diff --git a/packages/cli/src/ui/components/messages/ToolConfirmationMessage.tsx b/packages/cli/src/ui/components/messages/ToolConfirmationMessage.tsx
index b4fe4167..fcdb743f 100644
--- a/packages/cli/src/ui/components/messages/ToolConfirmationMessage.tsx
+++ b/packages/cli/src/ui/components/messages/ToolConfirmationMessage.tsx
@@ -134,7 +134,7 @@ export const ToolConfirmationMessage: React.FC<
     );
     if (config?.getIdeMode() && config?.getIdeModeFeature()) {
       options.push({
-        label: 'No',
+        label: 'No (esc)',
         value: ToolConfirmationOutcome.Cancel,
       });
     } else {
diff --git a/packages/core/src/ide/ide-client.ts b/packages/core/src/ide/ide-client.ts
index 92224389..0ab79e74 100644
--- a/packages/core/src/ide/ide-client.ts
+++ b/packages/core/src/ide/ide-client.ts
@@ -5,6 +5,7 @@
  */
 
 import * as fs from 'node:fs';
+import * as path from 'node:path';
 import {
   detectIde,
   DetectedIde,
@@ -249,7 +250,11 @@ export class IdeClient {
       );
       return false;
     }
-    if (getRealPath(ideWorkspacePath) !== getRealPath(process.cwd())) {
+
+    const idePath = getRealPath(ideWorkspacePath).toLocaleLowerCase();
+    const cwd = getRealPath(process.cwd()).toLocaleLowerCase();
+    const rel = path.relative(idePath, cwd);
+    if (rel.startsWith('..') || path.isAbsolute(rel)) {
       this.setState(
         IDEConnectionStatus.Disconnected,
         `Directory mismatch. Gemini CLI is running in a different location than the open workspace in ${this.currentIdeDisplayName}. Please run the CLI from the same directory as your project's root folder.`,