Azure AI Foundry VS Code agents cannot access local workspace tools.

[rmems]

Agent YAML with fs.read, fs.search, git.apply_patch, and process.run
updates successfully, but tools are shown as "Unknown tool type" and
do not execute when running the agent in VS Code.

Expected behavior:
Agent should be able to read local workspace files and run commands.

Actual behavior:
Agent chat opens, but no filesystem, git, or process tools execute.

Environment:

• Azure AI Foundry VS Code extension
• Azure Student subscription
• Model: GPT-4o
• Agent defined via .agent.yaml

[yukun-dong]

Hi @rmems, for the agent defined in .agent.yaml, the extension now supports bing grounding/file search/code interpreter/openapi/mcp, if your tools are not in this list then it's not supported.

Also the agent defined in .agent.yaml will be deprecated in the future. Please try the new agent experience. You can create a new agent via https://ai.azure.com/nextgen then you can see them in the vscode foundry extension under "Declarative Agent" tree node.