Unable to use local models in Jetbrains Rider due to "Connection error"

[igorkis-scrts]

Before submitting your bug report

• I've tried using the "Ask AI" feature on the Continue docs site to see if the docs have an answer
• I believe this is a bug. I'll try to join the Continue Discord for questions
• I'm not able to find an open issue that reports the same bug
• I've seen the troubleshooting guide on the Continue Docs

Relevant environment info

- OS: Windows 11
- Continue version: 1.0.44
- IDE version: Jetbrains Rider 2025.2.1
- Model: gpt-oss-20b
- config:
  
  name: local-dev
version: 1.0.0
schema: v1
models:
  - name: Test
    provider: openai
    model: openai/gpt-oss-20b
    apiBase: http://192.168.1.25:1234/v1/
    apiVersion: v1
    roles:
      - chat
  - name: gpt-oss-20b
    provider: lmstudio
    model: openai/gpt-oss-20b
    apiBase: http://192.168.1.25:1234/v1/
    roles:
      - chat
      - edit
      - apply
      - summarize
      - autocomplete
    capabilities:
      - tool_use
    autocompleteOptions:
      debounceDelay: 250
      maxPromptTokens: 1024
    rules:
      - Give concise responses
      - Always assume TypeScript rather than JavaScript

Description

I'm unable to use Continue.Dev with local models - every time I try to make a request to local model it completely fails with generic "connection error". It works perfectly fine in VSCode with the same config. It doesn't either when model is localhosted nor when it is on some other machine in the same network.

To reproduce

1. Have gpt-oss-20b (or any other local model) in LM Studio.
2. Put the config I provided in Continue's config.yaml. file.
3. Open Jetbrains Rider 2025.2.1 with the Continue plugin installed.
4. Try to send a message to local model in Chat window.
5. See Connection Error.

Log output

[2025-09-18T11:55:03] Error listing models:  TypeError [ERR_INVALID_URL]: Invalid URL
[2025-09-18T11:55:03] Invalid URL

Code: ERR_INVALID_URL
Error number: undefined
Syscall: undefined
Type: undefined

TypeError [ERR_INVALID_URL]: Invalid URL
    at new NodeError (node:internal/errors:388:5)
    at URL.onParseError (node:internal/url:564:9)
    at new URL (node:internal/url:644:5)
    at new Fze (C:\snapshot\continue\binary\out\index.js:38:2487)
    at Dy (C:\snapshot\continue\binary\out\index.js:8057:5072)
    at process.processTicksAndRejections (node:internal/process/task_queues:95:5)
    at async n (C:\snapshot\continue\binary\out\index.js:8412:48)
    at async Yht (C:\snapshot\continue\binary\out\index.js:8156:3322)
    at async A.listModels (C:\snapshot\continue\binary\out\index.js:9237:372)
    at async Trd (C:\snapshot\continue\binary\out\index.js:9499:2909) 
[2025-09-18T11:55:03] Error listing models:  TypeError [ERR_INVALID_URL]: Invalid URL
[2025-09-18T11:55:12] Error: Connection error. 
[2025-09-18T11:55:12] Error running handler for "llm/streamChat":  Error: Connection error.
[2025-09-18T11:55:37] Error: Connection error. 
[2025-09-18T11:55:37] Error running handler for "llm/streamChat":  Error: Connection error.
[2025-09-18T11:55:43] Error: Connection error. 
[2025-09-18T11:55:43] Error running handler for "llm/streamChat":  Error: Connection error.

[igorkis-scrts]

This is somehow related to proxy settings (Continue tries to send all it's request even meant for local network IPs?) - as soon as I set proxy in JB it completely stops working despite wildcard exception rules for local network. Unfortunately, I can't use Rider without proxy.