diff --git a/extensions/copilot/package-lock.json b/extensions/copilot/package-lock.json
index 85e1c499f5a..fb195fcc003 100644
--- a/extensions/copilot/package-lock.json
+++ b/extensions/copilot/package-lock.json
@@ -13,7 +13,7 @@
 				"@anthropic-ai/claude-agent-sdk": "^0.2.63",
 				"@anthropic-ai/sdk": "^0.78.0",
 				"@github/blackbird-external-ingest-utils": "^0.3.0",
-				"@github/copilot": "^1.0.2",
+				"@github/copilot": "^1.0.4",
 				"@google/genai": "^1.22.0",
 				"@humanwhocodes/gitignore-to-minimatch": "1.0.2",
 				"@microsoft/tiktokenizer": "^1.0.10",
@@ -3182,26 +3182,26 @@
 			"license": "MIT"
 		},
 		"node_modules/@github/copilot": {
-			"version": "1.0.2",
-			"resolved": "https://registry.npmjs.org/@github/copilot/-/copilot-1.0.2.tgz",
-			"integrity": "sha512-716SIZMYftldVcJay2uZOzsa9ROGGb2Mh2HnxbDxoisFsWNNgZlQXlV7A+PYoGsnAo2Zk/8e1i5SPTscGf2oww==",
+			"version": "1.0.4",
+			"resolved": "https://registry.npmjs.org/@github/copilot/-/copilot-1.0.4.tgz",
+			"integrity": "sha512-IpPg+zYplLu4F4lmatEDdR/1Y/jJ9cGWt89m3K3H4YSfYrZ5Go4UlM28llulYCG7sVdQeIGauQN1/KiBI/Rocg==",
 			"license": "SEE LICENSE IN LICENSE.md",
 			"bin": {
 				"copilot": "npm-loader.js"
 			},
 			"optionalDependencies": {
-				"@github/copilot-darwin-arm64": "1.0.2",
-				"@github/copilot-darwin-x64": "1.0.2",
-				"@github/copilot-linux-arm64": "1.0.2",
-				"@github/copilot-linux-x64": "1.0.2",
-				"@github/copilot-win32-arm64": "1.0.2",
-				"@github/copilot-win32-x64": "1.0.2"
+				"@github/copilot-darwin-arm64": "1.0.4",
+				"@github/copilot-darwin-x64": "1.0.4",
+				"@github/copilot-linux-arm64": "1.0.4",
+				"@github/copilot-linux-x64": "1.0.4",
+				"@github/copilot-win32-arm64": "1.0.4",
+				"@github/copilot-win32-x64": "1.0.4"
 			}
 		},
 		"node_modules/@github/copilot-darwin-arm64": {
-			"version": "1.0.2",
-			"resolved": "https://registry.npmjs.org/@github/copilot-darwin-arm64/-/copilot-darwin-arm64-1.0.2.tgz",
-			"integrity": "sha512-dYoeaTidsphRXyMjvAgpjEbBV41ipICnXURrLFEiATcjC4IY6x2BqPOocrExBYW/Tz2VZvDw51iIZaf6GXrTmw==",
+			"version": "1.0.4",
+			"resolved": "https://registry.npmjs.org/@github/copilot-darwin-arm64/-/copilot-darwin-arm64-1.0.4.tgz",
+			"integrity": "sha512-/YGGhv6cp0ItolsF0HsLq2KmesA4atn0IEYApBs770fzJ8OP2pkOEzrxo3gWU3wc7fHF2uDB1RrJEZ7QSFLdEQ==",
 			"cpu": [
 				"arm64"
 			],
@@ -3215,9 +3215,9 @@
 			}
 		},
 		"node_modules/@github/copilot-darwin-x64": {
-			"version": "1.0.2",
-			"resolved": "https://registry.npmjs.org/@github/copilot-darwin-x64/-/copilot-darwin-x64-1.0.2.tgz",
-			"integrity": "sha512-8+Z9dYigEfXf0wHl9c2tgFn8Cr6v4RAY8xTgHMI9mZInjQyxVeBXCxbE2VgzUtDUD3a705Ka2d8ZOz05aYtGsg==",
+			"version": "1.0.4",
+			"resolved": "https://registry.npmjs.org/@github/copilot-darwin-x64/-/copilot-darwin-x64-1.0.4.tgz",
+			"integrity": "sha512-gwn2QjZbc1SqPVSAtDMesU1NopyHZT8Qsn37xPfznpV9s94KVyX4TTiDZaUwfnI0wr8kVHBL46RPLNz6I8kR9A==",
 			"cpu": [
 				"x64"
 			],
@@ -3231,9 +3231,9 @@
 			}
 		},
 		"node_modules/@github/copilot-linux-arm64": {
-			"version": "1.0.2",
-			"resolved": "https://registry.npmjs.org/@github/copilot-linux-arm64/-/copilot-linux-arm64-1.0.2.tgz",
-			"integrity": "sha512-ik0Y5aTXOFRPLFrNjZJdtfzkozYqYeJjVXGBAH3Pp1nFZRu/pxJnrnQ1HrqO/LEgQVbJzAjQmWEfMbXdQIxE4Q==",
+			"version": "1.0.4",
+			"resolved": "https://registry.npmjs.org/@github/copilot-linux-arm64/-/copilot-linux-arm64-1.0.4.tgz",
+			"integrity": "sha512-92vzHKxN55BpI76sP/5fXIXfat1gzAhsq4bNLqLENGfZyMP/25OiVihCZuQHnvxzXaHBITFGUvtxfdll2kbcng==",
 			"cpu": [
 				"arm64"
 			],
@@ -3247,9 +3247,9 @@
 			}
 		},
 		"node_modules/@github/copilot-linux-x64": {
-			"version": "1.0.2",
-			"resolved": "https://registry.npmjs.org/@github/copilot-linux-x64/-/copilot-linux-x64-1.0.2.tgz",
-			"integrity": "sha512-mHSPZjH4nU9rwbfwLxYJ7CQ90jK/Qu1v2CmvBCUPfmuGdVwrpGPHB5FrB+f+b0NEXjmemDWstk2zG53F7ppHfw==",
+			"version": "1.0.4",
+			"resolved": "https://registry.npmjs.org/@github/copilot-linux-x64/-/copilot-linux-x64-1.0.4.tgz",
+			"integrity": "sha512-wQvpwf4/VMTnSmWyYzq07Xg18Vxg7aZ5NVkkXqlLTuXRASW0kvCCb5USEtXHHzR7E6rJztkhCjFRE1bZW8jAGw==",
 			"cpu": [
 				"x64"
 			],
@@ -3263,9 +3263,9 @@
 			}
 		},
 		"node_modules/@github/copilot-win32-arm64": {
-			"version": "1.0.2",
-			"resolved": "https://registry.npmjs.org/@github/copilot-win32-arm64/-/copilot-win32-arm64-1.0.2.tgz",
-			"integrity": "sha512-tLW2CY/vg0fYLp8EuiFhWIHBVzbFCDDpohxT/F/XyMAdTVSZLnopCcxQHv2BOu0CVGrYjlf7YOIwPfAKYml1FA==",
+			"version": "1.0.4",
+			"resolved": "https://registry.npmjs.org/@github/copilot-win32-arm64/-/copilot-win32-arm64-1.0.4.tgz",
+			"integrity": "sha512-zOvD/5GVxDf0ZdlTkK+m55Vs55xuHNmACX50ZO2N23ZGG2dmkdS4mkruL59XB5ISgrOfeqvnqrwTFHbmPZtLfw==",
 			"cpu": [
 				"arm64"
 			],
@@ -3279,9 +3279,9 @@
 			}
 		},
 		"node_modules/@github/copilot-win32-x64": {
-			"version": "1.0.2",
-			"resolved": "https://registry.npmjs.org/@github/copilot-win32-x64/-/copilot-win32-x64-1.0.2.tgz",
-			"integrity": "sha512-cFlc3xMkKKFRIYR00EEJ2XlYAemeh5EZHsGA8Ir2G0AH+DOevJbomdP1yyCC5gaK/7IyPkHX3sGie5sER2yPvQ==",
+			"version": "1.0.4",
+			"resolved": "https://registry.npmjs.org/@github/copilot-win32-x64/-/copilot-win32-x64-1.0.4.tgz",
+			"integrity": "sha512-yQenHMdkV0b77mF6aLM60TuwtNZ592TluptVDF+80Sj2zPfCpLyvrRh2FCIHRtuwTy4BfxETh2hCFHef8E6IOw==",
 			"cpu": [
 				"x64"
 			],
diff --git a/extensions/copilot/package.json b/extensions/copilot/package.json
index 285d4b7a548..66220ead1ce 100644
--- a/extensions/copilot/package.json
+++ b/extensions/copilot/package.json
@@ -6144,7 +6144,7 @@
 		"@anthropic-ai/claude-agent-sdk": "^0.2.63",
 		"@anthropic-ai/sdk": "^0.78.0",
 		"@github/blackbird-external-ingest-utils": "^0.3.0",
-		"@github/copilot": "^1.0.2",
+		"@github/copilot": "^1.0.4",
 		"@google/genai": "^1.22.0",
 		"@humanwhocodes/gitignore-to-minimatch": "1.0.2",
 		"@microsoft/tiktokenizer": "^1.0.10",
diff --git a/extensions/copilot/src/extension/chatSessions/copilotcli/common/copilotCLITools.ts b/extensions/copilot/src/extension/chatSessions/copilotcli/common/copilotCLITools.ts
index 90b2889e030..6a089cdd9bc 100644
--- a/extensions/copilot/src/extension/chatSessions/copilotcli/common/copilotCLITools.ts
+++ b/extensions/copilot/src/extension/chatSessions/copilotcli/common/copilotCLITools.ts
@@ -15,7 +15,7 @@ import { ResourceMap } from '../../../../util/vs/base/common/map';
 import { constObservable, IObservable } from '../../../../util/vs/base/common/observable';
 import { isAbsolutePath, isEqual } from '../../../../util/vs/base/common/resources';
 import { URI } from '../../../../util/vs/base/common/uri';
-import { ChatMcpToolInvocationData, ChatRequestTurn2, ChatResponseCodeblockUriPart, ChatResponseMarkdownPart, ChatResponsePullRequestPart, ChatResponseTextEditPart, ChatResponseThinkingProgressPart, ChatResponseTurn2, ChatToolInvocationPart, LanguageModelTextPart, Location, MarkdownString, McpToolInvocationContentData, Range, Uri } from '../../../../vscodeTypes';
+import { ChatMcpToolInvocationData, ChatReferenceBinaryData, ChatRequestTurn2, ChatResponseCodeblockUriPart, ChatResponseMarkdownPart, ChatResponsePullRequestPart, ChatResponseTextEditPart, ChatResponseThinkingProgressPart, ChatResponseTurn2, ChatToolInvocationPart, LanguageModelTextPart, Location, MarkdownString, McpToolInvocationContentData, Range, Uri } from '../../../../vscodeTypes';
 import type { MCP } from '../../../common/modelContextProtocol';
 import { ToolName } from '../../../tools/common/toolNames';
 import { ICopilotTool } from '../../../tools/common/toolsRegistry';
@@ -537,7 +537,7 @@ export function buildChatHistoryFromEvents(sessionId: string, modelId: string |
 					}
 				});
 				((event.data.attachments || []))
-					.filter(attachment => attachment.type === 'selection' || attachment.type === 'github_reference' ? true : !isInstructionAttachmentPath(attachment.path))
+					.filter(attachment => attachment.type === 'selection' || attachment.type === 'github_reference' || attachment.type === 'blob' ? true : !isInstructionAttachmentPath(attachment.path))
 					.forEach(attachment => {
 						if (attachment.type === 'github_reference') {
 							return;
@@ -554,7 +554,7 @@ export function buildChatHistoryFromEvents(sessionId: string, modelId: string |
 								value: new Location(uri, new Range(attachment.selection.start.line - 1, attachment.selection.start.character - 1, attachment.selection.end.line - 1, attachment.selection.end.character - 1)),
 								range
 							});
-						} else {
+						} else if (attachment.type === 'file' || attachment.type === 'directory') {
 							const range = attachment.displayName ? getRangeInPrompt(event.data.content || '', attachment.displayName) : undefined;
 							const attachmentPath = attachment.type === 'directory' ?
 								getFolderAttachmentPath(attachment.path) :
@@ -569,6 +569,20 @@ export function buildChatHistoryFromEvents(sessionId: string, modelId: string |
 								value: uri,
 								range
 							});
+						} else if (attachment.type === 'blob') {
+							const binaryDataSupplier = async () => {
+								try {
+									return decodeBase64(attachment.data).buffer;
+								} catch (error) {
+									logger.error(error, `Failed to decode blob attachment ${attachment.displayName || ''}`);
+									throw error;
+								}
+							};
+							references.push({
+								id: `${attachment.displayName || ''}-${attachment.mimeType}-${attachment.type}`,
+								name: attachment.displayName || '',
+								value: new ChatReferenceBinaryData(attachment.mimeType, binaryDataSupplier),
+							});
 						}
 					});
 
diff --git a/extensions/copilot/src/extension/chatSessions/copilotcli/node/copilotcliSession.ts b/extensions/copilot/src/extension/chatSessions/copilotcli/node/copilotcliSession.ts
index e2f2438fb35..040f917ebd6 100644
--- a/extensions/copilot/src/extension/chatSessions/copilotcli/node/copilotcliSession.ts
+++ b/extensions/copilot/src/extension/chatSessions/copilotcli/node/copilotcliSession.ts
@@ -886,6 +886,8 @@ export class CopilotCLISession extends DisposableStore implements ICopilotCLISes
 		attachments.forEach(attachment => {
 			if (attachment.type === 'github_reference') {
 				result.push(`- ${attachment.title}: (${attachment.number}, ${attachment.type}, ${attachment.referenceType})`);
+			} else if (attachment.type === 'blob') {
+				result.push(`- ${attachment.displayName ?? 'blob'} (${attachment.type}, ${attachment.mimeType})`);
 			} else {
 				result.push(`- ${attachment.displayName} (${attachment.type}, ${attachment.type === 'selection' ? attachment.filePath : attachment.path})`);
 			}
@@ -985,6 +987,8 @@ export class CopilotCLISession extends DisposableStore implements ICopilotCLISes
 		attachments.forEach(attachment => {
 			if (attachment.type === 'github_reference') {
 				result.push(`- ${attachment.title}: (${attachment.number}, ${attachment.type}, ${attachment.referenceType})`);
+			} else if (attachment.type === 'blob') {
+				result.push(`- ${attachment.displayName ?? 'blob'} (${attachment.type}, ${attachment.mimeType})`);
 			} else {
 				result.push(`- ${attachment.displayName} (${attachment.type}, ${attachment.type === 'selection' ? attachment.filePath : attachment.path})`);
 			}