Copilot no longer can read local files in vscode when in ask mode

[wa2n-code]

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I've been using the free github copilot in vscode to make suggestions for js and html files in a web project for the last few months. Now after an apparent update to copilot, it cannot read local files that are in my project which I need to frame suggested code additions around existing code. I even "asked" it if it can read local files got the following response:

No, I cannot read your local files automatically. You need to copy and paste the relevant code or file contents here if you want me to review or modify them. This is for your privacy and security.

On another (Linux) system that requires manual updates, the older version has no problems accessing local files, so this (hopefully) is a bug that can be fixed. My problematic copilot extension is Version 1.335.0 Last Updated 2025-06-15, 19:26:55, and copilot chat extension is Version 0.28.0 Last Updated 2025-06-15, 19:46:51.

[AdityaSuraj]

I'm also seeing this issue after updating to:

• Copilot extension: v1.335.0

• Copilot Chat: v0.28.0

• Last updated: June 15, 2025

Before the update, Copilot could access local files and use them for context when suggesting completions or answering questions. Now it just responds with:

"No, I cannot read your local files automatically. You need to copy and paste the relevant code or file contents here..."

This seems like a big regression, especially for larger projects where referencing multiple files is essential. On a different (Linux) machine where I haven't updated Copilot yet, it still works as expected — so this behavior definitely seems tied to the recent update.

If this is a new default for privacy reasons, I hope there will be a way to opt-in to local file access again. Otherwise, the functionality is significantly limited.

Would appreciate any confirmation from the GitHub team: is this a bug or an intentional change?

[nisxant69]

What you’re experiencing sounds like a recent change in how GitHub Copilot handles local file context in VS Code. Previously, older versions may have implicitly used the content of your open files or project files to generate suggestions, but newer updates have tightened privacy and security controls, so Copilot no longer automatically “reads” your local files unless you explicitly provide their content in the prompt. This means it won’t analyze your project files in the background as before. This change is intentional to protect your code privacy and align with data usage policies. On your Linux system with the older version, the behavior remains because that version doesn’t enforce these restrictions yet. Unfortunately, this isn’t a bug but a deliberate design update, so you’ll need to copy and paste code snippets into Copilot Chat or open files directly in the editor for relevant context. Keep an eye on official GitHub Copilot release notes or forums, as they may add clearer guidance or options in future updates to balance privacy with context awareness.

[Shimal007]

Issue:
With Github Copilot v1.335.0 and Copilot Chat v0.28.0, Copilot no longer appears to be able to use nearby files in my workspace to provide context for code completions.
This wasn't an issue in the previous (Linux) installation — it successfully provided context from files within my directory — but now it responds with:

"I cannot read your local files automatically..."

Expected behavior:
Copilot should be able to leverage nearby files in the directory to provide contextually accurate suggestions, especially when coding in a multi-file project.

Steps to reproduce:

Update to Copilot v1.335.0 and Copilot Chat v0.28.0 in VSCode.

Open a JavaScript/HTML file in a multi-file project.

Begin typing code or asking Copilot a question that normally would require knowledge of nearby files.

Environment:

VSCode: 1.x (latest)

OS: Windows

Copilot: v1.335.0

Copilot Chat: v0.28.0

Additional context:

The Linux installation (with an older plugin) can resolve context from nearby files, while the updated Windows plugin cannot.

The change seemed to appear after the June 15th update.

✅ Tip:
To report this directly, you can:

Open VSCode.

Go to Help > Report Issue.

Fill in the details above.

Also, consider posting this on the Github Copilot community discussions for visibility