diff --git a/extensions/cli/src/telemetry/posthogService.test.ts b/extensions/cli/src/telemetry/posthogService.test.ts
index 7fd95204da..6e60de95e3 100644
--- a/extensions/cli/src/telemetry/posthogService.test.ts
+++ b/extensions/cli/src/telemetry/posthogService.test.ts
@@ -152,5 +152,38 @@ describe("PosthogService", () => {
       expect(client).toBeUndefined();
       expect(dns.lookup).toHaveBeenCalledTimes(1);
     });
+
+    it("returns false when DNS resolves to 0.0.0.0 (blocked)", async () => {
+      const dns: any = (await import("dns/promises")).default;
+      dns.lookup.mockResolvedValueOnce({
+        address: "0.0.0.0",
+        family: 4,
+      } as any);
+      const result = await (service as any).hasInternetConnection();
+      expect(result).toBe(false);
+      expect(dns.lookup).toHaveBeenCalledTimes(1);
+    });
+
+    it("returns false when DNS resolves to localhost", async () => {
+      const dns: any = (await import("dns/promises")).default;
+      dns.lookup.mockResolvedValueOnce({
+        address: "127.0.0.1",
+        family: 4,
+      } as any);
+      const result = await (service as any).hasInternetConnection();
+      expect(result).toBe(false);
+      expect(dns.lookup).toHaveBeenCalledTimes(1);
+    });
+
+    it("returns true when DNS resolves to valid address", async () => {
+      const dns: any = (await import("dns/promises")).default;
+      dns.lookup.mockResolvedValueOnce({
+        address: "1.1.1.1",
+        family: 4,
+      } as any);
+      const result = await (service as any).hasInternetConnection();
+      expect(result).toBe(true);
+      expect(dns.lookup).toHaveBeenCalledTimes(1);
+    });
   });
 });
diff --git a/extensions/cli/src/telemetry/posthogService.ts b/extensions/cli/src/telemetry/posthogService.ts
index acbec0855f..04c76aff32 100644
--- a/extensions/cli/src/telemetry/posthogService.ts
+++ b/extensions/cli/src/telemetry/posthogService.ts
@@ -5,6 +5,7 @@ import node_machine_id from "node-machine-id";
 import type { PostHog as PostHogType } from "posthog-node";
 
 import { isAuthenticatedConfig, loadAuthConfig } from "../auth/workos.js";
+import { loggers } from "../logging.js";
 import { isHeadlessMode, isServe } from "../util/cli.js";
 import { isGitHubActions } from "../util/git.js";
 import { logger } from "../util/logger.js";
@@ -13,6 +14,7 @@ import { getVersion } from "../version.js";
 export class PosthogService {
   private os: string | undefined;
   private uniqueId: string;
+  private _telemetryBlocked: boolean = false;
 
   constructor() {
     this.os = os.platform();
@@ -23,10 +25,20 @@ export class PosthogService {
   private async hasInternetConnection() {
     const refetchConnection = async () => {
       try {
-        await dns.lookup("app.posthog.com");
-        this._hasInternetConnection = true;
+        const result = await dns.lookup("app.posthog.com");
+        // Check that the resolved address is not 0.0.0.0 or other invalid addresses
+        const isValidAddress =
+          result.address !== "0.0.0.0" && !result.address.startsWith("127.");
+        this._hasInternetConnection = isValidAddress;
+        this._telemetryBlocked = !isValidAddress;
+        if (!isValidAddress) {
+          logger.debug(
+            "DNS lookup returned invalid address for PostHog, skipping telemetry",
+          );
+        }
       } catch {
         this._hasInternetConnection = false;
+        this._telemetryBlocked = false;
       }
     };
 
@@ -40,6 +52,14 @@ export class PosthogService {
   }
 
   get isEnabled() {
+    // Check for the unified telemetry control first
+    if (process.env.CONTINUE_TELEMETRY_ENABLED === "0") {
+      return false;
+    }
+    if (process.env.CONTINUE_TELEMETRY_ENABLED === "1") {
+      return true;
+    }
+    // Fall back to the legacy variable for backward compatibility
     return process.env.CONTINUE_ALLOW_ANONYMOUS_TELEMETRY !== "0";
   }
 
@@ -47,7 +67,13 @@ export class PosthogService {
   private async getClient() {
     if (!(await this.hasInternetConnection())) {
       this._client = undefined;
-      logger.warn("No internet connection, skipping telemetry");
+      if (this._telemetryBlocked && this.isEnabled) {
+        loggers.warning(
+          "Telemetry appears to be blocked by your network. To disable telemetry entirely, set CONTINUE_TELEMETRY_ENABLED=0",
+        );
+      } else if (this.isEnabled) {
+        logger.warn("No internet connection, skipping telemetry");
+      }
     } else if (this.isEnabled) {
       if (!this._client) {
         const { PostHog } = await import("posthog-node");
diff --git a/extensions/cli/src/telemetry/telemetryService.ts b/extensions/cli/src/telemetry/telemetryService.ts
index 910c82f59e..561ba4bd4b 100644
--- a/extensions/cli/src/telemetry/telemetryService.ts
+++ b/extensions/cli/src/telemetry/telemetryService.ts
@@ -71,8 +71,19 @@ class TelemetryService {
       process.env.OTEL_EXPORTER_OTLP_METRICS_ENDPOINT ||
       process.env.OTEL_METRICS_EXPORTER
     );
-    const enabled =
-      process.env.CONTINUE_CLI_ENABLE_TELEMETRY !== "0" && hasOtelConfig;
+
+    // Check for unified telemetry control first
+    let telemetryEnabled = true; // default to enabled if OTEL config exists
+    if (process.env.CONTINUE_TELEMETRY_ENABLED === "0") {
+      telemetryEnabled = false;
+    } else if (process.env.CONTINUE_TELEMETRY_ENABLED === "1") {
+      telemetryEnabled = true;
+    } else {
+      // Fall back to legacy variable for backward compatibility
+      telemetryEnabled = process.env.CONTINUE_CLI_ENABLE_TELEMETRY !== "0";
+    }
+
+    const enabled = telemetryEnabled && hasOtelConfig;
     const sessionId = uuidv4();
 
     return {