diff --git a/CHANGELOG.md b/CHANGELOG.md
index 79d28fd83..c60276e5b 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -10,6 +10,7 @@ Docs: https://docs.clawd.bot
 
 ### Fixes
 - Configure: hide OpenRouter auto routing model from the model picker. (#1182) — thanks @zerone0x.
+- Agents: retry compaction reset once, then surface a user-facing error on repeat failure. (#1187) — thanks @fayrose.
 - macOS: load menu session previews asynchronously so items populate while the menu is open.
 - macOS: use label colors for session preview text so previews render in menu subviews.
 
diff --git a/src/agents/system-prompt.test.ts b/src/agents/system-prompt.test.ts
index 8c6fbc174..06570f6ff 100644
--- a/src/agents/system-prompt.test.ts
+++ b/src/agents/system-prompt.test.ts
@@ -94,7 +94,7 @@ describe("buildAgentSystemPrompt", () => {
     expect(prompt).toContain("- Read: Read file contents");
     expect(prompt).toContain("- Exec: Run shell commands");
     expect(prompt).toContain(
-      "Use `Read` to load the SKILL.md at the location listed for that skill.",
+      "- If exactly one skill clearly applies: read its SKILL.md at <location> with `Read`, then follow it.",
     );
     expect(prompt).toContain("Clawdbot docs: /tmp/clawd/docs");
     expect(prompt).toContain(
@@ -188,7 +188,7 @@ describe("buildAgentSystemPrompt", () => {
 
     expect(prompt).toContain("## Skills");
     expect(prompt).toContain(
-      "Use `read` to load the SKILL.md at the location listed for that skill.",
+      "- If exactly one skill clearly applies: read its SKILL.md at <location> with `read`, then follow it.",
     );
   });
 
diff --git a/src/auto-reply/reply/agent-runner-execution.ts b/src/auto-reply/reply/agent-runner-execution.ts
index 166b6289a..c775f5ceb 100644
--- a/src/auto-reply/reply/agent-runner-execution.ts
+++ b/src/auto-reply/reply/agent-runner-execution.ts
@@ -441,19 +441,22 @@ export async function runAgentTurnWithFallback(params: {
       // Some embedded runs surface context overflow as an error payload instead of throwing.
       // Treat those as a session-level failure and auto-recover by starting a fresh session.
       const embeddedError = runResult.meta?.error;
-      if (
-        embeddedError &&
-        isContextOverflowError(embeddedError.message) &&
-        !didResetAfterCompactionFailure &&
-        (await params.resetSessionAfterCompactionFailure(embeddedError.message))
-      ) {
-        didResetAfterCompactionFailure = true;
-        return {
-          kind: "final",
-          payload: {
-            text: "⚠️ Context limit exceeded. I've reset our conversation to start fresh - please try again.\n\nTo prevent this, increase your compaction buffer by setting `agents.defaults.compaction.reserveTokensFloor` to 4000 or higher in your config.",
-          },
-        };
+      if (embeddedError && isContextOverflowError(embeddedError.message)) {
+        if (
+          !didResetAfterCompactionFailure &&
+          (await params.resetSessionAfterCompactionFailure(embeddedError.message))
+        ) {
+          didResetAfterCompactionFailure = true;
+          continue;
+        }
+        if (didResetAfterCompactionFailure) {
+          return {
+            kind: "final",
+            payload: {
+              text: "⚠️ Context limit exceeded. I've reset our conversation to start fresh - please try again.\n\nTo prevent this, increase your compaction buffer by setting `agents.defaults.compaction.reserveTokensFloor` to 20000 or higher in your config.",
+            },
+          };
+        }
       }
       if (embeddedError?.kind === "role_ordering") {
         const didReset = await params.resetSessionAfterRoleOrderingConflict(
@@ -487,10 +490,13 @@ export async function runAgentTurnWithFallback(params: {
         (await params.resetSessionAfterCompactionFailure(message))
       ) {
         didResetAfterCompactionFailure = true;
+        continue;
+      }
+      if (isCompactionFailure && didResetAfterCompactionFailure) {
         return {
           kind: "final",
           payload: {
-            text: "⚠️ Context limit exceeded during compaction. I've reset our conversation to start fresh - please try again.\n\nTo prevent this, increase your compaction buffer by setting `agents.defaults.compaction.reserveTokensFloor` to 4000 or higher in your config.",
+            text: "⚠️ Context limit exceeded during compaction. I've reset our conversation to start fresh - please try again.\n\nTo prevent this, increase your compaction buffer by setting `agents.defaults.compaction.reserveTokensFloor` to 20000 or higher in your config.",
           },
         };
       }
diff --git a/src/auto-reply/reply/agent-runner.heartbeat-typing.runreplyagent-typing-heartbeat.retries-after-compaction-failure-by-resetting-session.test.ts b/src/auto-reply/reply/agent-runner.heartbeat-typing.runreplyagent-typing-heartbeat.retries-after-compaction-failure-by-resetting-session.test.ts
index f583daf6a..5b32146cb 100644
--- a/src/auto-reply/reply/agent-runner.heartbeat-typing.runreplyagent-typing-heartbeat.retries-after-compaction-failure-by-resetting-session.test.ts
+++ b/src/auto-reply/reply/agent-runner.heartbeat-typing.runreplyagent-typing-heartbeat.retries-after-compaction-failure-by-resetting-session.test.ts
@@ -172,6 +172,53 @@ describe("runReplyAgent typing (heartbeat)", () => {
       }
     }
   });
+  it("returns a user-facing error after repeated compaction failure", async () => {
+    const prevStateDir = process.env.CLAWDBOT_STATE_DIR;
+    const stateDir = await fs.mkdtemp(path.join(tmpdir(), "clawdbot-session-compaction-repeat-"));
+    process.env.CLAWDBOT_STATE_DIR = stateDir;
+    try {
+      const sessionId = "session";
+      const storePath = path.join(stateDir, "sessions", "sessions.json");
+      const transcriptPath = sessions.resolveSessionTranscriptPath(sessionId);
+      const sessionEntry = { sessionId, updatedAt: Date.now(), sessionFile: transcriptPath };
+      const sessionStore = { main: sessionEntry };
+
+      await fs.mkdir(path.dirname(storePath), { recursive: true });
+      await fs.writeFile(storePath, JSON.stringify(sessionStore), "utf-8");
+      await fs.mkdir(path.dirname(transcriptPath), { recursive: true });
+      await fs.writeFile(transcriptPath, "ok", "utf-8");
+
+      runEmbeddedPiAgentMock.mockImplementation(async () => {
+        throw new Error(
+          'Context overflow: Summarization failed: 400 {"message":"prompt is too long"}',
+        );
+      });
+
+      const callsBefore = runEmbeddedPiAgentMock.mock.calls.length;
+      const { run } = createMinimalRun({
+        sessionEntry,
+        sessionStore,
+        sessionKey: "main",
+        storePath,
+      });
+      const res = await run();
+
+      expect(runEmbeddedPiAgentMock.mock.calls.length - callsBefore).toBe(2);
+      const payload = Array.isArray(res) ? res[0] : res;
+      expect(payload.text).toContain("Context limit exceeded");
+      expect(payload.text?.toLowerCase()).toContain("reset");
+      expect(sessionStore.main.sessionId).not.toBe(sessionId);
+
+      const persisted = JSON.parse(await fs.readFile(storePath, "utf-8"));
+      expect(persisted.main.sessionId).toBe(sessionStore.main.sessionId);
+    } finally {
+      if (prevStateDir) {
+        process.env.CLAWDBOT_STATE_DIR = prevStateDir;
+      } else {
+        delete process.env.CLAWDBOT_STATE_DIR;
+      }
+    }
+  });
   it("retries after context overflow payload by resetting the session", async () => {
     const prevStateDir = process.env.CLAWDBOT_STATE_DIR;
     const stateDir = await fs.mkdtemp(path.join(tmpdir(), "clawdbot-session-overflow-reset-"));