diff --git a/src/vs/workbench/api/common/extHost.api.impl.ts b/src/vs/workbench/api/common/extHost.api.impl.ts
index 186d496596b..66fe037cc20 100644
--- a/src/vs/workbench/api/common/extHost.api.impl.ts
+++ b/src/vs/workbench/api/common/extHost.api.impl.ts
@@ -1377,9 +1377,6 @@ export function createApiFactoryAndRegisterActors(accessor: ServicesAccessor): I
 
 		// namespace: interactive
 		const interactive: typeof vscode.interactive = {
-			// IMPORTANT
-			// this needs to be updated whenever the API proposal changes
-			_version: 1,
 			transferActiveChat(toWorkspace: vscode.Uri) {
 				checkProposedApiEnabled(extension, 'interactive');
 				return extHostChatAgents2.transferActiveChat(toWorkspace);
@@ -1404,6 +1401,10 @@ export function createApiFactoryAndRegisterActors(accessor: ServicesAccessor): I
 
 		// namespace: chat
 		const chat: typeof vscode.chat = {
+			// IMPORTANT
+			// this needs to be updated whenever the API proposal changes and breaks backwards compatibility
+			_version: 1,
+
 			registerChatResponseProvider(id: string, provider: vscode.ChatResponseProvider, metadata: vscode.ChatResponseProviderMetadata) {
 				checkProposedApiEnabled(extension, 'chatProvider');
 				return extHostLanguageModels.registerLanguageModel(extension, id, provider, metadata);
diff --git a/src/vs/workbench/contrib/chat/common/chatServiceImpl.ts b/src/vs/workbench/contrib/chat/common/chatServiceImpl.ts
index a43b8b2f1c4..034ad834957 100644
--- a/src/vs/workbench/contrib/chat/common/chatServiceImpl.ts
+++ b/src/vs/workbench/contrib/chat/common/chatServiceImpl.ts
@@ -3,7 +3,6 @@
  *  Licensed under the MIT License. See License.txt in the project root for license information.
  *--------------------------------------------------------------------------------------------*/
 
-import { Action } from 'vs/base/common/actions';
 import { coalesce } from 'vs/base/common/arrays';
 import { CancellationToken, CancellationTokenSource } from 'vs/base/common/cancellation';
 import { ErrorNoTelemetry } from 'vs/base/common/errors';
@@ -15,10 +14,9 @@ import { revive } from 'vs/base/common/marshalling';
 import { StopWatch } from 'vs/base/common/stopwatch';
 import { URI, UriComponents } from 'vs/base/common/uri';
 import { localize } from 'vs/nls';
-import { CommandsRegistry, ICommandService } from 'vs/platform/commands/common/commands';
+import { CommandsRegistry } from 'vs/platform/commands/common/commands';
 import { IInstantiationService } from 'vs/platform/instantiation/common/instantiation';
 import { ILogService } from 'vs/platform/log/common/log';
-import { INotificationService, Severity } from 'vs/platform/notification/common/notification';
 import { Progress } from 'vs/platform/progress/common/progress';
 import { IStorageService, StorageScope, StorageTarget } from 'vs/platform/storage/common/storage';
 import { ITelemetryService } from 'vs/platform/telemetry/common/telemetry';
@@ -154,8 +152,6 @@ export class ChatService extends Disposable implements IChatService {
 		@IChatSlashCommandService private readonly chatSlashCommandService: IChatSlashCommandService,
 		@IChatVariablesService private readonly chatVariablesService: IChatVariablesService,
 		@IChatAgentService private readonly chatAgentService: IChatAgentService,
-		@INotificationService private readonly notificationService: INotificationService,
-		@ICommandService private readonly commandService: ICommandService,
 	) {
 		super();
 
@@ -358,18 +354,6 @@ export class ChatService extends Disposable implements IChatService {
 
 			const defaultAgent = this.chatAgentService.getActivatedAgents().find(agent => agent.id === defaultAgentData.id);
 			if (!defaultAgent) {
-				// Should have been registered during activation above!
-				this.notificationService.notify({
-					severity: Severity.Error,
-					message: localize('chatFailErrorMessage', "Chat failed to load. Please ensure that the GitHub Copilot Chat extension is up to date."),
-					actions: {
-						primary: [
-							new Action('showExtension', localize('action.showExtension', "Show Extension"), undefined, true, () => {
-								return this.commandService.executeCommand('workbench.extensions.action.showExtensionsWithIds', ['GitHub.copilot-chat']);
-							})
-						]
-					}
-				});
 				throw new ErrorNoTelemetry('No default agent registered');
 			}
 			const welcomeMessage = model.welcomeMessage ? undefined : await defaultAgent.provideWelcomeMessage?.(model.initialLocation, token) ?? undefined;
diff --git a/src/vscode-dts/vscode.proposed.chatParticipantAdditions.d.ts b/src/vscode-dts/vscode.proposed.chatParticipantAdditions.d.ts
index 260c84c94a2..875849bc8ed 100644
--- a/src/vscode-dts/vscode.proposed.chatParticipantAdditions.d.ts
+++ b/src/vscode-dts/vscode.proposed.chatParticipantAdditions.d.ts
@@ -215,6 +215,14 @@ declare module 'vscode' {
 		export function createChatParticipant(id: string, handler: ChatExtendedRequestHandler): ChatParticipant;
 
 		export function createDynamicChatParticipant(id: string, dynamicProps: DynamicChatParticipantProps, handler: ChatExtendedRequestHandler): ChatParticipant;
+
+		/**
+		 * Current version of the proposal. Changes whenever backwards-incompatible changes are made.
+		 * If a new feature is added that doesn't break existing code, the version is not incremented. When the extension uses this new feature, it should set its engines.vscode version appropriately.
+		 * But if a change is made to an existing feature that would break existing code, the version should be incremented.
+		 * The chat extension should not activate if it doesn't support the current version.
+		 */
+		export const _version: 1 | number;
 	}
 
 	/**
diff --git a/src/vscode-dts/vscode.proposed.interactive.d.ts b/src/vscode-dts/vscode.proposed.interactive.d.ts
index c25195e5aed..d6c4c7b5296 100644
--- a/src/vscode-dts/vscode.proposed.interactive.d.ts
+++ b/src/vscode-dts/vscode.proposed.interactive.d.ts
@@ -6,9 +6,6 @@
 declare module 'vscode' {
 
 	export namespace interactive {
-		// current version of the proposal.
-		export const _version: 1 | number;
-
 		export function transferActiveChat(toWorkspace: Uri): void;
 	}
 }