diff --git a/packages/vscode-ide-companion/src/types/acpTypes.ts b/packages/vscode-ide-companion/src/types/acpTypes.ts
index 9a6495237..c1e20b5f9 100644
--- a/packages/vscode-ide-companion/src/types/acpTypes.ts
+++ b/packages/vscode-ide-companion/src/types/acpTypes.ts
@@ -40,10 +40,10 @@ export {
 export const NEXT_APPROVAL_MODE: {
   [k in ApprovalModeValue]: ApprovalModeValue;
 } = {
+  plan: 'default',
   default: 'auto-edit',
   'auto-edit': 'yolo',
-  plan: 'yolo',
-  yolo: 'default',
+  yolo: 'plan',
 };
 
 // Ask User Question types
diff --git a/packages/vscode-ide-companion/src/webview/App.tsx b/packages/vscode-ide-companion/src/webview/App.tsx
index 2124f2e09..e6e11945b 100644
--- a/packages/vscode-ide-companion/src/webview/App.tsx
+++ b/packages/vscode-ide-companion/src/webview/App.tsx
@@ -838,12 +838,10 @@ export const App: React.FC = () => {
     });
   }, [vscode]);
 
-  // Handle toggle edit mode (Default -> Auto-edit -> YOLO -> Default)
   const handleToggleEditMode = useCallback(() => {
     setEditMode((prev) => {
       const next: ApprovalModeValue = NEXT_APPROVAL_MODE[prev];
 
-      // Notify extension to set approval mode via ACP
       try {
         vscode.postMessage({
           type: 'setApprovalMode',
@@ -856,6 +854,22 @@ export const App: React.FC = () => {
     });
   }, [vscode]);
 
+  // Handle Tab key to cycle approval modes when input is focused
+  const handleInputKeyDown = useCallback(
+    (e: React.KeyboardEvent) => {
+      if (
+        e.key === 'Tab' &&
+        !e.shiftKey &&
+        !isComposing &&
+        !completion.isOpen
+      ) {
+        e.preventDefault();
+        handleToggleEditMode();
+      }
+    },
+    [completion.isOpen, handleToggleEditMode, isComposing],
+  );
+
   const handleToggleThinking = useCallback(() => {
     setThinkingEnabled((prev) => !prev);
   }, []);
@@ -1026,7 +1040,7 @@ export const App: React.FC = () => {
           onInputChange={setInputText}
           onCompositionStart={() => setIsComposing(true)}
           onCompositionEnd={() => setIsComposing(false)}
-          onKeyDown={() => {}}
+          onKeyDown={handleInputKeyDown}
           onSubmit={handleSubmitWithScroll}
           onCancel={handleCancel}
           onToggleEditMode={handleToggleEditMode}
diff --git a/packages/vscode-ide-companion/src/webview/providers/WebViewProvider.test.ts b/packages/vscode-ide-companion/src/webview/providers/WebViewProvider.test.ts
index 3f3bf8158..3c87e078c 100644
--- a/packages/vscode-ide-companion/src/webview/providers/WebViewProvider.test.ts
+++ b/packages/vscode-ide-companion/src/webview/providers/WebViewProvider.test.ts
@@ -10,16 +10,28 @@ const {
   mockCreateImagePathResolver,
   mockGetGlobalTempDir,
   mockGetPanel,
+  mockMessageHandlerInstances,
   mockOnDidChangeActiveTextEditor,
   mockOnDidChangeTextEditorSelection,
+  mockQwenAgentManagerInstances,
 } = vi.hoisted(() => ({
   mockCreateImagePathResolver: vi.fn(),
   mockGetGlobalTempDir: vi.fn(() => '/global-temp'),
   mockGetPanel: vi.fn<() => { webview: { postMessage: unknown } } | null>(
     () => null,
   ),
+  mockMessageHandlerInstances: [] as Array<{
+    permissionHandler?: (message: {
+      type: string;
+      data: { optionId?: string };
+    }) => void;
+  }>,
   mockOnDidChangeActiveTextEditor: vi.fn(() => ({ dispose: vi.fn() })),
   mockOnDidChangeTextEditorSelection: vi.fn(() => ({ dispose: vi.fn() })),
+  mockQwenAgentManagerInstances: [] as Array<{
+    permissionRequestCallback?: (request: unknown) => Promise<string>;
+    cancelCurrentPrompt: ReturnType<typeof vi.fn>;
+  }>,
 }));
 
 vi.mock('@qwen-code/qwen-code-core', () => ({
@@ -68,10 +80,19 @@ vi.mock('../../services/qwenAgentManager.js', () => ({
     onEndTurn = vi.fn();
     onToolCall = vi.fn();
     onPlan = vi.fn();
-    onPermissionRequest = vi.fn();
+    onPermissionRequest = vi.fn(
+      (callback: (request: unknown) => Promise<string>) => {
+        this.permissionRequestCallback = callback;
+      },
+    );
     onAskUserQuestion = vi.fn();
     onDisconnected = vi.fn();
+    permissionRequestCallback?: (request: unknown) => Promise<string>;
+    cancelCurrentPrompt = vi.fn();
     disconnect = vi.fn();
+    constructor() {
+      mockQwenAgentManagerInstances.push(this);
+    }
   },
 }));
 
@@ -107,9 +128,24 @@ vi.mock('./MessageHandler.js', () => ({
       _conversationStore: unknown,
       _currentConversationId: string | null,
       _sendToWebView: (message: unknown) => void,
-    ) {}
+    ) {
+      mockMessageHandlerInstances.push(this);
+    }
     setLoginHandler = vi.fn();
-    setPermissionHandler = vi.fn();
+    permissionHandler?: (message: {
+      type: string;
+      data: { optionId?: string };
+    }) => void;
+    setPermissionHandler = vi.fn(
+      (
+        handler: (message: {
+          type: string;
+          data: { optionId?: string };
+        }) => void,
+      ) => {
+        this.permissionHandler = handler;
+      },
+    );
     setAskUserQuestionHandler = vi.fn();
     setCurrentConversationId = vi.fn();
     getCurrentConversationId = vi.fn(() => null);
@@ -146,6 +182,8 @@ import {
 describe('WebViewProvider.attachToView', () => {
   beforeEach(() => {
     vi.clearAllMocks();
+    mockMessageHandlerInstances.length = 0;
+    mockQwenAgentManagerInstances.length = 0;
     mockGetPanel.mockReturnValue(null);
     mockCreateImagePathResolver.mockReturnValue((paths: string[]) =>
       paths.map((entry) => ({
@@ -302,6 +340,84 @@ describe('WebViewProvider.attachToView', () => {
     });
     expect(panelPostMessage).not.toHaveBeenCalled();
   });
+
+  it('marks rejected switch_mode permission requests as failed without cancelling the session', async () => {
+    const postMessage = vi.fn();
+    const webview = {
+      options: undefined as unknown,
+      html: '',
+      postMessage,
+      asWebviewUri: vi.fn((uri: { fsPath: string }) => ({
+        toString: () => `webview:${uri.fsPath}`,
+      })),
+      onDidReceiveMessage: vi.fn(() => ({ dispose: vi.fn() })),
+    };
+
+    const provider = new WebViewProvider(
+      { subscriptions: [] } as never,
+      { fsPath: '/extension-root' } as never,
+    );
+
+    await provider.attachToView(
+      {
+        webview,
+        visible: true,
+        onDidChangeVisibility: vi.fn(() => ({ dispose: vi.fn() })),
+        onDidDispose: vi.fn(() => ({ dispose: vi.fn() })),
+      } as never,
+      'qwen-code.chatView.sidebar',
+    );
+
+    const agentManager = mockQwenAgentManagerInstances.at(-1);
+    const messageHandler = mockMessageHandlerInstances.at(-1);
+
+    expect(agentManager?.permissionRequestCallback).toBeTypeOf('function');
+
+    const permissionPromise = agentManager?.permissionRequestCallback?.({
+      options: [
+        {
+          optionId: 'proceed_once',
+          name: 'Yes',
+          kind: 'allow_once',
+        },
+        {
+          optionId: 'cancel',
+          name: 'No, keep planning (esc)',
+          kind: 'reject_once',
+        },
+      ],
+      toolCall: {
+        toolCallId: 'tool-call-1',
+        title: 'Would you like to proceed?',
+        kind: 'switch_mode',
+        status: 'pending',
+      },
+    });
+
+    expect(messageHandler?.permissionHandler).toBeTypeOf('function');
+
+    messageHandler?.permissionHandler?.({
+      type: 'permissionResponse',
+      data: { optionId: 'cancel' },
+    });
+
+    await expect(permissionPromise).resolves.toBe('cancel');
+    expect(agentManager?.cancelCurrentPrompt).not.toHaveBeenCalled();
+    expect(postMessage).not.toHaveBeenCalledWith(
+      expect.objectContaining({
+        type: 'streamEnd',
+      }),
+    );
+    expect(postMessage).toHaveBeenCalledWith({
+      type: 'toolCall',
+      data: expect.objectContaining({
+        type: 'tool_call_update',
+        toolCallId: 'tool-call-1',
+        kind: 'switch_mode',
+        status: 'failed',
+      }),
+    });
+  });
 });
 
 describe('WebViewProvider.createNewSession', () => {
diff --git a/packages/vscode-ide-companion/src/webview/providers/WebViewProvider.ts b/packages/vscode-ide-companion/src/webview/providers/WebViewProvider.ts
index 60f8a25d9..2f84c89dc 100644
--- a/packages/vscode-ide-companion/src/webview/providers/WebViewProvider.ts
+++ b/packages/vscode-ide-companion/src/webview/providers/WebViewProvider.ts
@@ -308,25 +308,35 @@ export class WebViewProvider {
               optionId === 'cancel' ||
               optionId.toLowerCase().includes('reject');
 
+            // For switch_mode (exit_plan_mode), cancel means "reject
+            // the plan and stay in plan mode" — the agent keeps running.
+            const isSwitchMode =
+              (request.toolCall as { kind?: string } | undefined)?.kind ===
+              'switch_mode';
+
             // Always close open qwen-diff editors after any permission decision
             void vscode.commands.executeCommand('qwen.diff.closeAll');
 
             if (isCancel) {
-              // Fire and forget — cancel generation and update UI
+              // Fire and forget — for normal tool calls, cancel generation and
+              // end the stream; for switch_mode, keep the session alive but
+              // still mark the permission tool call as failed in the UI.
               void (async () => {
-                try {
-                  await this.agentManager.cancelCurrentPrompt();
-                } catch (err) {
-                  console.warn(
-                    '[WebViewProvider] cancelCurrentPrompt error:',
-                    err,
-                  );
-                }
+                if (!isSwitchMode) {
+                  try {
+                    await this.agentManager.cancelCurrentPrompt();
+                  } catch (err) {
+                    console.warn(
+                      '[WebViewProvider] cancelCurrentPrompt error:',
+                      err,
+                    );
+                  }
 
-                this.sendMessageToWebView({
-                  type: 'streamEnd',
-                  data: { timestamp: Date.now(), reason: 'user_cancelled' },
-                });
+                  this.sendMessageToWebView({
+                    type: 'streamEnd',
+                    data: { timestamp: Date.now(), reason: 'user_cancelled' },
+                  });
+                }
 
                 // Synthesize a failed tool_call_update to match CLI UX
                 try {
diff --git a/packages/webui/src/components/PermissionDrawer.tsx b/packages/webui/src/components/PermissionDrawer.tsx
index 1f8c12432..d2eee02d6 100644
--- a/packages/webui/src/components/PermissionDrawer.tsx
+++ b/packages/webui/src/components/PermissionDrawer.tsx
@@ -4,8 +4,9 @@
  * SPDX-License-Identifier: Apache-2.0
  */
 
-import { useEffect, useRef, useState } from 'react';
+import { useEffect, useMemo, useRef, useState } from 'react';
 import type { FC } from 'react';
+import { MarkdownRenderer } from './messages/MarkdownRenderer/MarkdownRenderer.js';
 
 export interface PermissionOption {
   name: string;
@@ -103,6 +104,9 @@ export const PermissionDrawer: FC<PermissionDrawerProps> = ({
         </>
       );
     }
+    if (toolCall.kind === 'switch_mode') {
+      return 'Would you like to proceed?';
+    }
     return toolCall.title || 'Permission Required';
   };
 
@@ -178,6 +182,25 @@ export const PermissionDrawer: FC<PermissionDrawerProps> = ({
     }
   }, [isOpen, options.length]);
 
+  const planText = useMemo(() => {
+    if (toolCall.kind !== 'switch_mode' || !Array.isArray(toolCall.content)) {
+      return null;
+    }
+    for (const item of toolCall.content) {
+      if (
+        item.type === 'content' &&
+        typeof item.content === 'object' &&
+        item.content !== null
+      ) {
+        const inner = item.content as { type?: string; text?: string };
+        if (inner.type === 'text' && typeof inner.text === 'string') {
+          return inner.text;
+        }
+      }
+    }
+    return null;
+  }, [toolCall.kind, toolCall.content]);
+
   if (!isOpen) {
     return null;
   }
@@ -187,7 +210,7 @@ export const PermissionDrawer: FC<PermissionDrawerProps> = ({
       {/* Main container */}
       <div
         ref={containerRef}
-        className="relative flex flex-col rounded-large border p-2 outline-none animate-slide-up"
+        className={`relative flex flex-col rounded-large border p-2 outline-none animate-slide-up${planText ? ' max-h-[60vh]' : ''}`}
         style={{
           backgroundColor: 'var(--app-input-secondary-background)',
           borderColor: 'var(--app-input-border)',
@@ -227,6 +250,13 @@ export const PermissionDrawer: FC<PermissionDrawerProps> = ({
             )}
         </div>
 
+        {/* Plan content for switch_mode (exit_plan_mode) */}
+        {planText && (
+          <div className="relative z-[1] overflow-y-auto mb-2 rounded-[4px] max-h-[40vh] py-2 px-3 text-[13px] leading-normal bg-[var(--app-primary-background)] border border-[var(--app-input-border)] [scrollbar-width:thin] [&::-webkit-scrollbar]:w-1.5 [&::-webkit-scrollbar-track]:bg-transparent [&::-webkit-scrollbar-thumb]:rounded-full [&::-webkit-scrollbar-thumb]:bg-[var(--app-foreground-muted)]/30">
+            <MarkdownRenderer content={planText} />
+          </div>
+        )}
+
         {/* Options */}
         <div className="relative z-[1] flex flex-col gap-1 pb-1">
           {options.map((option, index) => {