diff --git a/agent/model_metadata.py b/agent/model_metadata.py
index 57168fc960..b2e96d9f20 100644
--- a/agent/model_metadata.py
+++ b/agent/model_metadata.py
@@ -1726,11 +1726,28 @@ def parse_available_output_tokens_from_error(error_msg: str) -> Optional[int]:
     # Available output = window - input. When the input alone is at or over
     # the window this stays None, so the caller correctly falls through to
     # compression instead of futilely shrinking the output cap.
+    #
+    # Caveat: when max_tokens is the BINDING constraint, vLLM does not report
+    # the real prompt size at all.  It back-computes a lower bound from the
+    # constraint itself -- "at least N input tokens" where
+    # N == window + 1 - requested_output -- so window - N is always exactly
+    # requested_output - 1.  Subtracting the caller's safety margin then walks
+    # the cap down ~65 tokens per retry while the reported input walks up by
+    # the same amount, burning every compression attempt without ever fitting.
+    # Detect that degenerate case and halve the requested cap instead: it
+    # carries the same guarantee (strictly below what was rejected) and
+    # converges in one or two retries.
     _m_vllm_input = re.search(
         r'prompt contains (?:at least )?(\d+)\s*input tokens', error_lower
     )
     if _m_ctx_tok and _m_vllm_input:
         _available = int(_m_ctx_tok.group(1)) - int(_m_vllm_input.group(1))
+        _m_requested_out = re.search(r'requested (\d+)\s*output tokens', error_lower)
+        if 'at least' in error_lower and _m_requested_out:
+            _requested_out = int(_m_requested_out.group(1))
+            if _available >= _requested_out - 1:
+                # The budget is derived from the constraint, not measured.
+                return max(1, _requested_out // 2)
         if _available >= 1:
             return _available
 
diff --git a/tests/test_output_cap_parsing.py b/tests/test_output_cap_parsing.py
index d477ef5da1..1825569976 100644
--- a/tests/test_output_cap_parsing.py
+++ b/tests/test_output_cap_parsing.py
@@ -121,10 +121,28 @@ class TestParseVllmTokenBasedOutputCap:
         "output tokens."
     )
 
-    def test_vllm_token_based_format(self):
-        # available output = 131072 - 65537 = 65535
-        assert parse_available_output_tokens_from_error(self._VLLM_MSG) == 65535
+    # Verbatim vLLM response where the input is MEASURED, not back-computed:
+    # window - input != requested - 1, so the reported figure is real.
+    _VLLM_MSG_REAL_INPUT = (
+        "This model's maximum context length is 131072 tokens. However, you "
+        "requested 65536 output tokens and your prompt contains 100000 "
+        "input tokens, for a total of 165536 tokens. Please reduce the length "
+        "of the input prompt or the number of requested output tokens."
+    )
 
+    def test_vllm_token_based_format(self):
+        # The reported input is a LOWER BOUND that vLLM back-computes from the
+        # constraint (65537 == 131072 + 1 - 65536), so window - input is just
+        # requested - 1 and carries no information about the real prompt.
+        # Halve the requested cap instead so the retry actually converges.
+        assert parse_available_output_tokens_from_error(self._VLLM_MSG) == 32768
+
+    def test_vllm_measured_input_is_trusted(self):
+        # When the input is measured rather than derived, use it as-is.
+        # available output = 131072 - 100000 = 31072
+        assert parse_available_output_tokens_from_error(
+            self._VLLM_MSG_REAL_INPUT
+        ) == 31072
 
     def test_vllm_retry_fits_inside_window(self):
         # The retried cap plus the reported input must fit in the window.
@@ -132,3 +150,28 @@ class TestParseVllmTokenBasedOutputCap:
         assert available is not None
         assert available + 65537 <= 131072
 
+    def test_vllm_retry_converges(self):
+        """The retry sequence must reach a working cap in a few attempts.
+
+        Regression test for the 65-tokens-per-retry crawl: with a 102400
+        window and a real prompt of ~37000 tokens, retrying from a 65536 cap
+        used to produce 65471 -> 65406 -> 65341 and exhaust the compression
+        budget without ever fitting.
+        """
+        window, real_input, cap = 102400, 37000, 65536
+        for _ in range(5):
+            if real_input + cap <= window:
+                break
+            # vLLM's message when max_tokens is the binding constraint.
+            msg = (
+                f"This model's maximum context length is {window} tokens. "
+                f"However, you requested {cap} output tokens and your prompt "
+                f"contains at least {window + 1 - cap} input tokens, for a "
+                f"total of at least {window + 1} tokens."
+            )
+            available = parse_available_output_tokens_from_error(msg)
+            assert available is not None
+            assert available < cap, "each retry must lower the cap"
+            cap = available
+        assert real_input + cap <= window, f"did not converge: cap={cap}"
+