Use extension source picker during init

cli/azd/cmd/extension.go

@@ -2128,7 +2128,7 @@ func selectDistinctExtension(
 		return matches[0], nil
 	}
 
-	if global.NoPrompt {
+	if global != nil && global.NoPrompt {
 		return nil, &internal.ErrorWithSuggestion{
 			Err:        fmt.Errorf("the %s extension was found in multiple sources.", extensionId),
 			Suggestion: "Specify the extension source using the --source flag.",
@@ -2150,7 +2150,8 @@ func selectDistinctExtension(
 			"The %s extension was found in multiple sources.\nSelect the source to continue",
 			output.WithHighLightFormat(extensionId),
 		),
-		Choices: sourceChoices,
+		Choices:       sourceChoices,
+		SelectedIndex: defaultExtensionSourceIndex(matches),
 	})
 
 	sourceResponseIndex, err := selectSource.Ask(ctx)
@@ -2163,6 +2164,16 @@ func selectDistinctExtension(
 	return matches[*sourceResponseIndex], nil
 }
 
+func defaultExtensionSourceIndex(matches []*extensions.ExtensionMetadata) *int {
+	for i, ext := range matches {
+		if strings.EqualFold(ext.Source, "azd") {
+			return new(i)
+		}
+	}
+
+	return new(0)
+}
+
 // checkNamespaceConflict checks if the given namespace conflicts with any installed extension.
 // Two namespaces conflict if one is a prefix of the other (e.g., "ai" and "ai.agent").
 func checkNamespaceConflict(

cli/azd/cmd/extension_coverage3_test.go

@@ -92,6 +92,49 @@ func Test_SelectDistinctExtension_MultipleNoPrompt(t *testing.T) {
 	assert.Contains(t, err.Error(), "multiple sources")
 }
 
+func Test_DefaultExtensionSourceIndex(t *testing.T) {
+	t.Parallel()
+
+	tests := []struct {
+		name    string
+		matches []*extensions.ExtensionMetadata
+		want    int
+	}{
+		{
+			name: "DefaultsToAzdSourceWhenPresent",
+			matches: []*extensions.ExtensionMetadata{
+				{Source: "contoso"},
+				{Source: "azd"},
+			},
+			want: 1,
+		},
+		{
+			name: "DefaultsToFirstSourceWhenAzdMissing",
+			matches: []*extensions.ExtensionMetadata{
+				{Source: "contoso"},
+				{Source: "fabrikam"},
+			},
+			want: 0,
+		},
+		{
+			name: "MatchesAzdSourceCaseInsensitively",
+			matches: []*extensions.ExtensionMetadata{
+				{Source: "contoso"},
+				{Source: "AZD"},
+			},
+			want: 1,
+		},
+	}
+
+	for _, tt := range tests {
+		t.Run(tt.name, func(t *testing.T) {
+			t.Parallel()
+
+			require.Equal(t, tt.want, *defaultExtensionSourceIndex(tt.matches))
+		})
+	}
+}
+
 // --- namespacesConflict Tests (additional paths) ---
 
 func Test_NamespacesConflict_SameNamespace(t *testing.T) {

cli/azd/cmd/init.go

@@ -1160,12 +1160,20 @@ func (i *initAction) initializeExtensions(ctx context.Context, azdCtx *azdcontex
 				return fmt.Errorf("extension %s not found", extensionId)
 			}
 
-			if len(extensionMatches) > 1 {
+			extensionMetadata, err := selectDistinctExtension(
+				ctx,
+				i.console,
+				extensionId,
+				extensionMatches,
+				i.flags.global,
+			)
+			if err != nil {
 				i.console.StopSpinner(ctx, stepMessage, input.StepFailed)
-				return fmt.Errorf("extension %s found in multiple sources, specify exact source", extensionId)
+				return err
+			}
+			if len(extensionMatches) > 1 {
+				i.console.ShowSpinner(ctx, stepMessage, input.Step)
 			}
-
-			extensionMetadata := extensionMatches[0]
 
 			extensionVersion, err := i.extensionsManager.Install(ctx, extensionMetadata, installConstraint)
 			if err != nil {

cli/azd/pkg/environment/manager.go

@@ -643,7 +643,7 @@ func (m *manager) ensureValidEnvironmentName(ctx context.Context, spec *Spec) er
 
 	for !IsValidEnvironmentName(spec.Name) {
 		userInput, err := m.console.Prompt(ctx, input.ConsoleOptions{
-			Message: "Enter a unique environment name:",
+			Message: "Enter a unique environment name",
 			Help: heredoc.Doc(`
 			A unique string that can be used to differentiate copies of your application in Azure.