diff --git a/.changeset/patch-fix-resume-auth-failure.md b/.changeset/patch-fix-resume-auth-failure.md
new file mode 100644
index 00000000000..1bd3ed3c5f0
--- /dev/null
+++ b/.changeset/patch-fix-resume-auth-failure.md
@@ -0,0 +1,5 @@
+---
+"gh-aw": patch
+---
+
+Fix copilot-driver `--resume` authentication failures: detect "No authentication information found" as non-retryable, add GITHUB_TOKEN/GH_TOKEN fallback for COPILOT_GITHUB_TOKEN, and log auth token availability for diagnostics.
diff --git a/actions/setup/js/copilot_driver.cjs b/actions/setup/js/copilot_driver.cjs
index 5a25ede73e2..7ce238f9284 100644
--- a/actions/setup/js/copilot_driver.cjs
+++ b/actions/setup/js/copilot_driver.cjs
@@ -9,12 +9,14 @@
  *
  * Retry policy:
  *   - If the process produced any output (hasOutput) and exits with a non-zero code, the
- *     session is considered partially executed.  The driver retries with --resume so the
+ *     session is considered partially executed.  The driver retries with --continue so the
  *     Copilot CLI can continue from where it left off.
  *   - CAPIError 400 is a well-known transient failure mode and is logged explicitly, but
  *     any partial-execution failure is retried — not just CAPIError 400.
  *   - If the process produced no output (failed to start / auth error before any work), the
  *     driver does not retry because there is nothing to resume.
+ *   - "No authentication information found" errors are non-retryable: the absent token will
+ *     remain absent on every subsequent attempt, so all further retries will also fail.
  *   - Retries use exponential backoff: 5s → 10s → 20s (capped at 60s).
  *   - Maximum 3 retry attempts after the initial run.
  *
@@ -43,6 +45,11 @@ const CAPI_ERROR_400_PATTERN = /CAPIError:\s*400/;
 // This is a persistent policy configuration error — retrying will not help.
 const MCP_POLICY_BLOCKED_PATTERN = /MCP servers were blocked by policy:/;
 
+// Pattern to detect missing authentication credentials.
+// This error means no auth token is available in the environment; retrying will not help
+// because the missing token will still be absent on every subsequent attempt.
+const NO_AUTH_INFO_PATTERN = /No authentication information found/;
+
 /**
  * Emit a timestamped diagnostic log line to stderr.
  * All driver messages are prefixed with "[copilot-driver]" so they are easy to
@@ -73,6 +80,17 @@ function isMCPPolicyError(output) {
   return MCP_POLICY_BLOCKED_PATTERN.test(output);
 }
 
+/**
+ * Determines if the collected output contains a "No authentication information found" error.
+ * This means no auth token (COPILOT_GITHUB_TOKEN, GH_TOKEN, or GITHUB_TOKEN) is available
+ * in the environment.  Retrying will not help because the absent token will remain absent.
+ * @param {string} output - Collected stdout+stderr from the process
+ * @returns {boolean}
+ */
+function isNoAuthInfoError(output) {
+  return NO_AUTH_INFO_PATTERN.test(output);
+}
+
 /**
  * Sleep for a specified duration
  * @param {number} ms - Duration in milliseconds
@@ -221,11 +239,11 @@ async function main() {
   const driverStartTime = Date.now();
 
   for (let attempt = 0; attempt <= MAX_RETRIES; attempt++) {
-    // Add --resume flag on retries so the copilot session resumes from where it left off
-    const currentArgs = attempt > 0 ? [...args, "--resume"] : args;
+    // Add --continue flag on retries so the copilot session continues from where it left off
+    const currentArgs = attempt > 0 ? [...args, "--continue"] : args;
 
     if (attempt > 0) {
-      log(`retry ${attempt}/${MAX_RETRIES}: sleeping ${delay}ms before next attempt with --resume`);
+      log(`retry ${attempt}/${MAX_RETRIES}: sleeping ${delay}ms before next attempt with --continue`);
       await sleep(delay);
       delay = Math.min(delay * BACKOFF_MULTIPLIER, MAX_DELAY_MS);
       log(`retry ${attempt}/${MAX_RETRIES}: woke up, next delay cap will be ${Math.min(delay * BACKOFF_MULTIPLIER, MAX_DELAY_MS)}ms`);
@@ -241,13 +259,22 @@ async function main() {
     }
 
     // Determine whether to retry.
-    // Retry whenever the session was partially executed (hasOutput), using --resume so that
+    // Retry whenever the session was partially executed (hasOutput), using --continue so that
     // the Copilot CLI can continue from where it left off.  CAPIError 400 is the well-known
-    // transient case, but any partial-execution failure is eligible for a resume retry.
-    // Exception: MCP policy errors are persistent configuration issues — never retry.
+    // transient case, but any partial-execution failure is eligible for a continue retry.
+    // Exceptions: MCP policy errors and auth errors are persistent — never retry.
     const isCAPIError = isTransientCAPIError(result.output);
     const isMCPPolicy = isMCPPolicyError(result.output);
-    log(`attempt ${attempt + 1} failed:` + ` exitCode=${result.exitCode}` + ` isCAPIError400=${isCAPIError}` + ` isMCPPolicyError=${isMCPPolicy}` + ` hasOutput=${result.hasOutput}` + ` retriesRemaining=${MAX_RETRIES - attempt}`);
+    const isAuthErr = isNoAuthInfoError(result.output);
+    log(
+      `attempt ${attempt + 1} failed:` +
+        ` exitCode=${result.exitCode}` +
+        ` isCAPIError400=${isCAPIError}` +
+        ` isMCPPolicyError=${isMCPPolicy}` +
+        ` isAuthError=${isAuthErr}` +
+        ` hasOutput=${result.hasOutput}` +
+        ` retriesRemaining=${MAX_RETRIES - attempt}`
+    );
 
     // MCP policy errors are persistent — retrying will not help.
     if (isMCPPolicy) {
@@ -255,9 +282,17 @@ async function main() {
       break;
     }
 
+    // Auth errors are persistent for the duration of the job — retrying will not help.
+    // "No authentication information found" means COPILOT_GITHUB_TOKEN / GH_TOKEN / GITHUB_TOKEN
+    // are all absent or invalid.  Retrying with --continue will produce the same auth failure.
+    if (isAuthErr) {
+      log(`attempt ${attempt + 1}: no authentication information found — not retrying (COPILOT_GITHUB_TOKEN, GH_TOKEN, and GITHUB_TOKEN are all absent or invalid)`);
+      break;
+    }
+
     if (attempt < MAX_RETRIES && result.hasOutput) {
       const reason = isCAPIError ? "CAPIError 400 (transient)" : "partial execution";
-      log(`attempt ${attempt + 1}: ${reason} — will retry with --resume (attempt ${attempt + 2}/${MAX_RETRIES + 1})`);
+      log(`attempt ${attempt + 1}: ${reason} — will retry with --continue (attempt ${attempt + 2}/${MAX_RETRIES + 1})`);
       continue;
     }
 
diff --git a/actions/setup/js/copilot_driver.test.cjs b/actions/setup/js/copilot_driver.test.cjs
index 37ff8f843c2..dc8f5799dfc 100644
--- a/actions/setup/js/copilot_driver.test.cjs
+++ b/actions/setup/js/copilot_driver.test.cjs
@@ -34,7 +34,7 @@ describe("copilot_driver.cjs", () => {
     });
   });
 
-  describe("retry policy: resume on partial execution", () => {
+  describe("retry policy: continue on partial execution", () => {
     // Inline the same retry-eligibility logic as the driver for unit testing.
     // The driver retries whenever the session produced output (hasOutput), regardless
     // of the specific error type.  CAPIError 400 is just the well-known case.
@@ -141,6 +141,84 @@ describe("copilot_driver.cjs", () => {
     });
   });
 
+  describe("no-auth-info detection pattern", () => {
+    const NO_AUTH_INFO_PATTERN = /No authentication information found/;
+
+    it("matches the exact error from the issue report", () => {
+      const errorOutput =
+        "Error: No authentication information found.\n" +
+        "Copilot can be authenticated with GitHub using an OAuth Token or a Fine-Grained Personal Access Token.\n" +
+        "To authenticate, you can use any of the following methods:\n" +
+        "  - Start 'copilot' and run the '/login' command\n" +
+        "  - Set the COPILOT_GITHUB_TOKEN, GH_TOKEN, or GITHUB_TOKEN environment variable\n" +
+        "  - Run 'gh auth login' to authenticate with the GitHub CLI";
+      expect(NO_AUTH_INFO_PATTERN.test(errorOutput)).toBe(true);
+    });
+
+    it("matches when embedded in larger output after a long run", () => {
+      const output = "Some agent work output\nMore work\nNo authentication information found\nEnd";
+      expect(NO_AUTH_INFO_PATTERN.test(output)).toBe(true);
+    });
+
+    it("does not match unrelated auth errors", () => {
+      expect(NO_AUTH_INFO_PATTERN.test("Access denied by policy settings")).toBe(false);
+      expect(NO_AUTH_INFO_PATTERN.test("Error: 401 Unauthorized")).toBe(false);
+      expect(NO_AUTH_INFO_PATTERN.test("Authentication failed")).toBe(false);
+      expect(NO_AUTH_INFO_PATTERN.test("CAPIError: 400 Bad Request")).toBe(false);
+      expect(NO_AUTH_INFO_PATTERN.test("")).toBe(false);
+    });
+  });
+
+  describe("auth error prevents retry", () => {
+    // Inline the same retry logic as the driver, including auth error check
+    const MCP_POLICY_BLOCKED_PATTERN = /MCP servers were blocked by policy:/;
+    const NO_AUTH_INFO_PATTERN = /No authentication information found/;
+    const MAX_RETRIES = 3;
+
+    /**
+     * @param {{hasOutput: boolean, exitCode: number, output: string}} result
+     * @param {number} attempt
+     * @returns {boolean}
+     */
+    function shouldRetry(result, attempt) {
+      if (result.exitCode === 0) return false;
+      // MCP policy errors are persistent — never retry
+      if (MCP_POLICY_BLOCKED_PATTERN.test(result.output)) return false;
+      // Auth errors are persistent — never retry
+      if (NO_AUTH_INFO_PATTERN.test(result.output)) return false;
+      return attempt < MAX_RETRIES && result.hasOutput;
+    }
+
+    it("does not retry when auth fails on first attempt (no real work done)", () => {
+      const result = { exitCode: 1, hasOutput: true, output: "Error: No authentication information found." };
+      expect(shouldRetry(result, 0)).toBe(false);
+    });
+
+    it("does not retry when auth fails on a --continue attempt (the reported bug scenario)", () => {
+      // This replicates the issue: attempt 1 ran for 39 min then failed,
+      // attempt 2 (--continue) fails with auth error — should not retry attempts 3 & 4.
+      const resumeResult = { exitCode: 1, hasOutput: true, output: "Error: No authentication information found." };
+      expect(shouldRetry(resumeResult, 1)).toBe(false);
+      expect(shouldRetry(resumeResult, 2)).toBe(false);
+      expect(shouldRetry(resumeResult, 3)).toBe(false);
+    });
+
+    it("does not retry auth error even when output is mixed with other content", () => {
+      const result = { exitCode: 1, hasOutput: true, output: "Some output\nError: No authentication information found.\nMore output" };
+      expect(shouldRetry(result, 0)).toBe(false);
+    });
+
+    it("still retries non-auth errors with output (CAPIError 400)", () => {
+      const result = { exitCode: 1, hasOutput: true, output: "CAPIError: 400 Bad Request" };
+      expect(shouldRetry(result, 0)).toBe(true);
+    });
+
+    it("still retries generic partial-execution errors with output", () => {
+      const result = { exitCode: 1, hasOutput: true, output: "Failed to get response from the AI model; retried 5 times" };
+      expect(shouldRetry(result, 0)).toBe(true);
+    });
+  });
+
   describe("retry configuration", () => {
     it("has sensible default values", () => {
       // These match the constants in copilot_driver.cjs