diff --git a/agent/copilot_acp_client.py b/agent/copilot_acp_client.py
index 80a1f842bb..c2b3f99f87 100644
--- a/agent/copilot_acp_client.py
+++ b/agent/copilot_acp_client.py
@@ -31,6 +31,8 @@ logger = logging.getLogger(__name__)
 
 _TOOL_CALL_BLOCK_RE = re.compile(r"<tool_call>\s*(\{.*?\})\s*</tool_call>", re.DOTALL)
 _TOOL_CALL_JSON_RE = re.compile(r"\{\s*\"id\"\s*:\s*\"[^\"]+\"\s*,\s*\"type\"\s*:\s*\"function\"\s*,\s*\"function\"\s*:\s*\{.*?\}\s*\}", re.DOTALL)
+_TOOL_CALL_START_TAG = "<tool_call>"
+_TOOL_CALL_END_TAG = "</tool_call>"
 
 
 def _resolve_timeout_seconds() -> float:
@@ -313,6 +315,8 @@ class CopilotACPClient:
         self._activity_callback = activity_callback
         self._stream_delta_callback = stream_delta_callback
         self._reasoning_callback = reasoning_callback
+        self._stream_filter_buffer = ""
+        self._stream_filter_in_tool_call = False
         self._acp_command = acp_command or command or _resolve_command()
         self._acp_args = list(acp_args or args or _resolve_args())
         self._acp_cwd = str(Path(acp_cwd or os.getcwd()).resolve())
@@ -505,6 +509,7 @@ class CopilotACPClient:
             raise TimeoutError(f"Timed out waiting for Copilot ACP response to {method}.")
 
         try:
+            self._reset_stream_filters()
             _request(
                 "initialize",
                 {
@@ -655,8 +660,11 @@ class CopilotACPClient:
         cb = self._stream_delta_callback
         if cb is None or not text:
             return
+        safe_text = self._filter_stream_text(text)
+        if not safe_text:
+            return
         try:
-            cb(text)
+            cb(safe_text)
         except Exception:
             logger.debug("Copilot ACP stream delta callback failed", exc_info=True)
 
@@ -668,3 +676,53 @@ class CopilotACPClient:
             cb(text)
         except Exception:
             logger.debug("Copilot ACP reasoning callback failed", exc_info=True)
+
+    def _reset_stream_filters(self) -> None:
+        self._stream_filter_buffer = ""
+        self._stream_filter_in_tool_call = False
+
+    def _filter_stream_text(self, text: str) -> str:
+        if not text:
+            return ""
+
+        buffer = self._stream_filter_buffer + text
+        self._stream_filter_buffer = ""
+        visible_parts: list[str] = []
+
+        while buffer:
+            if self._stream_filter_in_tool_call:
+                end_idx = buffer.find(_TOOL_CALL_END_TAG)
+                if end_idx < 0:
+                    self._stream_filter_buffer = buffer
+                    return "".join(visible_parts)
+                buffer = buffer[end_idx + len(_TOOL_CALL_END_TAG):]
+                self._stream_filter_in_tool_call = False
+                continue
+
+            start_idx = buffer.find(_TOOL_CALL_START_TAG)
+            if start_idx >= 0:
+                if start_idx > 0:
+                    visible_parts.append(buffer[:start_idx])
+                buffer = buffer[start_idx + len(_TOOL_CALL_START_TAG):]
+                self._stream_filter_in_tool_call = True
+                continue
+
+            holdback = self._longest_tool_tag_prefix_suffix(buffer)
+            if holdback:
+                visible_parts.append(buffer[:-holdback])
+                self._stream_filter_buffer = buffer[-holdback:]
+            else:
+                visible_parts.append(buffer)
+                self._stream_filter_buffer = ""
+            break
+
+        return "".join(visible_parts)
+
+    @staticmethod
+    def _longest_tool_tag_prefix_suffix(text: str) -> int:
+        for tag in (_TOOL_CALL_START_TAG, _TOOL_CALL_END_TAG):
+            max_prefix = min(len(text), len(tag) - 1)
+            for size in range(max_prefix, 0, -1):
+                if text.endswith(tag[:size]):
+                    return size
+        return 0
diff --git a/tests/agent/test_copilot_acp_client.py b/tests/agent/test_copilot_acp_client.py
index 3e5fc77758..51f4d27aea 100644
--- a/tests/agent/test_copilot_acp_client.py
+++ b/tests/agent/test_copilot_acp_client.py
@@ -196,6 +196,46 @@ class CopilotACPClientSafetyTests(unittest.TestCase):
         self.assertEqual(streamed, ["hello"])
         self.assertEqual(reasoned, ["thinking"])
 
+    def test_session_update_filters_tool_call_markup_from_stream_callbacks(self) -> None:
+        streamed: list[str] = []
+
+        self.client = CopilotACPClient(
+            acp_cwd="/tmp",
+            stream_delta_callback=streamed.append,
+        )
+
+        text_parts: list[str] = []
+        process = _FakeProcess()
+        chunks = [
+            "Before ",
+            "<tool",
+            "_call>{\"id\":\"1\",\"type\":\"function\",\"function\":{\"name\":\"terminal\",\"arguments\":\"{}\"}}",
+            "</tool_call>",
+            " after",
+        ]
+
+        for chunk in chunks:
+            handled = self.client._handle_server_message(
+                {
+                    "jsonrpc": "2.0",
+                    "method": "session/update",
+                    "params": {
+                        "update": {
+                            "sessionUpdate": "agent_message_chunk",
+                            "content": {"text": chunk},
+                        }
+                    },
+                },
+                process=process,
+                cwd="/tmp",
+                text_parts=text_parts,
+                reasoning_parts=[],
+            )
+            self.assertTrue(handled)
+
+        self.assertEqual("".join(text_parts), "".join(chunks))
+        self.assertEqual("".join(streamed), "Before  after")
+
 
 if __name__ == "__main__":
     unittest.main()