diff --git a/.agents/skills/senpi-qa/scripts/scenarios/compaction-retry-cycle-repro.mjs b/.agents/skills/senpi-qa/scripts/scenarios/compaction-retry-cycle-repro.mjs
new file mode 100644
index 000000000..e89977bd2
--- /dev/null
+++ b/.agents/skills/senpi-qa/scripts/scenarios/compaction-retry-cycle-repro.mjs
@@ -0,0 +1,271 @@
+#!/usr/bin/env node
+/**
+ * Repro driver: persistent provider failure + over-threshold context.
+ *
+ * Turn 1 succeeds with huge usage (context pinned near the hard limit).
+ * Every later request (turns AND compaction summarization) fails with a
+ * transient "Connection error." — the same shape as a real provider outage.
+ *
+ * Observation targets:
+ *   - whether compaction_start/compaction_end cycle forever without the agent
+ *     ever settling (infinite retry<->compaction cycle), and
+ *   - whether the final state leaves a compaction_start with no matching end
+ *     (lifecycle leak = the "Compacting..." spinner that never closes).
+ *
+ * Usage: node compaction-retry-cycle-repro.mjs [--watch-ms 240000]
+ */
+
+import { createServer } from "node:http";
+import { writeFileSync } from "node:fs";
+import { join } from "node:path";
+import { createChecks, guardRealAuth, installCleanupHooks, makeSandbox, spawnCli } from "../lib/common.mjs";
+import { checkRealAuthUnchanged, hermeticEnv } from "../lib/mock-loop-support.mjs";
+
+const CONTEXT_WINDOW = 128_000;
+const PINNED_INPUT_TOKENS = 120_000;
+const SUMMARY_MARKER = "context summarization assistant";
+
+function sseHead(res) {
+	res.writeHead(200, {
+		"content-type": "text/event-stream",
+		"cache-control": "no-cache",
+		connection: "keep-alive",
+	});
+}
+
+function writeAnthropicSse(res, text, modelId, inputTokens) {
+	sseHead(res);
+	const ev = (event, data) => res.write(`event: ${event}\ndata: ${JSON.stringify({ type: event, ...data })}\n\n`);
+	ev("message_start", {
+		message: {
+			id: "msg_mock",
+			type: "message",
+			role: "assistant",
+			model: modelId,
+			content: [],
+			stop_reason: null,
+			stop_sequence: null,
+			usage: { input_tokens: inputTokens, output_tokens: 0 },
+		},
+	});
+	ev("content_block_start", { index: 0, content_block: { type: "text", text: "" } });
+	ev("content_block_delta", { index: 0, delta: { type: "text_delta", text } });
+	ev("content_block_stop", { index: 0 });
+	ev("message_delta", { delta: { stop_reason: "end_turn", stop_sequence: null }, usage: { output_tokens: 40 } });
+	ev("message_stop", {});
+	res.end();
+}
+
+function startFlappingServer() {
+	const requests = [];
+	let callIndex = 0;
+	const server = createServer((req, res) => {
+		const chunks = [];
+		req.on("data", (c) => chunks.push(c));
+		req.on("end", () => {
+			const raw = Buffer.concat(chunks).toString("utf8");
+			let body = {};
+			try {
+				body = raw ? JSON.parse(raw) : {};
+			} catch {}
+			const systemText = typeof body.system === "string" ? body.system : JSON.stringify(body.system ?? "");
+			const isSummarization = systemText.includes(SUMMARY_MARKER);
+			requests.push({ at: Date.now(), url: req.url, summarization: isSummarization, systemPrefix: systemText.slice(0, 60) });
+			callIndex++;
+			if (callIndex === 1) {
+				return writeAnthropicSse(res, "x".repeat(400_000), body.model ?? "mock-claude", PINNED_INPUT_TOKENS);
+			}
+			setTimeout(() => {
+				res.writeHead(500, { "content-type": "application/json" });
+				res.end(JSON.stringify({ type: "error", error: { type: "api_error", message: "Connection error." } }));
+			}, 500);
+		});
+	});
+	return new Promise((resolve, reject) => {
+		server.once("error", reject);
+		server.listen(0, "127.0.0.1", () => {
+			const { port } = server.address();
+			resolve({
+				requests,
+				origin: `http://127.0.0.1:${port}`,
+				stop: () => new Promise((done) => server.close(done)),
+			});
+		});
+	});
+}
+
+function writeSandboxConfig(agentDir, server) {
+	writeFileSync(
+		join(agentDir, "models.json"),
+		JSON.stringify({
+			providers: {
+				anthropic: {
+					baseUrl: server.origin,
+					apiKey: "sk-mock-qa-7f3a",
+					api: "anthropic-messages",
+					models: [
+						{
+							id: "mock-claude",
+							api: "anthropic-messages",
+							baseUrl: server.origin,
+							contextWindow: CONTEXT_WINDOW,
+							maxTokens: 4_096,
+							cost: { input: 0, output: 0, cacheRead: 0, cacheWrite: 0 },
+						},
+					],
+				},
+			},
+		}),
+	);
+	writeFileSync(join(agentDir, "settings.json"), JSON.stringify({ compaction: { keepRecentTokens: 40 } }));
+}
+
+class RpcClient {
+	constructor({ env, cwd }) {
+		this.child = spawnCli(["--mode", "rpc", "--no-context-files"], { env, cwd });
+		this.pending = new Map();
+		this.events = [];
+		this.seq = 0;
+		this._buf = "";
+		this.stderr = "";
+		this.child.stdout.on("data", (chunk) => this._onData(chunk));
+		this.child.stderr.on("data", (d) => {
+			this.stderr += d.toString();
+		});
+	}
+
+	_onData(chunk) {
+		this._buf += chunk.toString();
+		let nl;
+		while ((nl = this._buf.indexOf("\n")) >= 0) {
+			const line = this._buf.slice(0, nl).trim();
+			this._buf = this._buf.slice(nl + 1);
+			if (!line) continue;
+			let msg;
+			try {
+				msg = JSON.parse(line);
+			} catch {
+				continue;
+			}
+			if (msg && msg.type === "response" && msg.id !== undefined && this.pending.has(msg.id)) {
+				this.pending.get(msg.id)(msg);
+				this.pending.delete(msg.id);
+			} else if (msg && msg.type) {
+				this.events.push({ at: Date.now(), msg });
+			}
+		}
+	}
+
+	send(cmd, { timeoutMs = 30_000 } = {}) {
+		const id = cmd.id ?? `req-${++this.seq}`;
+		return new Promise((resolve, reject) => {
+			const timer = setTimeout(() => {
+				this.pending.delete(id);
+				reject(new Error(`RPC timeout ${cmd.type} (stderr: ${this.stderr.slice(-400)})`));
+			}, timeoutMs);
+			this.pending.set(id, (m) => {
+				clearTimeout(timer);
+				resolve(m);
+			});
+			this.child.stdin.write(`${JSON.stringify({ ...cmd, id })}\n`);
+		});
+	}
+
+	close() {
+		try {
+			this.child.stdin.end();
+		} catch {}
+	}
+}
+
+async function main() {
+	const watchMs = Number(process.argv[process.argv.indexOf("--watch-ms") + 1] || 240_000);
+	installCleanupHooks();
+	const checks = createChecks("compaction-retry-cycle-repro.mjs");
+	const guard = guardRealAuth();
+	const box = makeSandbox("compaction-retry-cycle");
+	const server = await startFlappingServer();
+	writeSandboxConfig(box.agentDir, server);
+
+	const client = new RpcClient({ env: hermeticEnv(box.env), cwd: box.cwd });
+	const promptOutcomes = [];
+	const t0 = Date.now();
+	try {
+		await client.send({ type: "set_model", provider: "anthropic", modelId: "mock-claude" });
+		const p1 = await client.send({ type: "prompt", message: "turn one" });
+		if (p1.success !== true) throw new Error(`prompt 1 rejected: ${JSON.stringify(p1)}`);
+		const deadline = t0 + 60_000;
+		for (;;) {
+			if (client.events.some((e) => e.msg.type === "agent_end")) break;
+			if (Date.now() > deadline) throw new Error("turn 1 never settled");
+			await new Promise((r) => setTimeout(r, 50));
+		}
+
+		const p2 = await client.send({ type: "prompt", message: "turn two: continue the todo list" });
+		console.log("prompt 2 response:", JSON.stringify(p2).slice(0, 300));
+		promptOutcomes.push(p2);
+		const watchEnd = Date.now() + watchMs;
+		let continuations = 0;
+		while (Date.now() < watchEnd) {
+			await new Promise((r) => setTimeout(r, 3_000));
+			continuations++;
+			const res = await client.send({ type: "prompt", message: `continuation ${continuations}: next todo` }).catch((e) => String(e));
+			promptOutcomes.push(res);
+			console.log(`continuation ${continuations} ->`, JSON.stringify(res).slice(0, 220));
+		}
+	} finally {
+		client.close();
+	}
+
+	const rel = (at) => `${((at - t0) / 1000).toFixed(1)}s`;
+	const compactionStarts = client.events.filter((e) => e.msg.type === "compaction_start");
+	const compactionEnds = client.events.filter((e) => e.msg.type === "compaction_end");
+	const agentEnds = client.events.filter((e) => e.msg.type === "agent_end");
+	const retryEvents = client.events.filter((e) => String(e.msg.type).includes("retry"));
+	const summaryReqs = server.requests.filter((r) => r.summarization);
+	const turnReqs = server.requests.filter((r) => !r.summarization);
+
+	console.log("--- timeline (events) ---");
+	for (const e of client.events.filter((e2) => !["message_update", "message_start"].includes(e2.msg.type))) {
+		const m = e.msg;
+		const extra =
+			m.type === "compaction_end"
+				? ` accepted=${m.data?.accepted ?? m.accepted} reason=${m.data?.reason ?? m.reason}`
+				: m.type === "compaction_start"
+					? ` reason=${m.data?.reason ?? m.reason}`
+					: "";
+		console.log(`${rel(e.at)} ${m.type}${extra}`);
+	}
+	console.log("--- timeline (server requests) ---");
+	for (const r of server.requests) {
+		console.log(`${rel(r.at)} ${r.summarization ? "SUMMARIZATION" : "turn"} ${r.url} system="${r.systemPrefix ?? ""}"`);
+	}
+	console.log("--- counts ---");
+	console.log(`compaction_start=${compactionStarts.length} compaction_end=${compactionEnds.length}`);
+	console.log(`agent_end=${agentEnds.length} retryEvents=${retryEvents.length}`);
+	console.log(`summarization requests=${summaryReqs.length} turn requests=${turnReqs.length}`);
+
+	const openSpinner = compactionStarts.length > compactionEnds.length;
+	checks.ok("every compaction_start has a matching compaction_end (no spinner leak)", !openSpinner);
+	const isCompactionRejection = (outcome) =>
+		typeof outcome === "object" && outcome !== null && String(outcome.error ?? "").includes("compaction");
+	const afterTrip = promptOutcomes.slice(3);
+	const compactionBlocked = afterTrip.filter(isCompactionRejection);
+	checks.ok(
+		"once the breaker is tripped, no prompt is rejected because compaction is unavailable",
+		compactionBlocked.length === 0 && afterTrip.length > 0,
+		`compactionRejectionsAfterTrip=${compactionBlocked.length}/${afterTrip.length}`,
+	);
+	checks.ok(
+		"turns keep reaching the provider instead of dying at admission",
+		turnReqs.length >= 3,
+		`turnRequests=${turnReqs.length}`,
+	);
+	checkRealAuthUnchanged(checks, guard);
+
+	await server.stop();
+	box.cleanup();
+	process.exit(checks.finish() ? 0 : 1);
+}
+
+await main();
diff --git a/packages/coding-agent/src/core/agent-session.ts b/packages/coding-agent/src/core/agent-session.ts
index 138e151fc..adaff1d7e 100644
--- a/packages/coding-agent/src/core/agent-session.ts
+++ b/packages/coding-agent/src/core/agent-session.ts
@@ -4173,6 +4173,7 @@ export class AgentSession {
 			const compacted = await this._runPrePromptCompaction(assistantMessage, skipAbortedCheck, inlineReason);
 			if (compacted) return true;
 		}
+		if (this._isCompactionOnCooldown()) return false;
 		throw new RequiredCompactionError();
 	}
 
@@ -4214,6 +4215,7 @@ export class AgentSession {
 		}
 
 		const compacted = await this._runPrePromptCompaction(lastAssistantMessage, false, "pre_prompt");
+		if (!compacted && !isOversized() && this._isCompactionOnCooldown()) return;
 		if (!compacted || isOversized()) {
 			throw new RequiredCompactionError();
 		}
@@ -4389,6 +4391,11 @@ export class AgentSession {
 		return false;
 	}
 
+	private _isCompactionOnCooldown(): boolean {
+		const state = this._compactionLifecycle.state;
+		return state.status === "failed" && state.rejectionCause === "circuit-breaker";
+	}
+
 	private async _runPrePromptCompaction(
 		lastAssistantMessage: AssistantMessage | undefined,
 		skipAbortedCheck: boolean,
@@ -4458,7 +4465,10 @@ export class AgentSession {
 		if (!shouldCompact(contextTokens, model.contextWindow, settings)) return;
 
 		const compacted = await this._runPrePromptCompaction(this._findLastAssistantMessage(), true, "pre_prompt");
-		if (!compacted) throw new RequiredCompactionError();
+		if (!compacted) {
+			if (this._isCompactionOnCooldown()) return;
+			throw new RequiredCompactionError();
+		}
 		this._scheduledContinuationRecompacted = true;
 	}
 
@@ -5581,7 +5591,8 @@ export class AgentSession {
 			model &&
 			shouldCompact(contextTokens, model.contextWindow, compactionSettings)
 		) {
-			if (!(await this._runPrePromptCompaction(message, true, "threshold", true, true))) {
+			const preRetryCompaction = await this._runPrePromptCompaction(message, true, "threshold", true, true);
+			if (!preRetryCompaction && !this._isCompactionOnCooldown()) {
 				const attempt = this._retryAttempt;
 				this._retryAttempt = 0;
 				this._emit({
diff --git a/packages/coding-agent/test/suite/regressions/531-compaction-cooldown-admission.test.ts b/packages/coding-agent/test/suite/regressions/531-compaction-cooldown-admission.test.ts
new file mode 100644
index 000000000..245db936c
--- /dev/null
+++ b/packages/coding-agent/test/suite/regressions/531-compaction-cooldown-admission.test.ts
@@ -0,0 +1,92 @@
+import { fauxAssistantMessage } from "@earendil-works/pi-ai";
+import { afterEach, describe, expect, it } from "vitest";
+import type { ExtensionAPI } from "../../../src/core/extensions/index.ts";
+import type { InlineExtension } from "../../../src/index.ts";
+import { createHarness, type Harness } from "../harness.ts";
+
+const harnesses: Harness[] = [];
+
+afterEach(() => {
+	for (const harness of harnesses.splice(0)) {
+		harness.cleanup();
+	}
+});
+
+function breakerCancelledCompaction(): InlineExtension {
+	return ((pi: ExtensionAPI) => {
+		pi.on("session_before_compact", () => ({
+			cancel: true,
+			rejectionCause: "circuit-breaker",
+			reason: "compaction circuit breaker cooling down (60s left)",
+		}));
+	}) as InlineExtension;
+}
+
+function genericallyCancelledCompaction(): InlineExtension {
+	return ((pi: ExtensionAPI) => {
+		pi.on("session_before_compact", () => ({
+			cancel: true,
+			rejectionCause: "cancelled-by-extension",
+			reason: "extension refused",
+		}));
+	}) as InlineExtension;
+}
+
+async function createOverThresholdHarness(extension: InlineExtension): Promise<Harness> {
+	const harness = await createHarness({
+		models: [{ id: "faux-large", contextWindow: 20_000, maxTokens: 4_096 }],
+		settings: { compaction: { reserveTokens: 1_000 } },
+		extensionFactories: [extension],
+	});
+	harnesses.push(harness);
+	const timestamp = Date.now() - 1_000;
+	harness.sessionManager.appendMessage({
+		role: "user",
+		content: [{ type: "text", text: "work through the todo list" }],
+		timestamp: timestamp - 1,
+	});
+	harness.sessionManager.appendMessage({
+		...fauxAssistantMessage("progress note ".concat("x".repeat(80_000)), { timestamp }),
+		usage: {
+			input: 19_500,
+			output: 0,
+			cacheRead: 0,
+			cacheWrite: 0,
+			totalTokens: 19_500,
+			cost: { input: 0, output: 0, cacheRead: 0, cacheWrite: 0, total: 0 },
+		},
+	});
+	harness.session.agent.state.messages = harness.sessionManager.buildSessionContext().messages;
+	return harness;
+}
+
+describe("issue #531: compaction cooldown must not brick prompt admission", () => {
+	it("lets the turn proceed without compaction when the breaker cancelled it", async () => {
+		// Given: context is over the soft threshold and the compaction breaker is
+		// tripped, so session_before_compact is cancelled with circuit-breaker.
+		const harness = await createOverThresholdHarness(breakerCancelledCompaction());
+		harness.setResponses([fauxAssistantMessage("continued fine")]);
+
+		// When: the next prompt needs opportunistic pre-prompt compaction.
+		await harness.session.prompt("next todo item");
+
+		// Then: the turn reaches the provider instead of dying on the unavailable
+		// compaction, and the assistant reply lands in the session.
+		const texts = harness.session.agent.state.messages
+			.filter((message) => message.role === "assistant")
+			.map((message) => JSON.stringify(message));
+		expect(texts.some((text) => text.includes("continued fine"))).toBe(true);
+	});
+
+	it("keeps failing closed when compaction is cancelled for a non-breaker reason", async () => {
+		// Given: the same over-threshold context, but the cancel is a plain
+		// extension refusal, not a breaker cooldown.
+		const harness = await createOverThresholdHarness(genericallyCancelledCompaction());
+		harness.setResponses([fauxAssistantMessage("should never be sent")]);
+
+		// When / Then: admission still fails closed.
+		await expect(harness.session.prompt("next todo item")).rejects.toThrow(
+			"Context remains above the compaction threshold because compaction did not complete",
+		);
+	});
+});