VS Code Update Brings More Flexible Copilot Integration and Faster Chat Experience

Microsoft has released Visual Studio Code 1.117, continuing its push to make Copilot more flexible and developer-friendly. The update builds on version 1.116, which introduced built-in Copilot Chat, and now focuses on control, performance, and usability improvements.

The update is available through automatic downloads on Windows and macOS, while Linux users must check for updates manually.

Copilot Gets “Bring Your Own Key” Support

One of the biggest changes in version 1.117 is the introduction of Bring Your Own Key (BYOK) support for Copilot. This feature is available to Copilot Business and Copilot Enterprise users.

Developers can now connect their own API keys instead of relying solely on Microsoft-managed infrastructure. Supported providers include OpenAI, Google, OpenRouter, and Ollama.

This shift gives companies more control over how AI is used inside their environments. It also allows teams to run local models or route requests through their preferred providers, reducing reliance on Microsoft’s compute resources.

Chat Feels Faster With Incremental Rendering

Microsoft is also testing a new experimental feature that improves how Copilot Chat responses appear. Instead of waiting for a full response, the system now streams content block-by-block.

This change makes interactions feel faster and more natural, even if the total response time remains similar. The smoother output flow improves readability and reduces friction during longer coding sessions.

Terminal Integration Now Works Across All Shells

Version 1.117 also fixes a long-standing issue with Copilot CLI in the terminal. Previously, the feature struggled with custom shells such as fish on macOS and Linux or Git Bash on Windows.

The update removes these limitations, allowing Copilot CLI to launch correctly regardless of the default shell configuration. This improvement ensures a more consistent experience for developers who rely on customized terminal setups.

Bigger Shift Around Copilot Continues

The release comes as Microsoft adjusts its broader Copilot strategy. The company recently limited access to GitHub Copilot due to demand, and reports suggest a move toward token-based pricing may follow.

Together, these changes signal a shift toward more flexible, usage-based AI development tools, with greater control placed in the hands of developers and enterprises.

Via Neowin