Improve azd ai agent init for non-interactive environments

[spboyer]

Problem

azd ai agent init is unusable in non-interactive (non-TTY) environments because two required inputs (environment name and subscription) have no non-interactive defaults. This blocks CI/CD pipelines, IDE-integrated terminals, AI coding assistants, and scripted automation.

Root cause analysis identified 4 sequential blockers when running without a TTY. This PR addresses the first two:

Changes

1. Default environment name to directory basename (#6817)

When --no-prompt is active and no -e flag is provided, the environment name now defaults to the current directory's basename -- consistent with how azd init suggests -dev etc.

Before: no default response for prompt 'Enter a unique environment name:'
After: Automatically creates environment named after the working directory

2. Auto-select subscription in non-interactive mode (#6818)

When --no-prompt is active and no subscription is configured, the command now:

• Lists available subscriptions via azdClient.Account().ListSubscriptions()
• Auto-selects if exactly one subscription exists
• Returns a clear error with remediation hint if multiple subscriptions exist

Before: failed to prompt for subscription: rpc error: ... cannot prompt in non-interactive mode
After:

• 1 subscription: Auto-selected subscription: My Sub (guid)
• Multiple: multiple subscriptions found but running in non-interactive mode. Set a default with 'azd config set defaults.subscription <id>'

Testing

All existing extension tests pass. Changes are in the initialization flow which requires end-to-end testing with Azure resources.

Related Issues

• azd ai agent init: Add --model-deployment flag for non-interactive usage #6816 (P1, assigned to @JeffreyCA) -- --model-deployment flag (still blocking for full non-interactive flow)
• azd ai agent init: Document --no-prompt behavior and ensure CLI flag coverage #6819 (P3, assigned to @alexwolfmsft) -- Document --no-prompt behavior
• azd ai agent init: Add remediation hints to error messages #6820 (P3, assigned to @JeffreyCA) -- Remediation hints in error messages

Fixes #6817
Fixes #6818

[Copilot]

Pull request overview

Improves the azd ai agent init extension initialization flow for non-interactive environments by avoiding prompts for required Azure context when possible.

Changes:

• Default newly created azd environment name to the current directory basename when --no-prompt is active and -e isn’t provided.
• In --no-prompt mode, auto-select the Azure subscription when exactly one subscription is available; otherwise return a remediation error.

Comments suppressed due to low confidence (1)

cli/azd/extensions/azure.ai.agents/internal/cmd/init.go:495

• When listing subscriptions in --no-prompt mode, consider passing the existing tenant from the environment (AZURE_TENANT_ID) as ListSubscriptionsRequest.TenantId when available. Otherwise, users with multiple tenants can hit the "multiple subscriptions" error even if only one subscription exists in the intended tenant.

			subsResp, listErr := azdClient.Account().ListSubscriptions(
				ctx,
				&azdext.ListSubscriptionsRequest{},
			)

---

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[trangevi]

Would it be better to just pass --no-prompt to the env new call that we're making, and rely on however core wants to handle that flag, instead of having special logic in the extension? Seems better for consistency

[spboyer]

Good points from all three of you. To clarify the intent:

This was originally a quick unblock for AI coding assistants (Copilot CLI, etc.) that need to run azd ai agent init --no-prompt end-to-end without a TTY. The core azd init flow doesn't hit this code path — the extension has its own InitAction that independently prompts for environment name and subscription.

That said, I agree the principle should live in core:

• Default env name from directory basename in --no-prompt mode
• Subscription auto-select / defaults.subscription fallback in --no-prompt mode
• Passing --no-prompt through to sub-commands like env new

Proposal: I'll file a core issue to track making --no-prompt smarter across all azd commands, and we can reference that from here. For this PR, the question is whether to:

1. Keep as-is — extension-local workaround while core catches up
2. Simplify — pass --no-prompt to env new (trangevi's suggestion) and only keep the subscription auto-select logic
3. Close — wait for core support

@vhvb1989 @trangevi @kristenwomack what's your preference? Happy to go any direction.

[vhvb1989]

Good points from all three of you. To clarify the intent:

This was originally a quick unblock for AI coding assistants (Copilot CLI, etc.) that need to run azd ai agent init --no-prompt end-to-end without a TTY. The core azd init flow doesn't hit this code path — the extension has its own InitAction that independently prompts for environment name and subscription.

That said, I agree the principle should live in core:

• Default env name from directory basename in --no-prompt mode
• Subscription auto-select / defaults.subscription fallback in --no-prompt mode
• Passing --no-prompt through to sub-commands like env new

Proposal: I'll file a core issue to track making --no-prompt smarter across all azd commands, and we can reference that from here. For this PR, the question is whether to:

1. Keep as-is — extension-local workaround while core catches up
2. Simplify — pass --no-prompt to env new (trangevi's suggestion) and only keep the subscription auto-select logic
3. Close — wait for core support

@vhvb1989 @trangevi @kristenwomack what's your preference? Happy to go any direction.

My preference, in order would be 2, 2 and 1 at the end. - I would swap 1 to the top if there is some customer blocked or some team is planning to demo/present this in the nearest feature.