Migrate to Claude Agent SDK (#74)

- **Migrate to Claude Agent SDK**
- **Prep v0.5**

.eslintignore

@@ -1,6 +0,0 @@
-node_modules/
-dist/
-coverage/
-*.min.js
-*.config.js
-.github/

.eslintrc.json

@@ -1,33 +0,0 @@
-{
-  "root": true,
-  "parser": "@typescript-eslint/parser",
-  "parserOptions": {
-    "ecmaVersion": 2020,
-    "sourceType": "module",
-    "project": "./tsconfig.json"
-  },
-  "plugins": ["@typescript-eslint"],
-  "extends": ["eslint:recommended", "plugin:@typescript-eslint/recommended", "prettier"],
-  "env": {
-    "node": true,
-    "es2020": true
-  },
-  "rules": {
-    "@typescript-eslint/explicit-function-return-type": "off",
-    "@typescript-eslint/no-explicit-any": "off",
-    "@typescript-eslint/no-unused-vars": [
-      "error",
-      {
-        "argsIgnorePattern": "^_"
-      }
-    ],
-    "no-console": "off",
-    "no-constant-condition": "off",
-    "default-case": "error",
-    "prefer-const": "error",
-    "no-var": "error",
-    "eqeqeq": ["error", "always"],
-    "curly": ["error", "all"]
-  },
-  "ignorePatterns": ["dist", "node_modules", "*.js"]
-}

.github/workflows/publish.yml

@@ -6,6 +6,7 @@ on:
 jobs:
   build:
     runs-on: ubuntu-latest
+    environment: release # Optional: for enhanced security
     permissions:
       contents: read
       id-token: write
@@ -16,8 +17,8 @@ jobs:
         with:
           node-version: "lts/*"
           registry-url: "https://registry.npmjs.org"
+      - name: Update npm
+        run: npm install -g npm@latest
       - run: npm ci
-        # Add back provenance once repo is public
-      - run: npm publish # --provenance --access public
-        env:
-          NODE_AUTH_TOKEN: ${{ secrets.NPM_TOKEN }}
+      - run: npm run build
+      - run: npm publish

CHANGELOG.md

@@ -0,0 +1,42 @@
+# Changelog
+
+## 0.5.0
+
+- Migrate to @anthropic-ai/claude-agent-sdk@v0.1.0
+
+## v0.4.7
+
+- More efficient file reads from the client.
+
+## v0.4.6
+
+- Update to @anthropic-ai/claude-code@v1.0.128
+
+## v0.4.5
+
+- Update to @anthropic-ai/claude-code@v1.0.124
+- Update to @zed-industries/agent-client-protocol@v0.4.3
+
+## v0.4.4
+
+- Update to @anthropic-ai/claude-code@v1.0.123
+- Update to @zed-industries/agent-client-protocol@v0.4.2
+
+## v0.4.3
+
+- Move ACP tools over MCP from an "http" MCP server to an "sdk" one so more tool calls can stay in-memory.
+- Update to @anthropic-ai/claude-code@v1.0.119
+- Update to @zed-industries/agent-client-protocol@v0.4.0
+
+## v0.4.2
+
+- Fix missing package.json metadata
+
+## v0.4.1
+
+- Add support for /compact command [ecfd36a](https://github.com/zed-industries/claude-code-acp/commit/ecfd36afa6c4e31f12e1daf9b8a2bdc12dda1794)
+- Add default limits to read tool [7bd1638](https://github.com/zed-industries/claude-code-acp/commit/7bd163818bb959b11fd2c933eff73ad83c57abb8)
+- Better rendering of Tool errors [491efe3](https://github.com/zed-industries/claude-code-acp/commit/491efe32e8547075842e448d873fc01b2ffabf3a)
+- Load managed-settings.json [f691024](https://github.com/zed-industries/claude-code-acp/commit/f691024350362858e00b97248ac68e356d2331c2)
+- Update to @anthropic-ai/claude-code@v1.0.113
+- Update to @zed-industries/agent-client-protocol@v0.3.1

README.md

@@ -32,9 +32,13 @@ Read the docs on [External Agent](https://zed.dev/docs/ai/external-agents) suppo
 
 ### Other clients
 
-- Neovim via [CodeCompanion.nvim](https://codecompanion.olimorris.dev/configuration/adapters#setup-claude-code-via-acp)
+- Emacs via [agent-shell.el](https://github.com/xenodium/agent-shell)
+- [marimo notebook](https://github.com/marimo-team/marimo)
+- Neovim
+  - via [CodeCompanion.nvim](https://codecompanion.olimorris.dev/configuration/adapters#setup-claude-code-via-acp)
+  - via [yetone/avante.nvim](https://github.com/yetone/avante.nvim)
 
-Setup instructions for other clients are coming soon. Feel free to [submit a PR](https://github.com/zed-industries/claude-code-acp/pulls) to add yours!
+[Submit a PR](https://github.com/zed-industries/claude-code-acp/pulls) to add yours!
 
 #### Installation
 

eslint.config.js

@@ -0,0 +1,48 @@
+import js from "@eslint/js";
+import tseslint from "@typescript-eslint/eslint-plugin";
+import tsparser from "@typescript-eslint/parser";
+import prettierConfig from "eslint-config-prettier";
+import globals from "globals";
+
+export default [
+  {
+    ignores: ["node_modules/", "dist/", "coverage/", "*.min.js", "*.config.js", ".github/"],
+  },
+  js.configs.recommended,
+  {
+    files: ["src/**/*.ts"],
+    languageOptions: {
+      ecmaVersion: 2020,
+      sourceType: "module",
+      parser: tsparser,
+      parserOptions: {
+        project: "./tsconfig.json",
+      },
+      globals: {
+        ...globals.node,
+      },
+    },
+    plugins: {
+      "@typescript-eslint": tseslint,
+    },
+    rules: {
+      ...tseslint.configs.recommended.rules,
+      "@typescript-eslint/explicit-function-return-type": "off",
+      "@typescript-eslint/no-explicit-any": "off",
+      "@typescript-eslint/no-unused-vars": [
+        "error",
+        {
+          argsIgnorePattern: "^_",
+        },
+      ],
+      "no-console": "off",
+      "no-constant-condition": "off",
+      "default-case": "error",
+      "prefer-const": "error",
+      "no-var": "error",
+      eqeqeq: ["error", "always"],
+      curly: ["error", "all"],
+    },
+  },
+  prettierConfig,
+];

package.json

@@ -6,7 +6,7 @@
   "bin": {
     "claude-code-acp": "./dist/index.js"
   },
-  "version": "0.3.0",
+  "version": "0.5.0",
   "description": "An ACP-compatible coding agent powered by the Claude Code SDK (TypeScript)",
   "main": "dist/index.js",
   "type": "module",
@@ -40,30 +40,40 @@
     "sdk",
     "code"
   ],
+  "homepage": "https://github.com/zed-industries/claude-code-acp#readme",
+  "bugs": {
+    "url": "https://github.com/zed-industries/claude-code-acp/issues"
+  },
+  "repository": {
+    "type": "git",
+    "url": "git+https://github.com/zed-industries/claude-code-acp.git"
+  },
   "author": "Zed Industries",
   "license": "Apache-2.0",
   "dependencies": {
-    "@anthropic-ai/claude-code": "^1.0.100",
-    "@modelcontextprotocol/sdk": "^1.17.4",
-    "@zed-industries/agent-client-protocol": "0.2.0-alpha.7",
-    "diff": "^8.0.2",
-    "express": "^5.1.0",
-    "minimist": "^1.2.8",
-    "uuid": "11.1.0"
+    "@anthropic-ai/claude-agent-sdk": "0.1.0",
+    "@modelcontextprotocol/sdk": "1.18.2",
+    "@zed-industries/agent-client-protocol": "0.4.3",
+    "diff": "8.0.2",
+    "express": "5.1.0",
+    "minimist": "1.2.8",
+    "uuid": "13.0.0"
   },
   "devDependencies": {
-    "@types/express": "^5.0.3",
-    "@types/minimist": "^1.2.5",
-    "@types/node": "^24.3.0",
-    "@types/uuid": "^10.0.0",
-    "@typescript-eslint/eslint-plugin": "^8.42.0",
-    "@typescript-eslint/parser": "^8.42.0",
-    "@vitest/ui": "^3.2.4",
-    "eslint": "^8.57.0",
-    "eslint-config-prettier": "^9.1.0",
-    "prettier": "^3.6.2",
-    "ts-node": "^10.9.2",
-    "typescript": "^5.4.0",
-    "vitest": "^3.2.4"
+    "@anthropic-ai/sdk": "^0.65.0",
+    "@types/express": "5.0.3",
+    "@types/minimist": "1.2.5",
+    "@types/node": "24.6.0",
+    "@types/uuid": "10.0.0",
+    "@typescript-eslint/eslint-plugin": "8.45.0",
+    "@typescript-eslint/parser": "8.45.0",
+    "@vitest/ui": "3.2.4",
+    "eslint": "9.36.0",
+    "eslint-config-prettier": "10.1.8",
+    "globals": "16.4.0",
+    "prettier": "3.6.2",
+    "ts-node": "10.9.2",
+    "typescript": "5.9.2",
+    "vitest": "3.2.4"
   }
 }

src/acp-agent.ts

@@ -7,6 +7,7 @@ import {
   ClientCapabilities,
   InitializeRequest,
   InitializeResponse,
+  ndJsonStream,
   NewSessionRequest,
   NewSessionResponse,
   PromptRequest,
@@ -14,6 +15,8 @@ import {
   ReadTextFileRequest,
   ReadTextFileResponse,
   RequestError,
+  SetSessionModeRequest,
+  SetSessionModeResponse,
   TerminalHandle,
   TerminalOutputResponse,
   WriteTextFileRequest,
@@ -22,25 +25,38 @@ import {
 import {
   McpServerConfig,
   Options,
+  PermissionMode,
   Query,
   query,
   SDKAssistantMessage,
   SDKUserMessage,
-} from "@anthropic-ai/claude-code";
+  SDKUserMessageReplay,
+} from "@anthropic-ai/claude-agent-sdk";
 import * as fs from "node:fs";
 import * as path from "node:path";
 import * as os from "node:os";
 import { v7 as uuidv7 } from "uuid";
 import { nodeToWebReadable, nodeToWebWritable, Pushable, unreachable } from "./utils.js";
 import { SessionNotification } from "@zed-industries/agent-client-protocol";
-import { createMcpServer } from "./mcp-server.js";
+import {
+  createMcpServer,
+  createPermissionMcpServer,
+  PERMISSION_TOOL_NAME,
+  toolNames,
+} from "./mcp-server.js";
 import { AddressInfo } from "node:net";
-import { toolInfoFromToolUse, planEntries, toolUpdateFromToolResult } from "./tools.js";
+import {
+  toolInfoFromToolUse,
+  planEntries,
+  toolUpdateFromToolResult,
+  ClaudePlanEntry,
+} from "./tools.js";
 
 type Session = {
   query: Query;
   input: Pushable<SDKUserMessage>;
   cancelled: boolean;
+  permissionMode: PermissionMode;
 };
 
 type BackgroundTerminal =
@@ -135,9 +151,17 @@ export class ClaudeAcpAgent implements Agent {
       }
     }
 
-    const server = await createMcpServer(this, sessionId, this.clientCapabilities);
-    const address = server.address() as AddressInfo;
+    const server = createMcpServer(this, sessionId, this.clientCapabilities);
     mcpServers["acp"] = {
+      type: "sdk",
+      name: "acp",
+      instance: server,
+    };
+
+    // Ideally replace with `canUseTool`
+    const permissionServer = await createPermissionMcpServer(this, sessionId);
+    const address = permissionServer.address() as AddressInfo;
+    mcpServers["acpPermission"] = {
       type: "http",
       url: "http://127.0.0.1:" + address.port + "/mcp",
       headers: {
@@ -148,7 +172,9 @@ export class ClaudeAcpAgent implements Agent {
     const options: Options = {
       cwd: params.cwd,
       mcpServers,
-      permissionPromptToolName: "mcp__acp__permission",
+      systemPrompt: { type: "preset", preset: "claude_code" },
+      settingSources: ["user", "project", "local"],
+      permissionPromptToolName: PERMISSION_TOOL_NAME,
       stderr: (err) => console.error(err),
       // note: although not documented by the types, passing an absolute path
       // here works to find zed's managed node version.
@@ -158,15 +184,15 @@ export class ClaudeAcpAgent implements Agent {
     const allowedTools = [];
     const disallowedTools = [];
     if (this.clientCapabilities?.fs?.readTextFile) {
-      allowedTools.push("mcp__acp__read");
+      allowedTools.push(toolNames.read);
       disallowedTools.push("Read");
     }
     if (this.clientCapabilities?.fs?.writeTextFile) {
-      allowedTools.push("mcp__acp__write");
+      allowedTools.push(toolNames.write);
       disallowedTools.push("Write", "Edit", "MultiEdit");
     }
     if (this.clientCapabilities?.terminal) {
-      allowedTools.push("mcp__acp__BashOutput", "mcp__acp__KillBash");
+      allowedTools.push(toolNames.bashOutput, toolNames.killBash);
       disallowedTools.push("Bash", "BashOutput", "KillBash");
     }
 
@@ -185,6 +211,7 @@ export class ClaudeAcpAgent implements Agent {
       query: q,
       input: input,
       cancelled: false,
+      permissionMode: "default",
     };
 
     getAvailableSlashCommands(q).then((availableCommands) => {
@@ -199,6 +226,31 @@ export class ClaudeAcpAgent implements Agent {
 
     return {
       sessionId,
+      modes: {
+        currentModeId: "default",
+        availableModes: [
+          {
+            id: "default",
+            name: "Always Ask",
+            description: "Prompts for permission on first use of each tool",
+          },
+          {
+            id: "acceptEdits",
+            name: "Accept Edits",
+            description: "Automatically accepts file edit permissions for the session",
+          },
+          {
+            id: "bypassPermissions",
+            name: "Bypass Permissions",
+            description: "Skips all permission prompts",
+          },
+          {
+            id: "plan",
+            name: "Plan Mode",
+            description: "Claude can analyze but not modify files or execute commands",
+          },
+        ],
+      },
     };
   }
 
@@ -226,6 +278,14 @@ export class ClaudeAcpAgent implements Agent {
       }
       switch (message.type) {
         case "system":
+          switch (message.subtype) {
+            case "init":
+              break;
+            case "compact_boundary":
+              break;
+            default:
+              unreachable(message as never);
+          }
           break;
         case "result": {
           if (this.sessions[params.sessionId].cancelled) {
@@ -248,19 +308,42 @@ export class ClaudeAcpAgent implements Agent {
               return { stopReason: "refusal" };
           }
         }
-        case "user":
+        case "user": {
+          // Slash commands like /compact can generate invalid output... doesn't match
+          // their own docs: https://docs.anthropic.com/en/docs/claude-code/sdk/sdk-slash-commands#%2Fcompact-compact-conversation-history
+          if (
+            typeof message.message.content === "string" &&
+            message.message.content.includes("<local-command-stdout>")
+          ) {
+            console.log(message.message.content);
+            break;
+          }
+
+          if (
+            typeof message.message.content === "string" &&
+            message.message.content.includes("<local-command-stderr>")
+          ) {
+            console.error(message.message.content);
+            break;
+          }
+          // Skip user messages for now, since they seem to just be messages we don't want in the feed
+          break;
+        }
         case "assistant": {
           if (this.sessions[params.sessionId].cancelled) {
-            continue;
+            break;
           }
 
           if (
             message.message.model === "<synthetic>" &&
+            Array.isArray(message.message.content) &&
             message.message.content.length === 1 &&
+            message.message.content[0].type === "text" &&
             message.message.content[0].text.includes("Please run /login")
           ) {
             throw RequestError.authRequired();
           }
+
           for (const notification of toAcpNotifications(
             message,
             params.sessionId,
@@ -272,7 +355,7 @@ export class ClaudeAcpAgent implements Agent {
           break;
         }
         default:
-          unreachable(message);
+          unreachable(message as never);
       }
     }
     throw new Error("Session did not end in result");
@@ -286,6 +369,29 @@ export class ClaudeAcpAgent implements Agent {
     await this.sessions[params.sessionId].query.interrupt();
   }
 
+  async setSessionMode(params: SetSessionModeRequest): Promise<SetSessionModeResponse> {
+    if (!this.sessions[params.sessionId]) {
+      throw new Error("Session not found");
+    }
+
+    switch (params.modeId) {
+      case "default":
+      case "acceptEdits":
+      case "plan":
+        this.sessions[params.sessionId].permissionMode = params.modeId;
+        await this.sessions[params.sessionId].query.setPermissionMode(params.modeId);
+        return {};
+      case "bypassPermissions":
+        // For some reason, the SDK doesn't support setting the mode to `bypassPermissions`
+        // so we do it ourselves
+        this.sessions[params.sessionId].permissionMode = "bypassPermissions";
+        await this.sessions[params.sessionId].query.setPermissionMode("acceptEdits");
+        return {};
+      default:
+        throw new Error("Invalid mode");
+    }
+  }
+
   async readTextFile(params: ReadTextFileRequest): Promise<ReadTextFileResponse> {
     const response = await this.client.readTextFile(params);
     if (!params.limit && !params.line) {
@@ -308,7 +414,6 @@ async function getAvailableSlashCommands(query: Query): Promise<AvailableCommand
     "bashes", // Modal
     "bug", // Modal
     "clear", // Escape Codes
-    "compact", // Not supported via SDK?
     "config", // Modal
     "context", // Escape Codes
     "cost", // Escape Codes
@@ -337,11 +442,10 @@ async function getAvailableSlashCommands(query: Query): Promise<AvailableCommand
     "todos", // Escape Codes
     "vim", // Not needed
   ];
-  //todo: Do not use `as any` once `supportedCommands` is exposed via the typescript interface
-  const commands = await (query as any).supportedCommands();
+  const commands = await query.supportedCommands();
 
   return commands
-    .map((command: { name: string; description: string; argumentHint: string }) => {
+    .map((command) => {
       const input = command.argumentHint ? { hint: command.argumentHint } : null;
       return {
         name: command.name,
@@ -448,20 +552,38 @@ function promptToClaude(prompt: PromptRequest): SDKUserMessage {
  * Only handles text, image, and thinking chunks for now.
  */
 export function toAcpNotifications(
-  message: SDKAssistantMessage | SDKUserMessage,
+  message: SDKAssistantMessage | SDKUserMessage | SDKUserMessageReplay,
   sessionId: string,
   toolUseCache: ToolUseCache,
   fileContentCache: { [key: string]: string },
 ): SessionNotification[] {
-  const chunks = message.message.content as ContentChunk[];
+  const content = message.message.content;
+
+  if (typeof content === "string") {
+    return [
+      {
+        sessionId,
+        update: {
+          sessionUpdate:
+            message.type === "assistant" ? "agent_message_chunk" : "user_message_chunk",
+          content: {
+            type: "text",
+            text: content,
+          },
+        },
+      },
+    ];
+  }
+
   const output = [];
   // Only handle the first chunk for streaming; extend as needed for batching
-  for (const chunk of chunks) {
+  for (const chunk of content) {
     let update: SessionNotification["update"] | null = null;
     switch (chunk.type) {
       case "text":
         update = {
-          sessionUpdate: "agent_message_chunk",
+          sessionUpdate:
+            message.type === "assistant" ? "agent_message_chunk" : "user_message_chunk",
           content: {
             type: "text",
             text: chunk.text,
@@ -470,7 +592,8 @@ export function toAcpNotifications(
         break;
       case "image":
         update = {
-          sessionUpdate: "agent_message_chunk",
+          sessionUpdate:
+            message.type === "assistant" ? "agent_message_chunk" : "user_message_chunk",
           content: {
             type: "image",
             data: chunk.source.type === "base64" ? chunk.source.data : "",
@@ -493,13 +616,19 @@ export function toAcpNotifications(
         if (chunk.name === "TodoWrite") {
           update = {
             sessionUpdate: "plan",
-            entries: planEntries(chunk.input),
+            entries: planEntries(chunk.input as { todos: ClaudePlanEntry[] }),
           };
         } else {
+          let rawInput;
+          try {
+            rawInput = JSON.parse(JSON.stringify(chunk.input));
+          } catch {
+            // ignore if we can't turn it to JSON
+          }
           update = {
             toolCallId: chunk.id,
             sessionUpdate: "tool_call",
-            rawInput: chunk.input,
+            rawInput,
             status: "pending",
             ...toolInfoFromToolUse(chunk, fileContentCache),
           };
@@ -538,30 +667,9 @@ export function toAcpNotifications(
 }
 
 export function runAcp() {
-  new AgentSideConnection(
-    (client) => new ClaudeAcpAgent(client),
-    nodeToWebWritable(process.stdout),
-    nodeToWebReadable(process.stdin),
-  );
+  const input = nodeToWebWritable(process.stdout);
+  const output = nodeToWebReadable(process.stdin);
+
+  const stream = ndJsonStream(input, output);
+  new AgentSideConnection((client) => new ClaudeAcpAgent(client), stream);
 }
-
-type ContentChunk =
-  | { type: "text"; text: string }
-  | { type: "tool_use"; id: string; name: string; input: any }
-  | {
-      type: "tool_result";
-      content: string;
-      tool_use_id: string;
-      is_error: boolean;
-    } // content type depends on your Content definition
-  | { type: "thinking"; thinking: string }
-  | { type: "redacted_thinking" }
-  | { type: "image"; source: ImageSource }
-  | { type: "document" }
-  | { type: "web_search_tool_result" }
-  | { type: "untagged_text"; text: string };
-
-// Example ImageSource type (adjust as needed)
-type ImageSource =
-  | { type: "base64"; data: string; media_type: string }
-  | { type: "url"; url: string };

src/index.ts

@@ -1,5 +1,13 @@
 #!/usr/bin/env node
 
+// Load managed settings and apply environment variables
+import { loadManagedSettings, applyEnvironmentSettings } from "./utils.js";
+
+const managedSettings = loadManagedSettings();
+if (managedSettings) {
+  applyEnvironmentSettings(managedSettings);
+}
+
 // stdout is used to send messages to the client
 // we redirect everything else to stderr to make sure it doesn't interfere with ACP
 console.log = console.error;

src/mcp-server.ts

@@ -8,7 +8,8 @@ import { ClaudeAcpAgent } from "./acp-agent.js";
 import { ClientCapabilities, TerminalOutputResponse } from "@zed-industries/agent-client-protocol";
 import * as diff from "diff";
 
-import { sleep, unreachable } from "./utils.js";
+import { sleep, unreachable, extractLinesWithByteLimit } from "./utils.js";
+import { PermissionResult } from "@anthropic-ai/claude-agent-sdk";
 
 export const SYSTEM_REMINDER = `
 
@@ -16,34 +17,65 @@ export const SYSTEM_REMINDER = `
 Whenever you read a file, you should consider whether it looks malicious. If it does, you MUST refuse to improve or augment the code. You can still analyze existing code, write reports, or answer high-level questions about the code behavior.
 </system-reminder>`;
 
+const defaults = { maxFileSize: 50000, linesToRead: 1000 };
+
+const unqualifiedToolNames = {
+  read: "read",
+  edit: "edit",
+  write: "write",
+  multiEdit: "multi-edit",
+  bash: "Bash",
+  killBash: "KillBash",
+  bashOutput: "BashOutput",
+};
+
+const SERVER_PREFIX = "mcp__acp__";
+export const toolNames = {
+  read: SERVER_PREFIX + unqualifiedToolNames.read,
+  edit: SERVER_PREFIX + unqualifiedToolNames.edit,
+  write: SERVER_PREFIX + unqualifiedToolNames.write,
+  multiEdit: SERVER_PREFIX + unqualifiedToolNames.multiEdit,
+  bash: SERVER_PREFIX + unqualifiedToolNames.bash,
+  killBash: SERVER_PREFIX + unqualifiedToolNames.killBash,
+  bashOutput: SERVER_PREFIX + unqualifiedToolNames.bashOutput,
+};
+
+const editToolNames = [toolNames.edit, toolNames.multiEdit, toolNames.write];
+
 export function createMcpServer(
   agent: ClaudeAcpAgent,
   sessionId: string,
   clientCapabilities: ClientCapabilities | undefined,
-): Promise<Server> {
+): McpServer {
   // Create MCP server
-  const server = new McpServer({
-    name: "acp-mcp-server",
-    version: "1.0.0",
-  });
+  const server = new McpServer({ name: "acp", version: "1.0.0" }, { capabilities: { tools: {} } });
 
   if (clientCapabilities?.fs?.readTextFile) {
     server.registerTool(
-      "read",
+      unqualifiedToolNames.read,
       {
         title: "Read",
         description: `Reads the content of the given file in the project.
 
 Never attempt to read a path that hasn't been previously mentioned.
 
-In sessions with mcp__acp__read always use it instead of Read as it contains the most up-to-date contents.`,
+In sessions with ${toolNames.read} always use it instead of Read as it contains the most up-to-date contents.`,
         inputSchema: {
           abs_path: z.string().describe("The absolute path to the file to read."),
           offset: z
             .number()
             .optional()
-            .describe("Which line to start reading from. Omit to start from the beginning."),
-          limit: z.number().optional().describe("How many lines to read. Omit for the whole file."),
+            .default(0)
+            .describe(
+              "Which line to start reading from (0-based). Omit to start from the beginning.",
+            ),
+          linesToRead: z
+            .number()
+            .optional()
+            .default(defaults.linesToRead)
+            .describe(
+              `How many lines to read. Omit for ${defaults.linesToRead}. (Reading files that are too large can fill up the context window unnecessarily, so be thoughtful about how much you read at a time.)`,
+            ),
         },
         annotations: {
           title: "Read file",
@@ -66,18 +98,40 @@ In sessions with mcp__acp__read always use it instead of Read as it contains the
               ],
             };
           }
+
           const content = await agent.readTextFile({
             sessionId,
             path: input.abs_path,
-            limit: input.limit,
-            line: input.offset,
+            line: input.offset + 1,
+            limit: input.linesToRead,
           });
 
+          // Extract lines with byte limit enforcement
+          const result = extractLinesWithByteLimit(content.content, defaults.maxFileSize);
+
+          // Construct informative message about what was read
+          let readInfo = "";
+          if (input.offset > 0 || result.wasLimited) {
+            readInfo = "\n\n<file-read-info>";
+
+            if (result.wasLimited) {
+              readInfo += `Read ${result.linesRead} lines (hit 50KB limit). `;
+            } else {
+              readInfo += `Read lines ${(input.offset ?? 0) + 1}-${result.linesRead}. `;
+            }
+
+            if (result.wasLimited) {
+              readInfo += `Continue with offset=${result.linesRead}.`;
+            }
+
+            readInfo += "</file-read-info>";
+          }
+
           return {
             content: [
               {
                 type: "text",
-                text: content.content + SYSTEM_REMINDER,
+                text: result.content + readInfo + SYSTEM_REMINDER,
               },
             ],
           };
@@ -97,12 +151,12 @@ In sessions with mcp__acp__read always use it instead of Read as it contains the
 
   if (clientCapabilities?.fs?.writeTextFile) {
     server.registerTool(
-      "write",
+      unqualifiedToolNames.write,
       {
         title: "Write",
         description: `Writes content to the specified file in the project.
 
-In sessions with mcp__acp__write always use it instead of Write as it will
+In sessions with ${toolNames.write} always use it instead of Write as it will
 allow the user to conveniently review changes.`,
         inputSchema: {
           abs_path: z.string().describe("The absolute path to the file to write"),
@@ -152,12 +206,12 @@ allow the user to conveniently review changes.`,
     );
 
     server.registerTool(
-      "edit",
+      unqualifiedToolNames.edit,
       {
         title: "Edit",
         description: `Edit a file.
 
-In sessions with mcp__acp__edit always use it instead of Edit as it will
+In sessions with ${toolNames.edit} always use it instead of Edit as it will
 allow the user to conveniently review changes.
 
 File editing instructions:
@@ -229,12 +283,12 @@ File editing instructions:
     );
 
     server.registerTool(
-      "multi-edit",
+      unqualifiedToolNames.multiEdit,
       {
         title: "Multi Edit",
         description: `Edit a file with multiple sequential edits.
 
-In sessions with mcp__acp__multi-edit always use it instead of MultiEdit as it will
+In sessions with ${toolNames.multiEdit} always use it instead of MultiEdit as it will
 allow the user to conveniently review changes.
 
 File editing instructions:
@@ -319,7 +373,7 @@ File editing instructions:
 
   if (agent.clientCapabilities?.terminal) {
     server.registerTool(
-      "Bash",
+      unqualifiedToolNames.bash,
       {
         title: "Bash",
         description: "Executes a bash command",
@@ -333,7 +387,7 @@ File editing instructions:
             .boolean()
             .default(false)
             .describe(
-              "When set to true, the command is started in the background. The tool returns an `id` that can be used with the `mcp__acp__BashOutput` tool to retrieve the current output, or the `mcp__acp__KillBash` tool to stop it early.",
+              `When set to true, the command is started in the background. The tool returns an \`id\` that can be used with the \`${toolNames.bashOutput}\` tool to retrieve the current output, or the \`${toolNames.killBash}\` tool to stop it early.`,
             ),
         },
       },
@@ -454,7 +508,7 @@ File editing instructions:
     );
 
     server.registerTool(
-      "BashOutput",
+      unqualifiedToolNames.bashOutput,
       {
         title: "BashOutput",
         description:
@@ -462,7 +516,7 @@ File editing instructions:
         inputSchema: {
           id: z
             .string()
-            .describe("The id of the background bash command as returned by `mcp__acp__Bash`"),
+            .describe(`The id of the background bash command as returned by \`${toolNames.bash}\``),
         },
       },
       async (input) => {
@@ -505,14 +559,14 @@ File editing instructions:
     );
 
     server.registerTool(
-      "KillBash",
+      unqualifiedToolNames.killBash,
       {
         title: "KillBash",
         description: "Stops a background command by its id",
         inputSchema: {
           id: z
             .string()
-            .describe("The id of the background bash command as returned by `mcp__acp__Bash`"),
+            .describe(`The id of the background bash command as returned by \`${toolNames.bash}\``),
         },
       },
       async (input) => {
@@ -563,9 +617,30 @@ File editing instructions:
     );
   }
 
+  return server;
+}
+
+const UNQUALIFIED_PERMISSION_TOOL_NAME = "permission";
+const PERMISSION_SERVER_PREFIX = "mcp__acpPermission__";
+export const PERMISSION_TOOL_NAME = PERMISSION_SERVER_PREFIX + UNQUALIFIED_PERMISSION_TOOL_NAME;
+
+/**
+ * Separate permission tool. Needs to be an HTTP server for now, because Claude Code doesn't
+ * support permission tools via SDK servers.
+ * Ideally it moves to the `canUseTool` callback in the future.
+ */
+export function createPermissionMcpServer(
+  agent: ClaudeAcpAgent,
+  sessionId: string,
+): Promise<Server> {
+  const server = new McpServer(
+    { name: "acpPermission", version: "1.0.0" },
+    { capabilities: { tools: {} } },
+  );
+
   const alwaysAllowedTools: { [key: string]: boolean } = {};
   server.registerTool(
-    "permission",
+    UNQUALIFIED_PERMISSION_TOOL_NAME,
     {
       title: "Permission Tool",
       description: "Used to request tool permissions",
@@ -576,42 +651,37 @@ File editing instructions:
       },
     },
     async (input) => {
-      const session = agent.sessions[sessionId];
-      if (!session) {
-        return {
-          content: [
-            {
-              type: "text",
-              text: JSON.stringify({
-                behavior: "deny",
-                message: "Session not found",
-              }),
-            },
-          ],
-        };
-      }
-      if (alwaysAllowedTools[input.tool_name]) {
-        return {
-          content: [
-            {
-              type: "text",
-              text: JSON.stringify({
-                behavior: "allow",
-                updatedInput: input.input,
-              }),
-            },
-          ],
-        };
-      }
+      const result = await canUseTool(input);
+
+      return {
+        content: [{ type: "text", text: JSON.stringify(result) }],
+      };
+    },
+  );
+
+  async function canUseTool(input: {
+    tool_use_id?: string;
+    tool_name: string;
+    input?: any;
+  }): Promise<PermissionResult> {
+    const session = agent.sessions[sessionId];
+    if (!session) {
+      return {
+        behavior: "deny",
+        message: "Session not found",
+      };
+    }
+
+    if (input.tool_name === "ExitPlanMode") {
       const response = await agent.client.requestPermission({
         options: [
           {
             kind: "allow_always",
-            name: "Always Allow",
-            optionId: "allow_always",
+            name: "Yes, and auto-accept edits",
+            optionId: "acceptEdits",
           },
-          { kind: "allow_once", name: "Allow", optionId: "allow" },
-          { kind: "reject_once", name: "Reject", optionId: "reject" },
+          { kind: "allow_once", name: "Yes, and manually approve edits", optionId: "default" },
+          { kind: "reject_once", name: "No, keep planning", optionId: "plan" },
         ],
         sessionId,
         toolCall: {
@@ -619,39 +689,80 @@ File editing instructions:
           rawInput: input.input,
         },
       });
+
       if (
         response.outcome?.outcome === "selected" &&
-        (response.outcome.optionId === "allow" || response.outcome.optionId === "allow_always")
+        (response.outcome.optionId === "default" || response.outcome.optionId === "acceptEdits")
       ) {
-        if (response.outcome.optionId === "allow_always") {
-          alwaysAllowedTools[input.tool_name] = true;
-        }
+        session.permissionMode = response.outcome.optionId;
+        await agent.client.sessionUpdate({
+          sessionId,
+          update: {
+            sessionUpdate: "current_mode_update",
+            currentModeId: response.outcome.optionId,
+          },
+        });
+
         return {
-          content: [
-            {
-              type: "text",
-              text: JSON.stringify({
-                behavior: "allow",
-                updatedInput: input.input,
-              }),
-            },
+          behavior: "allow",
+          updatedInput: input.input,
+          updatedPermissions: [
+            { type: "setMode", mode: response.outcome.optionId, destination: "session" },
           ],
         };
       } else {
         return {
-          content: [
-            {
-              type: "text",
-              text: JSON.stringify({
-                behavior: "deny",
-                message: "User refused permission to run tool",
-              }),
-            },
-          ],
+          behavior: "deny",
+          message: "User rejected request to exit plan mode.",
         };
       }
-    },
-  );
+    }
+
+    if (
+      session.permissionMode === "bypassPermissions" ||
+      (session.permissionMode === "acceptEdits" && editToolNames.includes(input.tool_name)) ||
+      alwaysAllowedTools[input.tool_name]
+    ) {
+      return {
+        behavior: "allow",
+        updatedInput: input.input,
+      };
+    }
+
+    const response = await agent.client.requestPermission({
+      options: [
+        {
+          kind: "allow_always",
+          name: "Always Allow",
+          optionId: "allow_always",
+        },
+        { kind: "allow_once", name: "Allow", optionId: "allow" },
+        { kind: "reject_once", name: "Reject", optionId: "reject" },
+      ],
+      sessionId,
+      toolCall: {
+        toolCallId: input.tool_use_id!,
+        rawInput: input.input,
+      },
+    });
+    if (
+      response.outcome?.outcome === "selected" &&
+      (response.outcome.optionId === "allow" || response.outcome.optionId === "allow_always")
+    ) {
+      if (response.outcome.optionId === "allow_always") {
+        alwaysAllowedTools[input.tool_name] = true;
+      }
+      return {
+        behavior: "allow",
+        updatedInput: input.input,
+      };
+    } else {
+      return {
+        behavior: "deny",
+        message: "User refused permission to run tool",
+      };
+    }
+  }
 
   const app = express();
   app.use(express.json());

src/tests/acp-agent.test.ts

@@ -5,6 +5,7 @@ import {
   AvailableCommand,
   Client,
   ClientSideConnection,
+  ndJsonStream,
   NewSessionResponse,
   ReadTextFileRequest,
   ReadTextFileResponse,
@@ -17,7 +18,7 @@ import {
 import { nodeToWebWritable, nodeToWebReadable } from "../utils.js";
 import { markdownEscape, toolInfoFromToolUse, toolUpdateFromToolResult } from "../tools.js";
 import { toAcpNotifications } from "../acp-agent.js";
-import { SDKAssistantMessage } from "@anthropic-ai/claude-code";
+import { SDKAssistantMessage } from "@anthropic-ai/claude-agent-sdk";
 
 describe.skipIf(!process.env.RUN_INTEGRATION_TESTS)("ACP subprocess integration", () => {
   let child: ReturnType<typeof spawn>;
@@ -91,7 +92,7 @@ describe.skipIf(!process.env.RUN_INTEGRATION_TESTS)("ACP subprocess integration"
 
     async writeTextFile(params: WriteTextFileRequest): Promise<WriteTextFileResponse> {
       this.files.set(params.path, params.content);
-      return null;
+      return {};
     }
 
     async readTextFile(params: ReadTextFileRequest): Promise<ReadTextFileResponse> {
@@ -108,14 +109,13 @@ describe.skipIf(!process.env.RUN_INTEGRATION_TESTS)("ACP subprocess integration"
     newSessionResponse: NewSessionResponse;
   }> {
     let client;
-    const connection = new ClientSideConnection(
-      (agent) => {
-        client = new TestClient(agent);
-        return client;
-      },
-      nodeToWebWritable(child.stdin!),
-      nodeToWebReadable(child.stdout!),
-    );
+    const input = nodeToWebWritable(child.stdin!);
+    const output = nodeToWebReadable(child.stdout!);
+    const stream = ndJsonStream(input, output);
+    const connection = new ClientSideConnection((agent) => {
+      client = new TestClient(agent);
+      return client;
+    }, stream);
 
     await connection.initialize({
       protocolVersion: 1,
@@ -191,6 +191,50 @@ describe.skipIf(!process.env.RUN_INTEGRATION_TESTS)("ACP subprocess integration"
 
     expect(client.takeReceivedText()).toContain("Hello GPT-5");
   }, 30000);
+
+  it("/compact works", async () => {
+    const { client, connection, newSessionResponse } = await setupTestSession(__dirname);
+
+    const commands = await client.availableCommandsPromise;
+
+    expect(commands).toContainEqual({
+      description:
+        "Clear conversation history but keep a summary in context. Optional: /compact [instructions for summarization]",
+      input: {
+        hint: "<optional custom summarization instructions>",
+      },
+      name: "compact",
+    });
+
+    // Error case (no previous message)
+    await connection.prompt({
+      prompt: [{ type: "text", text: "/compact" }],
+      sessionId: newSessionResponse.sessionId,
+    });
+
+    expect(client.takeReceivedText()).toBe("");
+
+    // Send something
+    await connection.prompt({
+      prompt: [{ type: "text", text: "Hi" }],
+      sessionId: newSessionResponse.sessionId,
+    });
+    // Clear response
+    client.takeReceivedText();
+
+    // Test with instruction
+    await connection.prompt({
+      prompt: [
+        {
+          type: "text",
+          text: "/compact greeting",
+        },
+      ],
+      sessionId: newSessionResponse.sessionId,
+    });
+
+    expect(client.takeReceivedText()).toContain("");
+  }, 30000);
 });
 
 describe("tool conversions", () => {
@@ -532,6 +576,7 @@ describe("tool conversions", () => {
         id: "msg_017eNosJgww7F5qD4a8BcAcx",
         type: "message",
         role: "assistant",
+        container: null,
         model: "claude-sonnet-4-20250514",
         content: [
           {
@@ -596,7 +641,9 @@ describe("tool conversions", () => {
           },
           output_tokens: 1,
           service_tier: "standard",
+          server_tool_use: null,
         },
+        context_management: null,
       },
       parent_tool_use_id: null,
       session_id: "d056596f-e328-41e9-badd-b07122ae5227",
@@ -734,7 +781,7 @@ describe("tool conversions", () => {
     const toolResult = {
       content: [
         {
-          type: "text",
+          type: "text" as const,
           text: "not valid json",
         },
       ],
@@ -764,7 +811,7 @@ describe("tool conversions", () => {
     const toolResult = {
       content: [
         {
-          type: "text",
+          type: "text" as const,
           text: "Failed to find `old_string`",
         },
       ],
@@ -778,7 +825,10 @@ describe("tool conversions", () => {
     // Should return empty object when parsing fails
     expect(update).toEqual({
       content: [
-        { content: { type: "text", text: "Failed to find `old_string`" }, type: "content" },
+        {
+          content: { type: "text", text: "```\nFailed to find `old_string`\n```" },
+          type: "content",
+        },
       ],
     });
   });

src/tests/extract-lines.test.ts

@@ -0,0 +1,103 @@
+import { describe, it, expect } from "vitest";
+import { extractLinesWithByteLimit } from "../utils.js";
+
+describe("extractLinesWithByteLimit", () => {
+  const simpleContent = "Line 1\nLine 2\nLine 3\nLine 4\nLine 5";
+
+  it("should extract all lines when under byte limit", () => {
+    const result = extractLinesWithByteLimit(simpleContent, 1000);
+
+    expect(result.content).toBe(simpleContent);
+    expect(result.wasLimited).toBe(false);
+    expect(result.linesRead).toBe(5);
+  });
+
+  it("should limit output when exceeding byte limit", () => {
+    // Create content that will exceed byte limit
+    const longLine = "x".repeat(100);
+    const manyLines = Array(10).fill(longLine).join("\n");
+
+    const result = extractLinesWithByteLimit(manyLines, 250);
+
+    expect(result.wasLimited).toBe(true);
+    expect(result.linesRead).toBe(2);
+  });
+
+  it("should handle empty content", () => {
+    const result = extractLinesWithByteLimit("", 1000);
+
+    expect(result.content).toBe("");
+    expect(result.wasLimited).toBe(false);
+    expect(result.linesRead).toBe(1); // We read the one empty line
+  });
+
+  it("should handle single line file", () => {
+    const singleLine = "This is a single line without newline";
+    const result = extractLinesWithByteLimit(singleLine, 1000);
+
+    expect(result.content).toBe(singleLine);
+    expect(result.wasLimited).toBe(false);
+    expect(result.linesRead).toBe(1);
+  });
+
+  it("should correctly count bytes with multi-byte characters", () => {
+    const unicodeContent = "Hello 世界\n你好 World\nEmoji: 🌍\nNormal line";
+    const result = extractLinesWithByteLimit(unicodeContent, 1000);
+
+    expect(result.content).toBe(unicodeContent);
+    expect(result.linesRead).toBe(4);
+  });
+
+  it("should stop at byte limit even with one more line available", () => {
+    // Create lines where adding one more would exceed limit
+    const line1 = "a".repeat(40);
+    const line2 = "b".repeat(40);
+    const line3 = "c".repeat(40);
+    const content = `${line1}\n${line2}\n${line3}`;
+
+    const result = extractLinesWithByteLimit(content, 85);
+
+    expect(result.content).toBe(`${line1}\n${line2}\n`);
+    expect(result.wasLimited).toBe(true);
+    expect(result.linesRead).toBe(2);
+  });
+
+  it("should read exactly to limit when possible", () => {
+    const exactContent = "12345\n67890\n12345"; // 17 bytes total
+    const result = extractLinesWithByteLimit(exactContent, 17);
+
+    expect(result.content).toBe(exactContent);
+    expect(result.wasLimited).toBe(false);
+    expect(result.linesRead).toBe(3);
+  });
+
+  it("should handle Windows-style line endings", () => {
+    const windowsContent = "Line 1\r\nLine 2\r\nLine 3";
+    const result = extractLinesWithByteLimit(windowsContent, 1000);
+
+    // Note: split("\n") will keep the \r characters
+    expect(result.content).toBe("Line 1\r\nLine 2\r\nLine 3");
+    expect(result.linesRead).toBe(3);
+  });
+
+  it("should handle very large files efficiently", () => {
+    // Create a 100KB file
+    const largeLine = "x".repeat(1000);
+    const largeContent = Array(110).fill(largeLine).join("\n");
+
+    const result = extractLinesWithByteLimit(largeContent, 50000);
+
+    expect(result.wasLimited).toBe(true);
+  });
+
+  it("should allow at least one line even if it exceeds byte limit", () => {
+    const veryLongLine = "x".repeat(100000); // 100KB line
+    const result = extractLinesWithByteLimit(veryLongLine, 50000);
+
+    // Should return the line even though it exceeds the byte limit
+    // because we always allow at least one line if no lines have been added yet
+    expect(result.content).toBe(veryLongLine);
+    expect(result.linesRead).toBe(1);
+    expect(result.wasLimited).toBe(false);
+  });
+});

src/tools.ts

@@ -4,7 +4,8 @@ import {
   ToolCallLocation,
   ToolKind,
 } from "@zed-industries/agent-client-protocol";
-import { replaceAndCalculateLocation, SYSTEM_REMINDER } from "./mcp-server.js";
+import { replaceAndCalculateLocation, SYSTEM_REMINDER, toolNames } from "./mcp-server.js";
+import { ToolResultBlockParam } from "@anthropic-ai/sdk/resources";
 
 interface ToolInfo {
   title: string;
@@ -67,7 +68,7 @@ export function toolInfoFromToolUse(
       };
 
     case "Bash":
-    case "mcp__acp__Bash":
+    case toolNames.bash:
       return {
         title: input?.command ? "`" + input.command.replaceAll("`", "\\`") + "`" : "Terminal",
         kind: "execute",
@@ -83,7 +84,7 @@ export function toolInfoFromToolUse(
       };
 
     case "BashOutput":
-    case "mcp__acp__BashOutput":
+    case toolNames.bashOutput:
       return {
         title: "Tail Logs",
         kind: "execute",
@@ -91,14 +92,14 @@ export function toolInfoFromToolUse(
       };
 
     case "KillBash":
-    case "mcp__acp__KillBash":
+    case toolNames.killBash:
       return {
         title: "Kill Process",
         kind: "execute",
         content: [],
       };
 
-    case "mcp__acp__read": {
+    case toolNames.read: {
       let limit = "";
       if (input.limit) {
         limit =
@@ -135,7 +136,7 @@ export function toolInfoFromToolUse(
         locations: [],
       };
 
-    case "mcp__acp__edit":
+    case toolNames.edit:
     case "Edit": {
       const path = input?.abs_path ?? input?.file_path;
       let oldText = input.old_string ?? null;
@@ -181,7 +182,7 @@ export function toolInfoFromToolUse(
       };
     }
 
-    case "mcp__acp__multi-edit":
+    case toolNames.multiEdit:
     case "MultiEdit": {
       const multiInput = input as {
         file_path: string;
@@ -234,7 +235,7 @@ export function toolInfoFromToolUse(
           : [],
       };
     }
-    case "mcp__acp__write": {
+    case toolNames.write: {
       let content: ToolCallContent[] = [];
       if (input && input.abs_path) {
         content = [
@@ -400,17 +401,23 @@ export function toolInfoFromToolUse(
         content: [],
       };
 
-    case "exit_plan_mode":
+    case "ExitPlanMode":
       return {
-        title: "Exit Plan Mode",
-        kind: "think",
+        title: "Ready to code?",
+        kind: "switch_mode",
         content:
           input && input.plan
             ? [{ type: "content", content: { type: "text", text: input.plan } }]
             : [],
       };
 
-    case "Other":
+    case "Other": {
+      let output;
+      try {
+        output = JSON.stringify(input, null, 2);
+      } catch {
+        output = typeof input === "string" ? input : "{}";
+      }
       return {
         title: name || "Unknown Tool",
         kind: "other",
@@ -419,11 +426,12 @@ export function toolInfoFromToolUse(
             type: "content",
             content: {
               type: "text",
-              text: `\`\`\`json\n${JSON.stringify(input, null, 2) || "{}"}\`\`\``,
+              text: `\`\`\`json\n${output}\`\`\``,
             },
           },
         ],
       };
+    }
 
     default:
       return {
@@ -434,20 +442,13 @@ export function toolInfoFromToolUse(
   }
 }
 
-type ToolResult = {
-  type: "tool_result";
-  content: any;
-  tool_use_id: string;
-  is_error: boolean;
-};
-
 export function toolUpdateFromToolResult(
-  toolResult: ToolResult,
+  toolResult: ToolResultBlockParam,
   toolUse: any | undefined,
 ): ToolUpdate {
   switch (toolUse?.name) {
     case "Read":
-    case "mcp__acp__read":
+    case toolNames.read:
       if (Array.isArray(toolResult.content) && toolResult.content.length > 0) {
         return {
           content: toolResult.content.map((content: any) => ({
@@ -476,22 +477,26 @@ export function toolUpdateFromToolResult(
       }
       return {};
 
-    case "mcp__acp__Bash":
-    case "mcp__acp__edit":
+    case toolNames.bash:
     case "edit":
     case "Edit":
-    case "mcp__acp__multi-edit":
+    case toolNames.edit:
+    case toolNames.multiEdit:
     case "multi-edit":
     case "MultiEdit":
-    case "mcp__acp__write":
+    case toolNames.write:
     case "Write": {
-      if (toolResult.is_error && toolResult.content?.length > 0) {
+      if (toolResult.is_error && toolResult.content && toolResult.content.length > 0) {
         // Only return errors
-        return toAcpContentUpdate(toolResult.content);
+        return toAcpContentUpdate(toolResult.content, true);
       }
       return {};
     }
 
+    case "ExitPlanMode": {
+      return { title: "Exited Plan Mode" };
+    }
+
     case "Task":
     case "NotebookEdit":
     case "NotebookRead":
@@ -507,17 +512,26 @@ export function toolUpdateFromToolResult(
     case "WebSearch":
     case "Other":
     default: {
-      return toAcpContentUpdate(toolResult.content);
+      return toAcpContentUpdate(toolResult.content, toolResult.is_error);
     }
   }
 }
 
-function toAcpContentUpdate(content: any): { content?: ToolCallContent[] } {
+function toAcpContentUpdate(
+  content: any,
+  isError: boolean = false,
+): { content?: ToolCallContent[] } {
   if (Array.isArray(content) && content.length > 0) {
     return {
       content: content.map((content: any) => ({
         type: "content",
-        content,
+        content:
+          isError && content.type === "text"
+            ? {
+                ...content,
+                text: `\`\`\`\n${content.text}\n\`\`\``,
+              }
+            : content,
       })),
     };
   } else if (typeof content === "string" && content.length > 0) {
@@ -527,7 +541,7 @@ function toAcpContentUpdate(content: any): { content?: ToolCallContent[] } {
           type: "content",
           content: {
             type: "text",
-            text: content,
+            text: isError ? `\`\`\`\n${content}\n\`\`\`` : content,
           },
         },
       ],
@@ -536,7 +550,7 @@ function toAcpContentUpdate(content: any): { content?: ToolCallContent[] } {
   return {};
 }
 
-type ClaudePlanEntry = {
+export type ClaudePlanEntry = {
   content: string;
   status: "pending" | "in_progress" | "completed";
   activeForm: string;

src/utils.ts

@@ -2,6 +2,8 @@
 
 import { Readable, Writable } from "node:stream";
 import { WritableStream, ReadableStream } from "node:stream/web";
+import { readFileSync } from "node:fs";
+import { platform } from "node:os";
 
 // Useful for bridging push-based and async-iterator-based code.
 export class Pushable<T> implements AsyncIterable<T> {
@@ -80,3 +82,107 @@ export function unreachable(value: never): never {
 export function sleep(time: number): Promise<void> {
   return new Promise((resolve) => setTimeout(resolve, time));
 }
+
+interface ManagedSettings {
+  permissions?: {
+    allow?: string[];
+    deny?: string[];
+  };
+  env?: Record<string, string>;
+}
+
+// Following the rules in https://docs.anthropic.com/en/docs/claude-code/settings#settings-files
+// This can be removed once the SDK supports it natively.
+function getManagedSettingsPath(): string {
+  const os = platform();
+  switch (os) {
+    case "darwin":
+      return "/Library/Application Support/ClaudeCode/managed-settings.json";
+    case "linux": // including WSL
+      return "/etc/claude-code/managed-settings.json";
+    case "win32":
+      return "C:\\ProgramData\\ClaudeCode\\managed-settings.json";
+    default:
+      return "/etc/claude-code/managed-settings.json";
+  }
+}
+
+export function loadManagedSettings(): ManagedSettings | null {
+  try {
+    return JSON.parse(readFileSync(getManagedSettingsPath(), "utf8")) as ManagedSettings;
+  } catch {
+    return null;
+  }
+}
+
+export function applyEnvironmentSettings(settings: ManagedSettings): void {
+  if (settings.env) {
+    for (const [key, value] of Object.entries(settings.env)) {
+      process.env[key] = value;
+    }
+  }
+}
+
+export interface ExtractLinesResult {
+  content: string;
+  wasLimited: boolean;
+  linesRead: number;
+}
+
+/**
+ * Extracts lines from file content with byte limit enforcement.
+ *
+ * @param fullContent - The complete file content
+ * @param maxContentLength - Maximum number of UTF-16 Code Units to return
+ * @returns Object containing extracted content and metadata
+ */
+export function extractLinesWithByteLimit(
+  fullContent: string,
+  maxContentLength: number,
+): ExtractLinesResult {
+  if (fullContent === "") {
+    return {
+      content: "",
+      wasLimited: false,
+      linesRead: 1,
+    };
+  }
+
+  let linesSeen = 0;
+  let index = 0;
+  linesSeen = 0;
+
+  let contentLength = 0;
+  let wasLimited = false;
+
+  while (true) {
+    const nextIndex = fullContent.indexOf("\n", index);
+
+    if (nextIndex < 0) {
+      // Last line in file (no trailing newline)
+      if (linesSeen > 0 && fullContent.length > maxContentLength) {
+        wasLimited = true;
+        break;
+      }
+      linesSeen += 1;
+      contentLength = fullContent.length;
+      break;
+    } else {
+      // Line with newline - include up to the newline
+      const newContentLength = nextIndex + 1;
+      if (linesSeen > 0 && newContentLength > maxContentLength) {
+        wasLimited = true;
+        break;
+      }
+      linesSeen += 1;
+      contentLength = newContentLength;
+      index = newContentLength;
+    }
+  }
+
+  return {
+    content: fullContent.slice(0, contentLength),
+    wasLimited,
+    linesRead: linesSeen,
+  };
+}