;
+		this.element!.classList.toggle('wide', this._wide);
 		this.scrollableElement!.scanDomNode();
 	}
 
@@ -160,6 +162,9 @@ class ViewWelcomeController {
 		this.container.classList.add('welcome');
 		const viewWelcomeContainer = append(this.container, $('.welcome-view'));
 		this.element = $('.welcome-view-content', { tabIndex: 0 });
+		if (this._wide) {
+			this.element.classList.add('wide');
+		}
 		this.scrollableElement = new DomScrollableElement(this.element, { alwaysConsumeMouseWheel: true, horizontal: ScrollbarVisibility.Hidden, vertical: ScrollbarVisibility.Visible, });
 		append(viewWelcomeContainer, this.scrollableElement.getDomNode());
 
diff --git a/src/vs/workbench/contrib/chat/browser/agentSessions/agentSessionsModel.ts b/src/vs/workbench/contrib/chat/browser/agentSessions/agentSessionsModel.ts
index 6f60564133993..548b8ee12cab0 100644
--- a/src/vs/workbench/contrib/chat/browser/agentSessions/agentSessionsModel.ts
+++ b/src/vs/workbench/contrib/chat/browser/agentSessions/agentSessionsModel.ts
@@ -21,7 +21,7 @@ import { Registry } from '../../../../../platform/registry/common/platform.js';
 import { IStorageService, StorageScope, StorageTarget } from '../../../../../platform/storage/common/storage.js';
 import { ILifecycleService } from '../../../../services/lifecycle/common/lifecycle.js';
 import { Extensions, IOutputChannelRegistry, IOutputService } from '../../../../services/output/common/output.js';
-import { ChatSessionStatus as AgentSessionStatus, IChatSessionFileChange, IChatSessionItem, IChatSessionsExtensionPoint, IChatSessionsService } from '../../common/chatSessionsService.js';
+import { ChatSessionStatus as AgentSessionStatus, IChatSessionFileChange, IChatSessionFileChange2, IChatSessionItem, IChatSessionsExtensionPoint, IChatSessionsService } from '../../common/chatSessionsService.js';
 import { AgentSessionProviders, getAgentSessionProvider, getAgentSessionProviderIcon, getAgentSessionProviderName } from './agentSessions.js';
 
 //#region Interfaces, Types
@@ -523,13 +523,6 @@ export class AgentSessionsModel extends Disposable implements IAgentSessionsMode
 		}
 
 		this._sessions = sessions;
-
-		for (const [resource] of this.sessionStates) {
-			if (!sessions.has(resource)) {
-				this.sessionStates.delete(resource); // clean up states for removed sessions
-			}
-		}
-
 		this._resolved = true;
 
 		this.logger.logAllStatsIfTrace('Sessions resolved from providers');
@@ -634,7 +627,7 @@ interface ISerializedAgentSession {
 		readonly endTime?: number;
 	};
 
-	readonly changes?: readonly IChatSessionFileChange[] | {
+	readonly changes?: readonly IChatSessionFileChange[] | readonly IChatSessionFileChange2[] | {
 		readonly files: number;
 		readonly insertions: number;
 		readonly deletions: number;
diff --git a/src/vs/workbench/contrib/chat/browser/agentSessions/agentSessionsViewer.ts b/src/vs/workbench/contrib/chat/browser/agentSessions/agentSessionsViewer.ts
index 2b26ceb4b9168..11c00bc7bda04 100644
--- a/src/vs/workbench/contrib/chat/browser/agentSessions/agentSessionsViewer.ts
+++ b/src/vs/workbench/contrib/chat/browser/agentSessions/agentSessionsViewer.ts
@@ -315,7 +315,7 @@ export class AgentSessionRenderer extends Disposable implements ICompressibleTre
 
 	private toDuration(startTime: number, endTime: number, useFullTimeWords: boolean, disallowNow: boolean): string {
 		const elapsed = Math.max(Math.round((endTime - startTime) / 1000) * 1000, 1000 /* clamp to 1s */);
-		if (!disallowNow && elapsed < 30000) {
+		if (!disallowNow && elapsed < 60000) {
 			return localize('secondsDuration', "now");
 		}
 
@@ -331,7 +331,13 @@ export class AgentSessionRenderer extends Disposable implements ICompressibleTre
 			}
 
 			if (!timeLabel) {
-				timeLabel = fromNow(session.timing.lastRequestEnded ?? session.timing.lastRequestStarted ?? session.timing.created, true);
+				const date = session.timing.lastRequestEnded ?? session.timing.lastRequestStarted ?? session.timing.created;
+				const seconds = Math.round((new Date().getTime() - date) / 1000);
+				if (seconds < 60) {
+					timeLabel = localize('secondsDuration', "now");
+				} else {
+					timeLabel = fromNow(date, true);
+				}
 			}
 
 			return timeLabel;
diff --git a/src/vs/workbench/contrib/chat/browser/agentSessions/experiments/media/unifiedQuickAccess.css b/src/vs/workbench/contrib/chat/browser/agentSessions/experiments/media/unifiedQuickAccess.css
index d169b0cdb332e..9feca2208721f 100644
--- a/src/vs/workbench/contrib/chat/browser/agentSessions/experiments/media/unifiedQuickAccess.css
+++ b/src/vs/workbench/contrib/chat/browser/agentSessions/experiments/media/unifiedQuickAccess.css
@@ -77,7 +77,8 @@
 }
 
 .unified-send-button .codicon {
-	font-size: 14px;
+	font-size: 14px !important;
+	color: var(--vscode-button-foreground) !important;
 }
 
 .unified-send-label {
diff --git a/src/vs/workbench/contrib/chat/browser/widget/chatContentParts/toolInvocationParts/chatTerminalToolProgressPart.ts b/src/vs/workbench/contrib/chat/browser/widget/chatContentParts/toolInvocationParts/chatTerminalToolProgressPart.ts
index eb15e9e65c5a7..6b3732ca594b5 100644
--- a/src/vs/workbench/contrib/chat/browser/widget/chatContentParts/toolInvocationParts/chatTerminalToolProgressPart.ts
+++ b/src/vs/workbench/contrib/chat/browser/widget/chatContentParts/toolInvocationParts/chatTerminalToolProgressPart.ts
@@ -211,6 +211,7 @@ export class ChatTerminalToolProgressPart extends BaseChatToolInvocationSubPart
 	private readonly _showOutputAction = this._register(new MutableDisposable<ToggleChatTerminalOutputAction>());
 	private _showOutputActionAdded = false;
 	private readonly _focusAction = this._register(new MutableDisposable<FocusChatInstanceAction>());
+	private readonly _continueInBackgroundAction = this._register(new MutableDisposable<ContinueInBackgroundAction>());
 
 	private readonly _terminalData: IChatTerminalToolInvocationData;
 	private _terminalCommandUri: URI | undefined;
@@ -457,6 +458,14 @@ export class ChatTerminalToolProgressPart extends BaseChatToolInvocationSubPart
 			});
 			this._terminalSessionRegistration = this._store.add(listener);
 		}
+
+		// Listen for continue in background to remove the button
+		this._store.add(this._terminalChatService.onDidContinueInBackground(sessionId => {
+			if (sessionId === terminalToolSessionId) {
+				this._terminalData.didContinueInBackground = true;
+				this._removeContinueInBackgroundAction();
+			}
+		}));
 	}
 
 	private _addActions(terminalInstance?: ITerminalInstance, terminalToolSessionId?: string): void {
@@ -467,11 +476,24 @@ export class ChatTerminalToolProgressPart extends BaseChatToolInvocationSubPart
 		this._removeFocusAction();
 		const resolvedCommand = this._getResolvedCommand(terminalInstance);
 
+		this._removeContinueInBackgroundAction();
 		if (terminalInstance) {
 			const isTerminalHidden = terminalInstance && terminalToolSessionId ? this._terminalChatService.isBackgroundTerminal(terminalToolSessionId) : false;
 			const focusAction = this._instantiationService.createInstance(FocusChatInstanceAction, terminalInstance, resolvedCommand, this._terminalCommandUri, this._storedCommandId, isTerminalHidden);
 			this._focusAction.value = focusAction;
 			actionBar.push(focusAction, { icon: true, label: false, index: 0 });
+
+			// Add continue in background action - only for foreground executions with running commands
+			// Note: isBackground refers to whether the tool was invoked with isBackground=true (background execution),
+			// not whether the terminal is hidden from the user
+			if (terminalToolSessionId && !this._terminalData.isBackground && !this._terminalData.didContinueInBackground) {
+				const isStillRunning = resolvedCommand?.exitCode === undefined && this._terminalData.terminalCommandState?.exitCode === undefined;
+				if (isStillRunning) {
+					const continueAction = this._instantiationService.createInstance(ContinueInBackgroundAction, terminalToolSessionId);
+					this._continueInBackgroundAction.value = continueAction;
+					actionBar.push(continueAction, { icon: true, label: false, index: 0 });
+				}
+			}
 		}
 
 		this._ensureShowOutputAction(resolvedCommand);
@@ -675,6 +697,21 @@ export class ChatTerminalToolProgressPart extends BaseChatToolInvocationSubPart
 		this._focusAction.clear();
 	}
 
+	private _removeContinueInBackgroundAction(): void {
+		if (this._store.isDisposed) {
+			return;
+		}
+		const actionBar = this._actionBar;
+		const continueAction = this._continueInBackgroundAction.value;
+		if (actionBar && continueAction) {
+			const existingIndex = actionBar.viewItems.findIndex(item => item.action === continueAction);
+			if (existingIndex >= 0) {
+				actionBar.pull(existingIndex);
+			}
+		}
+		this._continueInBackgroundAction.clear();
+	}
+
 	private async _toggleOutput(expanded: boolean): Promise<boolean> {
 		const didChange = await this._outputView.toggle(expanded);
 		const isExpanded = this._outputView.isExpanded;
@@ -1450,6 +1487,24 @@ export class FocusChatInstanceAction extends Action implements IAction {
 	}
 }
 
+export class ContinueInBackgroundAction extends Action implements IAction {
+	constructor(
+		private readonly _terminalToolSessionId: string,
+		@ITerminalChatService private readonly _terminalChatService: ITerminalChatService,
+	) {
+		super(
+			TerminalContribCommandId.ContinueInBackground,
+			localize('continueInBackground', 'Continue in Background'),
+			ThemeIcon.asClassName(Codicon.debugContinue),
+			true,
+		);
+	}
+
+	public override async run(): Promise<void> {
+		this._terminalChatService.continueInBackground(this._terminalToolSessionId);
+	}
+}
+
 class ChatTerminalThinkingCollapsibleWrapper extends ChatCollapsibleContentPart {
 	private readonly _terminalContentElement: HTMLElement;
 	private readonly _commandText: string;
diff --git a/src/vs/workbench/contrib/chat/browser/widget/input/chatInputPart.ts b/src/vs/workbench/contrib/chat/browser/widget/input/chatInputPart.ts
index a0fa43226d226..01bcdcf72a334 100644
--- a/src/vs/workbench/contrib/chat/browser/widget/input/chatInputPart.ts
+++ b/src/vs/workbench/contrib/chat/browser/widget/input/chatInputPart.ts
@@ -84,7 +84,7 @@ import { IChatEditingSession, IModifiedFileEntry, ModifiedFileEntryState } from
 import { IChatModelInputState, IChatRequestModeInfo, IInputModel } from '../../../common/model/chatModel.js';
 import { ChatMode, IChatMode, IChatModeService } from '../../../common/chatModes.js';
 import { IChatFollowup, IChatService, IChatSessionContext } from '../../../common/chatService/chatService.js';
-import { agentOptionId, IChatSessionProviderOptionGroup, IChatSessionProviderOptionItem, IChatSessionsService, localChatSessionType } from '../../../common/chatSessionsService.js';
+import { agentOptionId, IChatSessionProviderOptionGroup, IChatSessionProviderOptionItem, IChatSessionsService, isIChatSessionFileChange2, localChatSessionType } from '../../../common/chatSessionsService.js';
 import { getChatSessionType } from '../../../common/model/chatUri.js';
 import { ChatRequestVariableSet, IChatRequestVariableEntry, isElementVariableEntry, isImageVariableEntry, isNotebookOutputVariableEntry, isPasteVariableEntry, isPromptFileVariableEntry, isPromptTextVariableEntry, isSCMHistoryItemChangeRangeVariableEntry, isSCMHistoryItemChangeVariableEntry, isSCMHistoryItemVariableEntry, isStringImplicitContextValue, isStringVariableEntry } from '../../../common/attachments/chatVariableEntries.js';
 import { IChatResponseViewModel } from '../../../common/model/chatViewModel.js';
@@ -2093,7 +2093,7 @@ export class ChatInputPart extends Disposable implements IHistoryNavigationWidge
 			const newHeight = this.container.offsetHeight;
 			this.height.set(newHeight, undefined);
 		}));
-		inputResizeObserver.observe(this.container);
+		this._register(inputResizeObserver.observe(this.container));
 	}
 
 	public toggleChatInputOverlay(editing: boolean): void {
@@ -2428,7 +2428,7 @@ export class ChatInputPart extends Disposable implements IHistoryNavigationWidge
 
 		const sessionFiles = derived(reader =>
 			sessionFileChanges.read(reader).map((entry): IChatCollapsibleListItem => ({
-				reference: entry.modifiedUri,
+				reference: isIChatSessionFileChange2(entry) ? entry.uri : entry.modifiedUri,
 				state: ModifiedFileEntryState.Accepted,
 				kind: 'reference',
 				options: {
diff --git a/src/vs/workbench/contrib/chat/common/chatService/chatService.ts b/src/vs/workbench/contrib/chat/common/chatService/chatService.ts
index 5df7c58f631a2..3d04fb6169b23 100644
--- a/src/vs/workbench/contrib/chat/common/chatService/chatService.ts
+++ b/src/vs/workbench/contrib/chat/common/chatService/chatService.ts
@@ -416,6 +416,8 @@ export interface IChatTerminalToolInvocationData {
 	terminalToolSessionId?: string;
 	/** The predefined command ID that will be used for this terminal command */
 	terminalCommandId?: string;
+	/** Whether the terminal command was started as a background execution */
+	isBackground?: boolean;
 	/** Serialized URI for the command that was executed in the terminal */
 	terminalCommandUri?: UriComponents;
 	/** Serialized output of the executed command */
@@ -435,6 +437,8 @@ export interface IChatTerminalToolInvocationData {
 		timestamp?: number;
 		duration?: number;
 	};
+	/** Whether the user chose to continue in background for this tool invocation */
+	didContinueInBackground?: boolean;
 	autoApproveInfo?: IMarkdownString;
 }
 
diff --git a/src/vs/workbench/contrib/chat/common/chatSessionsService.ts b/src/vs/workbench/contrib/chat/common/chatSessionsService.ts
index e0dacd3f5f47c..27ff794566e22 100644
--- a/src/vs/workbench/contrib/chat/common/chatSessionsService.ts
+++ b/src/vs/workbench/contrib/chat/common/chatSessionsService.ts
@@ -94,7 +94,7 @@ export interface IChatSessionItem {
 		files: number;
 		insertions: number;
 		deletions: number;
-	} | readonly IChatSessionFileChange[];
+	} | readonly IChatSessionFileChange[] | readonly IChatSessionFileChange2[];
 	archived?: boolean;
 }
 
@@ -105,6 +105,14 @@ export interface IChatSessionFileChange {
 	deletions: number;
 }
 
+export interface IChatSessionFileChange2 {
+	readonly uri: URI;
+	readonly originalUri?: URI;
+	readonly modifiedUri?: URI;
+	readonly insertions: number;
+	readonly deletions: number;
+}
+
 export type IChatSessionHistoryItem = {
 	id?: string;
 	type: 'request';
@@ -255,4 +263,9 @@ export function isSessionInProgressStatus(state: ChatSessionStatus): boolean {
 	return state === ChatSessionStatus.InProgress || state === ChatSessionStatus.NeedsInput;
 }
 
+export function isIChatSessionFileChange2(obj: unknown): obj is IChatSessionFileChange2 {
+	const candidate = obj as IChatSessionFileChange2;
+	return candidate && candidate.uri instanceof URI && typeof candidate.insertions === 'number' && typeof candidate.deletions === 'number';
+}
+
 export const IChatSessionsService = createDecorator<IChatSessionsService>('chatSessionsService');
diff --git a/src/vs/workbench/contrib/inlineChat/browser/inlineChatActions.ts b/src/vs/workbench/contrib/inlineChat/browser/inlineChatActions.ts
index 6e0c2c0ff5266..25d30cd3700c1 100644
--- a/src/vs/workbench/contrib/inlineChat/browser/inlineChatActions.ts
+++ b/src/vs/workbench/contrib/inlineChat/browser/inlineChatActions.ts
@@ -56,6 +56,7 @@ export class StartSessionAction extends Action2 {
 		super({
 			id: ACTION_START,
 			title: localize2('run', 'Open Inline Chat'),
+			shortTitle: localize2('runShort', 'Inline Chat'),
 			category: AbstractInlineChatAction.category,
 			f1: true,
 			precondition: inlineChatContextKey,
@@ -78,6 +79,10 @@ export class StartSessionAction extends Action2 {
 				id: MenuId.ChatEditorInlineGutter,
 				group: '1_chat',
 				order: 1,
+			}, {
+				id: MenuId.InlineChatEditorAffordance,
+				group: '1_chat',
+				order: 1,
 			}]
 		});
 	}
diff --git a/src/vs/workbench/contrib/inlineChat/browser/inlineChatEditorAffordance.ts b/src/vs/workbench/contrib/inlineChat/browser/inlineChatEditorAffordance.ts
index 3fe2e7636c93b..b7e09ff6fb7d4 100644
--- a/src/vs/workbench/contrib/inlineChat/browser/inlineChatEditorAffordance.ts
+++ b/src/vs/workbench/contrib/inlineChat/browser/inlineChatEditorAffordance.ts
@@ -6,14 +6,14 @@
 import './media/inlineChatEditorAffordance.css';
 import { IDimension } from '../../../../base/browser/dom.js';
 import * as dom from '../../../../base/browser/dom.js';
-import { Codicon } from '../../../../base/common/codicons.js';
 import { Disposable } from '../../../../base/common/lifecycle.js';
-import { ThemeIcon } from '../../../../base/common/themables.js';
 import { ContentWidgetPositionPreference, ICodeEditor, IContentWidget, IContentWidgetPosition } from '../../../../editor/browser/editorBrowser.js';
 import { EditorOption } from '../../../../editor/common/config/editorOptions.js';
 import { Selection, SelectionDirection } from '../../../../editor/common/core/selection.js';
 import { autorun, IObservable, ISettableObservable } from '../../../../base/common/observable.js';
-import { assertType } from '../../../../base/common/types.js';
+import { MenuId } from '../../../../platform/actions/common/actions.js';
+import { HiddenItemStrategy, MenuWorkbenchToolBar } from '../../../../platform/actions/browser/toolbar.js';
+import { IInstantiationService } from '../../../../platform/instantiation/common/instantiation.js';
 
 /**
  * Content widget that shows a small sparkle icon at the cursor position.
@@ -35,22 +35,20 @@ export class InlineChatEditorAffordance extends Disposable implements IContentWi
 		private readonly _editor: ICodeEditor,
 		selection: IObservable<Selection | undefined>,
 		suppressAffordance: ISettableObservable<boolean>,
-		private readonly _hover: ISettableObservable<{ rect: DOMRect; above: boolean; lineNumber: number } | undefined>
+		_hover: ISettableObservable<{ rect: DOMRect; above: boolean; lineNumber: number } | undefined>,
+		@IInstantiationService instantiationService: IInstantiationService,
 	) {
 		super();
 
 		// Create the widget DOM
 		this._domNode = dom.$('.inline-chat-content-widget');
 
-		// Add sparkle icon
-		const icon = dom.append(this._domNode, dom.$('.icon'));
-		icon.classList.add(...ThemeIcon.asClassNameArray(Codicon.sparkleFilled));
-
-		// Handle click to show overlay widget
-		this._store.add(dom.addDisposableListener(this._domNode, dom.EventType.CLICK, (e) => {
-			e.preventDefault();
-			e.stopPropagation();
-			this._showOverlayWidget();
+		// Create toolbar with the inline chat start action
+		this._store.add(instantiationService.createInstance(MenuWorkbenchToolBar, this._domNode, MenuId.InlineChatEditorAffordance, {
+			telemetrySource: 'inlineChatEditorAffordance',
+			hiddenItemStrategy: HiddenItemStrategy.Ignore,
+			menuOptions: { renderShortTitle: true },
+			toolbarOptions: { primaryGroup: () => true },
 		}));
 
 		this._store.add(autorun(r => {
@@ -95,28 +93,6 @@ export class InlineChatEditorAffordance extends Disposable implements IContentWi
 		}
 	}
 
-	private _showOverlayWidget(): void {
-		assertType(this._editor.hasModel());
-
-		if (!this._position || !this._position.position) {
-			return;
-		}
-
-		const position = this._position.position;
-		const editorDomNode = this._editor.getDomNode();
-		const scrolledPosition = this._editor.getScrolledVisiblePosition(position);
-		const editorRect = editorDomNode.getBoundingClientRect();
-		const x = editorRect.left + scrolledPosition.left;
-		const y = editorRect.top + scrolledPosition.top;
-
-		this._hide();
-		this._hover.set({
-			rect: new DOMRect(x, y, 0, scrolledPosition.height),
-			above: this._position.preference[0] === ContentWidgetPositionPreference.ABOVE,
-			lineNumber: position.lineNumber
-		}, undefined);
-	}
-
 	getId(): string {
 		return this._id;
 	}
diff --git a/src/vs/workbench/contrib/inlineChat/browser/inlineChatOverlayWidget.ts b/src/vs/workbench/contrib/inlineChat/browser/inlineChatOverlayWidget.ts
index 0f85cfc076a30..84e873083dcd6 100644
--- a/src/vs/workbench/contrib/inlineChat/browser/inlineChatOverlayWidget.ts
+++ b/src/vs/workbench/contrib/inlineChat/browser/inlineChatOverlayWidget.ts
@@ -86,7 +86,7 @@ export class InlineChatInputWidget extends Disposable {
 
 		// Create editor options
 		const options = getSimpleEditorOptions(configurationService);
-		options.wordWrap = 'off';
+		options.wordWrap = 'on';
 		options.lineNumbers = 'off';
 		options.glyphMargin = false;
 		options.lineDecorationsWidth = 0;
@@ -95,7 +95,6 @@ export class InlineChatInputWidget extends Disposable {
 		options.minimap = { enabled: false };
 		options.scrollbar = { vertical: 'auto', horizontal: 'hidden', alwaysConsumeMouseWheel: true, verticalSliderSize: 6 };
 		options.renderLineHighlight = 'none';
-		options.placeholder = this._keybindingService.appendKeybinding(localize('placeholderWithSelection', "Edit selection"), ACTION_START);
 
 		const codeEditorWidgetOptions: ICodeEditorWidgetOptions = {
 			isSimpleWidget: true,
@@ -110,6 +109,18 @@ export class InlineChatInputWidget extends Disposable {
 		this._input.setModel(model);
 		this._input.layout({ width: 200, height: 18 });
 
+		// Update placeholder based on selection state
+		this._store.add(autorun(r => {
+			const selection = this._editorObs.cursorSelection.read(r);
+			const hasSelection = selection && !selection.isEmpty();
+			const placeholderText = hasSelection
+				? localize('placeholderWithSelection', "Edit selection")
+				: localize('placeholderNoSelection', "Generate code");
+			this._input.updateOptions({
+				placeholder: this._keybindingService.appendKeybinding(placeholderText, ACTION_START)
+			});
+		}));
+
 		// Listen to content size changes and resize the input editor (max 3 lines)
 		this._store.add(this._input.onDidContentSizeChange(e => {
 			if (e.contentHeightChanged) {
diff --git a/src/vs/workbench/contrib/inlineChat/browser/media/inlineChat.css b/src/vs/workbench/contrib/inlineChat/browser/media/inlineChat.css
index e970952c6193f..842572dbad9cb 100644
--- a/src/vs/workbench/contrib/inlineChat/browser/media/inlineChat.css
+++ b/src/vs/workbench/contrib/inlineChat/browser/media/inlineChat.css
@@ -324,23 +324,23 @@
 }
 
 .inline-chat-gutter-menu .input {
-	padding: 0 18px;
+	padding: 0 8px;
 }
 
 .inline-chat-gutter-menu .monaco-action-bar.vertical .action-item {
 	display: flex;
 	justify-content: space-between;
-	padding: 0 .8em;
 	border-radius: 3px;
 	margin: 0 4px;
 }
 
 .inline-chat-gutter-menu .monaco-action-bar.vertical .action-item .action-label {
 	font-size: 13px;
+	width: 100%;
 }
 
 .inline-chat-gutter-menu .monaco-action-bar.vertical .action-item:not(.disabled):hover,
-.inline-chat-gutter-menu .monaco-action-bar.vertical .action-item:not(.disabled).focused {
+.inline-chat-gutter-menu .monaco-action-bar.vertical .action-item:not(.disabled):focus-within {
 	background-color: var(--vscode-list-activeSelectionBackground);
 	color: var(--vscode-list-activeSelectionForeground);
 	outline: 1px solid var(--vscode-menu-selectionBorder, transparent);
@@ -348,6 +348,8 @@
 }
 
 .inline-chat-gutter-menu .monaco-action-bar.vertical .action-item:not(.disabled):hover .action-label,
-.inline-chat-gutter-menu .monaco-action-bar.vertical .action-item:not(.disabled).focused .action-label {
+.inline-chat-gutter-menu .monaco-action-bar.vertical .action-item:not(.disabled):focus-within .action-label {
 	color: var(--vscode-list-activeSelectionForeground);
+	outline: 1px solid var(--vscode-menu-selectionBorder, transparent);
+	outline-offset: -1px;
 }
diff --git a/src/vs/workbench/contrib/search/browser/media/searchview.css b/src/vs/workbench/contrib/search/browser/media/searchview.css
index 814a993312ee2..e493fe31c9247 100644
--- a/src/vs/workbench/contrib/search/browser/media/searchview.css
+++ b/src/vs/workbench/contrib/search/browser/media/searchview.css
@@ -27,6 +27,7 @@
 	left: 0;
 	width: 16px;
 	height: 100%;
+	border-radius: var(--vscode-cornerRadius-small);
 	color: inherit;
 	box-sizing: border-box;
 	background-position: center center;
diff --git a/src/vs/workbench/contrib/terminal/browser/terminal.ts b/src/vs/workbench/contrib/terminal/browser/terminal.ts
index d5ace8862c6a1..64e0df0108a19 100644
--- a/src/vs/workbench/contrib/terminal/browser/terminal.ts
+++ b/src/vs/workbench/contrib/terminal/browser/terminal.ts
@@ -239,6 +239,18 @@ export interface ITerminalChatService {
 	 * @returns A record of all session-scoped auto-approve rules for the session
 	 */
 	getSessionAutoApproveRules(chatSessionResource: URI): Readonly<Record<string, boolean | { approve: boolean; matchCommandLine?: boolean }>>;
+
+	/**
+	 * Signal that a foreground terminal tool invocation should continue in the background.
+	 * This causes the tool to return its current output immediately while the terminal keeps running.
+	 * @param terminalToolSessionId The tool session ID to continue in background
+	 */
+	continueInBackground(terminalToolSessionId: string): void;
+
+	/**
+	 * Event fired when a terminal tool invocation should continue in the background.
+	 */
+	readonly onDidContinueInBackground: Event<string>;
 }
 
 /**
diff --git a/src/vs/workbench/contrib/terminal/terminalContribExports.ts b/src/vs/workbench/contrib/terminal/terminalContribExports.ts
index 1fd3bb600a07d..5692332ebc9eb 100644
--- a/src/vs/workbench/contrib/terminal/terminalContribExports.ts
+++ b/src/vs/workbench/contrib/terminal/terminalContribExports.ts
@@ -32,6 +32,7 @@ export const enum TerminalContribCommandId {
 	FocusMostRecentChatTerminal = TerminalChatCommandId.FocusMostRecentChatTerminal,
 	ToggleChatTerminalOutput = TerminalChatCommandId.ToggleChatTerminalOutput,
 	FocusChatInstanceAction = TerminalChatCommandId.FocusChatInstanceAction,
+	ContinueInBackground = TerminalChatCommandId.ContinueInBackground,
 }
 
 // HACK: Export some settings from `terminalContrib/` that are depended upon elsewhere. These are
diff --git a/src/vs/workbench/contrib/terminalContrib/chat/browser/terminalChat.ts b/src/vs/workbench/contrib/terminalContrib/chat/browser/terminalChat.ts
index 44561ce3ae518..bb5f43232886c 100644
--- a/src/vs/workbench/contrib/terminalContrib/chat/browser/terminalChat.ts
+++ b/src/vs/workbench/contrib/terminalContrib/chat/browser/terminalChat.ts
@@ -25,6 +25,7 @@ export const enum TerminalChatCommandId {
 	FocusMostRecentChatTerminal = 'workbench.action.terminal.chat.focusMostRecentChatTerminal',
 	ToggleChatTerminalOutput = 'workbench.action.terminal.chat.toggleChatTerminalOutput',
 	FocusChatInstanceAction = 'workbench.action.terminal.chat.focusChatInstance',
+	ContinueInBackground = 'workbench.action.terminal.chat.continueInBackground',
 }
 
 export const MENU_TERMINAL_CHAT_WIDGET_INPUT_SIDE_TOOLBAR = MenuId.for('terminalChatWidget');
diff --git a/src/vs/workbench/contrib/terminalContrib/chat/browser/terminalChatService.ts b/src/vs/workbench/contrib/terminalContrib/chat/browser/terminalChatService.ts
index 936f48a8d87f5..e815d4e93cb81 100644
--- a/src/vs/workbench/contrib/terminalContrib/chat/browser/terminalChatService.ts
+++ b/src/vs/workbench/contrib/terminalContrib/chat/browser/terminalChatService.ts
@@ -33,8 +33,12 @@ export class TerminalChatService extends Disposable implements ITerminalChatServ
 	private readonly _chatSessionResourceByTerminalInstance = new Map<ITerminalInstance, URI>();
 	private readonly _terminalInstanceListenersByToolSessionId = this._register(new DisposableMap<string, IDisposable>());
 	private readonly _chatSessionListenersByTerminalInstance = this._register(new DisposableMap<ITerminalInstance, IDisposable>());
-	private readonly _onDidRegisterTerminalInstanceForToolSession = new Emitter<ITerminalInstance>();
+
+	private readonly _onDidContinueInBackground = this._register(new Emitter<string>());
+	readonly onDidContinueInBackground: Event<string> = this._onDidContinueInBackground.event;
+	private readonly _onDidRegisterTerminalInstanceForToolSession = this._register(new Emitter<ITerminalInstance>());
 	readonly onDidRegisterTerminalInstanceWithToolSession: Event<ITerminalInstance> = this._onDidRegisterTerminalInstanceForToolSession.event;
+
 	private readonly _activeProgressParts = new Set<IChatTerminalToolProgressPart>();
 	private _focusedProgressPart: IChatTerminalToolProgressPart | undefined;
 	private _mostRecentProgressPart: IChatTerminalToolProgressPart | undefined;
@@ -345,4 +349,8 @@ export class TerminalChatService extends Disposable implements ITerminalChatServ
 	getSessionAutoApproveRules(chatSessionResource: URI): Readonly<Record<string, boolean | { approve: boolean; matchCommandLine?: boolean }>> {
 		return this._sessionAutoApproveRules.get(chatSessionResource) ?? {};
 	}
+
+	continueInBackground(terminalToolSessionId: string): void {
+		this._onDidContinueInBackground.fire(terminalToolSessionId);
+	}
 }
diff --git a/src/vs/workbench/contrib/terminalContrib/chatAgentTools/browser/tools/runInTerminalTool.ts b/src/vs/workbench/contrib/terminalContrib/chatAgentTools/browser/tools/runInTerminalTool.ts
index 6bbe90a640c1d..45aa0be265b1a 100644
--- a/src/vs/workbench/contrib/terminalContrib/chatAgentTools/browser/tools/runInTerminalTool.ts
+++ b/src/vs/workbench/contrib/terminalContrib/chatAgentTools/browser/tools/runInTerminalTool.ts
@@ -427,6 +427,7 @@ export class RunInTerminalTool extends Disposable implements IToolImpl {
 			},
 			cwd,
 			language,
+			isBackground: args.isBackground,
 		};
 
 		// HACK: Exit early if there's an alternative recommendation, this is a little hacky but
@@ -676,12 +677,13 @@ export class RunInTerminalTool extends Disposable implements IToolImpl {
 			inputUserSigint ||= data === '\x03';
 		}));
 
+		let didMoveToBackground = false;
 		let outputMonitor: OutputMonitor | undefined;
 		if (args.isBackground) {
 			let pollingResult: IPollingResult & { pollDurationMs: number } | undefined;
 			try {
 				this._logService.debug(`RunInTerminalTool: Starting background execution \`${command}\``);
-				const execution = new BackgroundTerminalExecution(toolTerminal.instance, xterm, command, chatSessionId, commandId);
+				const execution = BackgroundTerminalExecution.start(toolTerminal.instance, xterm, command, chatSessionId, commandId!);
 				RunInTerminalTool._backgroundExecutions.set(termId, execution);
 
 				outputMonitor = store.add(this._instantiationService.createInstance(OutputMonitor, execution, undefined, invocation.context!, token, command));
@@ -763,6 +765,7 @@ export class RunInTerminalTool extends Disposable implements IToolImpl {
 			let exitCode: number | undefined;
 			let altBufferResult: IToolResult | undefined;
 			let didTimeout = false;
+			let didContinueInBackground = false;
 			let timeoutPromise: CancelablePromise<void> | undefined;
 			const executeCancellation = store.add(new CancellationTokenSource(token));
 
@@ -780,15 +783,33 @@ export class RunInTerminalTool extends Disposable implements IToolImpl {
 				}
 			}
 
+			// Set up continue in background listener
+			if (terminalToolSessionId) {
+				store.add(this._terminalChatService.onDidContinueInBackground(sessionId => {
+					if (sessionId === terminalToolSessionId) {
+						didContinueInBackground = true;
+						if (!executeCancellation.token.isCancellationRequested) {
+							executeCancellation.cancel();
+						}
+					}
+				}));
+			}
+
+			let startMarker: IXtermMarker | undefined;
 			try {
 				const strategy: ITerminalExecuteStrategy = this._getExecuteStrategy(toolTerminal.shellIntegrationQuality, toolTerminal, commandDetection!);
 				if (toolTerminal.shellIntegrationQuality === ShellIntegrationQuality.None) {
 					toolResultMessage = '$(info) Enable [shell integration](https://code.visualstudio.com/docs/terminal/shell-integration) to improve command detection';
 				}
 				this._logService.debug(`RunInTerminalTool: Using \`${strategy.type}\` execute strategy for command \`${command}\``);
-				store.add(strategy.onDidCreateStartMarker(startMarker => {
+				store.add(strategy.onDidCreateStartMarker(startMarker_ => {
+					if (startMarker_) {
+						// Duplicate marker for use even if the execution strategy one gets disposed.
+						// Don't add to store - we may need to transfer ownership to BackgroundTerminalExecution.
+						startMarker = xterm.raw.registerMarker(startMarker_.line - (xterm.raw.buffer.active.cursorY + xterm.raw.buffer.active.baseY));
+					}
 					if (!outputMonitor) {
-						outputMonitor = store.add(this._instantiationService.createInstance(OutputMonitor, { instance: toolTerminal.instance, sessionId: invocation.context?.sessionId, getOutput: (marker?: IXtermMarker) => getOutput(toolTerminal.instance, marker ?? startMarker) }, undefined, invocation.context, token, command));
+						outputMonitor = store.add(this._instantiationService.createInstance(OutputMonitor, { instance: toolTerminal.instance, sessionId: invocation.context?.sessionId, getOutput: (marker?: IXtermMarker) => getOutput(toolTerminal.instance, marker ?? startMarker_) }, undefined, invocation.context, token, command));
 					}
 				}));
 				const executeResult = await strategy.execute(command, executeCancellation.token, commandId);
@@ -851,6 +872,21 @@ export class RunInTerminalTool extends Disposable implements IToolImpl {
 					const timeoutOutput = getOutput(toolTerminal.instance, undefined);
 					outputLineCount = timeoutOutput ? count(timeoutOutput.trim(), '\n') + 1 : 0;
 					terminalResult = timeoutOutput ?? '';
+				} else if (didContinueInBackground && e instanceof CancellationError) {
+					// Handle continue in background case - get output collected so far and return it
+					this._logService.debug(`RunInTerminalTool: Continue in background triggered, returning output collected so far`);
+					error = 'continueInBackground';
+					didMoveToBackground = true;
+					if (!startMarker) {
+						this._logService.debug(`RunInTerminalTool: Start marker is undefined`);
+					} else if (startMarker.isDisposed) {
+						this._logService.debug(`RunInTerminalTool: Start marker is disposed`);
+					}
+					const execution = BackgroundTerminalExecution.adopt(toolTerminal.instance, xterm, command, chatSessionId, startMarker);
+					RunInTerminalTool._backgroundExecutions.set(termId, execution);
+					const backgroundOutput = execution.getOutput();
+					outputLineCount = backgroundOutput ? count(backgroundOutput.trim(), '\n') + 1 : 0;
+					terminalResult = backgroundOutput ?? '';
 				} else {
 					this._logService.debug(`RunInTerminalTool: Threw exception`);
 					toolTerminal.instance.dispose();
@@ -860,6 +896,10 @@ export class RunInTerminalTool extends Disposable implements IToolImpl {
 			} finally {
 				timeoutPromise?.cancel();
 				store.dispose();
+				// Clean up the marker if we didn't move to background (which takes ownership)
+				if (!didMoveToBackground) {
+					startMarker?.dispose();
+				}
 				const timingExecuteMs = Date.now() - timingStart;
 				this._telemetry.logInvoke(toolTerminal.instance, {
 					terminalToolSessionId: toolSpecificData.terminalToolSessionId,
@@ -898,6 +938,9 @@ export class RunInTerminalTool extends Disposable implements IToolImpl {
 			} else if (didToolEditCommand) {
 				resultText.push(`Note: The tool simplified the command to \`${command}\`, and this is the output of running that command instead:\n`);
 			}
+			if (didMoveToBackground) {
+				resultText.push(`Note: This terminal execution was moved to the background using the ID ${termId}\n`);
+			}
 			resultText.push(terminalResult);
 
 			return {
@@ -1107,7 +1150,31 @@ export class RunInTerminalTool extends Disposable implements IToolImpl {
 class BackgroundTerminalExecution extends Disposable {
 	private _startMarker?: IXtermMarker;
 
-	constructor(
+	static start(
+		instance: ITerminalInstance,
+		xterm: XtermTerminal,
+		commandLine: string,
+		sessionId: string,
+		commandId: string,
+	): BackgroundTerminalExecution {
+		return new BackgroundTerminalExecution(instance, xterm, commandLine, sessionId, commandId);
+	}
+
+	static adopt(
+		instance: ITerminalInstance,
+		xterm: XtermTerminal,
+		commandLine: string,
+		sessionId: string,
+		existingMarker?: IXtermMarker,
+	): BackgroundTerminalExecution {
+		const execution = new BackgroundTerminalExecution(instance, xterm, commandLine, sessionId);
+		if (existingMarker) {
+			execution._startMarker = execution._register(existingMarker);
+		}
+		return execution;
+	}
+
+	private constructor(
 		readonly instance: ITerminalInstance,
 		private readonly _xterm: XtermTerminal,
 		private readonly _commandLine: string,
@@ -1116,9 +1183,12 @@ class BackgroundTerminalExecution extends Disposable {
 	) {
 		super();
 
-		this._startMarker = this._register(this._xterm.raw.registerMarker());
-		this.instance.runCommand(this._commandLine, true, commandId);
+		if (commandId !== undefined) {
+			this._startMarker = this._register(this._xterm.raw.registerMarker());
+			this.instance.runCommand(this._commandLine, true, commandId);
+		}
 	}
+
 	getOutput(marker?: IXtermMarker): string {
 		return getOutput(this.instance, marker ?? this._startMarker);
 	}
diff --git a/src/vs/workbench/contrib/update/browser/update.ts b/src/vs/workbench/contrib/update/browser/update.ts
index cc12ca62fbb67..a7450ed69427d 100644
--- a/src/vs/workbench/contrib/update/browser/update.ts
+++ b/src/vs/workbench/contrib/update/browser/update.ts
@@ -12,8 +12,8 @@ import { IInstantiationService, ServicesAccessor } from '../../../../platform/in
 import { IOpenerService } from '../../../../platform/opener/common/opener.js';
 import { IWorkbenchContribution } from '../../../common/contributions.js';
 import { IStorageService, StorageScope, StorageTarget } from '../../../../platform/storage/common/storage.js';
-import { IUpdateService, State as UpdateState, StateType, IUpdate, DisablementReason } from '../../../../platform/update/common/update.js';
-import { INotificationService, NotificationPriority, Severity } from '../../../../platform/notification/common/notification.js';
+import { IUpdateService, State as UpdateState, StateType, IUpdate, DisablementReason, Ready, Overwriting } from '../../../../platform/update/common/update.js';
+import { INotificationService, INotificationHandle, NotificationPriority, Severity } from '../../../../platform/notification/common/notification.js';
 import { IDialogService } from '../../../../platform/dialogs/common/dialogs.js';
 import { IBrowserWorkbenchEnvironmentService } from '../../../services/environment/browser/environmentService.js';
 import { ReleaseNotesManager } from './releaseNotesEditor.js';
@@ -161,6 +161,7 @@ export class UpdateContribution extends Disposable implements IWorkbenchContribu
 
 	private state: UpdateState;
 	private readonly badgeDisposable = this._register(new MutableDisposable());
+	private overwriteNotificationHandle: INotificationHandle | undefined;
 	private updateStateContextKey: IContextKey<string>;
 	private majorMinorUpdateAvailableContextKey: IContextKey<boolean>;
 
@@ -244,14 +245,18 @@ export class UpdateContribution extends Disposable implements IWorkbenchContribu
 				this.onUpdateDownloaded(state.update);
 				break;
 
+			case StateType.Overwriting:
+				this.onUpdateOverwriting(state);
+				break;
+
 			case StateType.Ready: {
 				const productVersion = state.update.productVersion;
 				if (productVersion) {
 					const currentVersion = parseVersion(this.productService.version);
 					const nextVersion = parseVersion(productVersion);
 					this.majorMinorUpdateAvailableContextKey.set(Boolean(currentVersion && nextVersion && isMajorMinorUpdate(currentVersion, nextVersion)));
-					this.onUpdateReady(state.update);
 				}
+				this.onUpdateReady(state);
 				break;
 			}
 		}
@@ -262,7 +267,7 @@ export class UpdateContribution extends Disposable implements IWorkbenchContribu
 			badge = new NumberBadge(1, () => nls.localize('updateIsReady', "New {0} update available.", this.productService.nameShort));
 		} else if (state.type === StateType.CheckingForUpdates) {
 			badge = new ProgressBadge(() => nls.localize('checkingForUpdates', "Checking for {0} updates...", this.productService.nameShort));
-		} else if (state.type === StateType.Downloading) {
+		} else if (state.type === StateType.Downloading || state.type === StateType.Overwriting) {
 			badge = new ProgressBadge(() => nls.localize('downloading', "Downloading {0} update...", this.productService.nameShort));
 		} else if (state.type === StateType.Updating) {
 			badge = new ProgressBadge(() => nls.localize('updating', "Updating {0}...", this.productService.nameShort));
@@ -363,39 +368,71 @@ export class UpdateContribution extends Disposable implements IWorkbenchContribu
 	}
 
 	// windows and mac
-	private onUpdateReady(update: IUpdate): void {
-		if (!(isWindows && this.productService.target !== 'user') && !this.shouldShowNotification()) {
-			return;
-		}
+	private onUpdateReady(state: Ready): void {
+		if (state.overwrite && this.overwriteNotificationHandle) {
+			const handle = this.overwriteNotificationHandle;
+			this.overwriteNotificationHandle = undefined;
+
+			// Update notification to show completion with restart action
+			handle.progress.done();
+			handle.updateMessage(nls.localize('newerUpdateReady', "The newer update is ready to install."));
+			handle.updateActions({
+				primary: [
+					toAction({
+						id: 'update.restartToUpdate',
+						label: nls.localize('restartToUpdate2', "Restart to Update"),
+						run: () => this.updateService.quitAndInstall()
+					})
+				]
+			});
+		} else if ((isWindows && this.productService.target !== 'user') || this.shouldShowNotification()) {
 
-		const actions = [{
-			label: nls.localize('updateNow', "Update Now"),
-			run: () => this.updateService.quitAndInstall()
-		}, {
-			label: nls.localize('later', "Later"),
-			run: () => { }
-		}];
+			const actions = [{
+				label: nls.localize('updateNow', "Update Now"),
+				run: () => this.updateService.quitAndInstall()
+			}, {
+				label: nls.localize('later', "Later"),
+				run: () => { }
+			}];
+
+			const productVersion = state.update.productVersion;
+			if (productVersion) {
+				actions.push({
+					label: nls.localize('releaseNotes', "Release Notes"),
+					run: () => {
+						this.instantiationService.invokeFunction(accessor => showReleaseNotes(accessor, productVersion));
+					}
+				});
+			}
 
-		const productVersion = update.productVersion;
-		if (productVersion) {
-			actions.push({
-				label: nls.localize('releaseNotes', "Release Notes"),
-				run: () => {
-					this.instantiationService.invokeFunction(accessor => showReleaseNotes(accessor, productVersion));
+			// windows user fast updates and mac
+			this.notificationService.prompt(
+				severity.Info,
+				nls.localize('updateAvailableAfterRestart', "Restart {0} to apply the latest update.", this.productService.nameLong),
+				actions,
+				{
+					sticky: true,
+					priority: NotificationPriority.OPTIONAL
 				}
-			});
+			);
 		}
+	}
 
-		// windows user fast updates and mac
-		this.notificationService.prompt(
-			severity.Info,
-			nls.localize('updateAvailableAfterRestart', "Restart {0} to apply the latest update.", this.productService.nameLong),
-			actions,
-			{
-				sticky: true,
-				priority: NotificationPriority.OPTIONAL
-			}
-		);
+	// macOS overwrite update - overwriting
+	private onUpdateOverwriting(state: Overwriting): void {
+		if (!state.explicit) {
+			return;
+		}
+
+		// Show notification with progress
+		this.overwriteNotificationHandle = this.notificationService.notify({
+			severity: Severity.Info,
+			sticky: true,
+			message: nls.localize('newerUpdateDownloading', "We found a newer update available and have started to download it. We'll let you know as soon as it's ready to install."),
+			source: nls.localize('update service', "Update Service"),
+		});
+
+		this.overwriteNotificationHandle.progress.infinite();
 	}
 
 	private shouldShowNotification(): boolean {
diff --git a/src/vs/workbench/services/update/browser/updateService.ts b/src/vs/workbench/services/update/browser/updateService.ts
index 65016e9067b6c..cced4f2d1838b 100644
--- a/src/vs/workbench/services/update/browser/updateService.ts
+++ b/src/vs/workbench/services/update/browser/updateService.ts
@@ -70,7 +70,7 @@ export class BrowserUpdateService extends Disposable implements IUpdateService {
 			const update = await updateProvider.checkForUpdate();
 			if (update) {
 				// State -> Downloaded
-				this.state = State.Ready({ version: update.version, productVersion: update.version });
+				this.state = State.Ready({ version: update.version, productVersion: update.version }, explicit, false);
 			} else {
 				// State -> Idle
 				this.state = State.Idle(UpdateType.Archive);
diff --git a/src/vscode-dts/vscode.proposed.chatSessionsProvider.d.ts b/src/vscode-dts/vscode.proposed.chatSessionsProvider.d.ts
index 3f8a6a0b89f44..7d07be4b52bb3 100644
--- a/src/vscode-dts/vscode.proposed.chatSessionsProvider.d.ts
+++ b/src/vscode-dts/vscode.proposed.chatSessionsProvider.d.ts
@@ -231,7 +231,7 @@ declare module 'vscode' {
 		/**
 		 * Statistics about the chat session.
 		 */
-		changes?: readonly ChatSessionChangedFile[] | {
+		changes?: readonly ChatSessionChangedFile[] | readonly ChatSessionChangedFile2[] | {
 			/**
 			 * Number of files edited during the session.
 			 */
@@ -273,6 +273,35 @@ declare module 'vscode' {
 		constructor(modifiedUri: Uri, insertions: number, deletions: number, originalUri?: Uri);
 	}
 
+	export class ChatSessionChangedFile2 {
+		/**
+		 * URI of the file.
+		 */
+		readonly uri: Uri;
+
+		/**
+		 * URI of the original file. Undefined if the file was created.
+		 */
+		readonly originalUri: Uri | undefined;
+
+		/**
+		 * URI of the modified file. Undefined if the file was deleted.
+		 */
+		readonly modifiedUri: Uri | undefined;
+
+		/**
+		 * Number of insertions made during the session.
+		 */
+		insertions: number;
+
+		/**
+		 * Number of deletions made during the session.
+		 */
+		deletions: number;
+
+		constructor(uri: Uri, originalUri: Uri | undefined, modifiedUri: Uri | undefined, insertions: number, deletions: number);
+	}
+
 	export interface ChatSession {
 		/**
 		 * The full history of the session
diff --git a/test/monaco/package-lock.json b/test/monaco/package-lock.json
index ada3052b87ee2..513d33eeb3444 100644
--- a/test/monaco/package-lock.json
+++ b/test/monaco/package-lock.json
@@ -144,9 +144,9 @@
       }
     },
     "node_modules/lodash": {
-      "version": "4.17.21",
-      "resolved": "https://registry.npmjs.org/lodash/-/lodash-4.17.21.tgz",
-      "integrity": "sha512-v2kDEe57lecTulaDIuNTPy3Ry4gLGJ6Z1O3vE1krgXZNrsQ+LFTGHVxVjcXPs17LhbZVGedAJv8XZ1tvj5FvSg==",
+      "version": "4.17.23",
+      "resolved": "https://registry.npmjs.org/lodash/-/lodash-4.17.23.tgz",
+      "integrity": "sha512-LgVTMpQtIopCi79SJeDiP0TfWi5CNEc/L/aRdTh3yIvmZXTnheWpKjSZhnvMl8iXbC1tFg9gdHHDMLoV7CnG+w==",
       "dev": true,
       "license": "MIT"
     },