diff --git a/Tasks/Common/coveragepublisher/coveragepublisher.ts b/Tasks/Common/coveragepublisher/coveragepublisher.ts
index 292cf7571b65..1a621653f766 100644
--- a/Tasks/Common/coveragepublisher/coveragepublisher.ts
+++ b/Tasks/Common/coveragepublisher/coveragepublisher.ts
@@ -64,6 +64,9 @@ async function publishCoverage(inputFiles: string[], reportDirectory: string, pa
     }
 
     try {
+        // Get comprehensive proxy configuration to fix .NET HttpClient proxy issues
+        const proxyConfig = getProxyEnvironmentVariables();
+        
         const env = {
             "SYSTEM_ACCESSTOKEN": taskLib.getEndpointAuthorizationParameter('SystemVssConnection', 'AccessToken', false),
             "SYSTEM_TEAMFOUNDATIONCOLLECTIONURI": taskLib.getVariable('System.TeamFoundationCollectionUri'),
@@ -72,9 +75,9 @@ async function publishCoverage(inputFiles: string[], reportDirectory: string, pa
             "AGENT_TEMPPATH": taskLib.getVariable('Agent.TempPath'),
             "SYSTEM_TEAMPROJECTID": taskLib.getVariable('System.TeamProjectId'),
             "PIPELINES_COVERAGEPUBLISHER_DEBUG": taskLib.getVariable('PIPELINES_COVERAGEPUBLISHER_DEBUG'),
-            "HTTPS_PROXY": process.env['HTTPS_PROXY'],
-            "NO_PROXY": process.env['NO_PROXY'],
-            "DOTNET_SYSTEM_GLOBALIZATION_INVARIANT": taskLib.getVariable('DOTNET_SYSTEM_GLOBALIZATION_INVARIANT')
+            "DOTNET_SYSTEM_GLOBALIZATION_INVARIANT": taskLib.getVariable('DOTNET_SYSTEM_GLOBALIZATION_INVARIANT'),
+            // Comprehensive proxy configuration for .NET HttpClient
+            ...proxyConfig
         };
 
         await dotnet.exec({
@@ -96,6 +99,132 @@ async function publishCoverage(inputFiles: string[], reportDirectory: string, pa
 }
 
 
+function getProxyEnvironmentVariables(): { [key: string]: string } {
+    const proxyVars: { [key: string]: string } = {};
+    
+    // Get Azure Pipelines agent proxy configuration (highest priority)
+    const agentProxyUrl = taskLib.getVariable("agent.proxyurl");
+    const agentProxyUsername = taskLib.getVariable("agent.proxyusername");
+    const agentProxyPassword = taskLib.getVariable("agent.proxypassword");
+    const agentProxyBypass = taskLib.getVariable("agent.proxybypasslist");
+    
+    // Input validation and sanitization
+    if (agentProxyUrl && !isValidProxyUrl(agentProxyUrl)) {
+        taskLib.warning("Invalid proxy URL format detected, skipping agent proxy configuration");
+        return proxyVars;
+    }
+    
+    // Construct proxy URL with authentication if available
+    let proxyUrl = "";
+    if (agentProxyUrl) {
+        if (agentProxyUsername && agentProxyPassword) {
+            // Validate credentials contain no malicious characters
+            if (!isValidCredential(agentProxyUsername) || !isValidCredential(agentProxyPassword)) {
+                taskLib.warning("Invalid characters detected in proxy credentials, using proxy without authentication");
+                proxyUrl = agentProxyUrl;
+            } else {
+                // Add authentication to proxy URL
+                try {
+                    const url = new URL(agentProxyUrl);
+                    url.username = encodeURIComponent(agentProxyUsername);
+                    url.password = encodeURIComponent(agentProxyPassword);
+                    proxyUrl = url.toString();
+                    taskLib.debug(`Using agent proxy with authentication: ${getMaskedProxyUrl(proxyUrl)}`);
+                } catch (err) {
+                    proxyUrl = agentProxyUrl;
+                    taskLib.warning(`Failed to parse agent proxy URL, using without authentication: ${err}`);
+                }
+            }
+        } else {
+            proxyUrl = agentProxyUrl;
+            taskLib.debug(`Using agent proxy: ${getMaskedProxyUrl(agentProxyUrl)}`);
+        }
+    } else {
+        // Fall back to environment variables
+        proxyUrl = process.env['HTTPS_PROXY'] || process.env['https_proxy'] || 
+                  process.env['HTTP_PROXY'] || process.env['http_proxy'] || "";
+        if (proxyUrl) {
+            taskLib.debug(`Using environment proxy: ${getMaskedProxyUrl(proxyUrl)}`);
+        }
+    }
+    // Set comprehensive proxy environment variables for .NET
+    if (proxyUrl) {
+        // Standard proxy environment variables (case variations for compatibility)
+        proxyVars["HTTP_PROXY"] = proxyUrl;
+        proxyVars["HTTPS_PROXY"] = proxyUrl;
+        proxyVars["http_proxy"] = proxyUrl;
+        proxyVars["https_proxy"] = proxyUrl;
+        
+        // .NET specific environment variables to force proxy initialization
+        // These are critical for resolving the HttpClient.DefaultProxy initialization issue
+        proxyVars["DOTNET_SYSTEM_NET_HTTP_USEDEFAULTCREDENTIALS"] = "true";
+        proxyVars["DOTNET_SYSTEM_NET_HTTP_USESOCKETSHTTPHANDLER"] = "false"; // Forces WinHttpHandler on Windows
+    }
+    
+    // Handle NO_PROXY / bypass list
+    let noProxyList = "";
+    if (agentProxyBypass) {
+        noProxyList = agentProxyBypass;
+        taskLib.debug(`Using agent proxy bypass list: ${agentProxyBypass}`);
+    } else {
+        noProxyList = process.env['NO_PROXY'] || process.env['no_proxy'] || "";
+        if (noProxyList) {
+            taskLib.debug(`Using environment proxy bypass list: ${noProxyList}`);
+        }
+    }
+    
+    if (noProxyList) {
+        proxyVars["NO_PROXY"] = noProxyList;
+        proxyVars["no_proxy"] = noProxyList;
+    }
+    
+    // Log configuration for debugging (with enhanced credential masking)
+    if (proxyUrl) {
+        taskLib.debug(`Proxy configuration set for .NET application: ${getMaskedProxyUrl(proxyUrl)}`);
+        if (noProxyList) {
+            taskLib.debug(`Proxy bypass list: ${noProxyList}`);
+        }
+    } else {
+        taskLib.debug("No proxy configuration detected");
+    }
+    
+    // Security note: Environment variables will contain proxy credentials
+    // Ensure child process cleans up these variables after use
+    return proxyVars;
+}
+
+// Security helper functions
+function isValidProxyUrl(url: string): boolean {
+    try {
+        const parsedUrl = new URL(url);
+        return ['http:', 'https:'].includes(parsedUrl.protocol);
+    } catch {
+        return false;
+    }
+}
+
+function isValidCredential(credential: string): boolean {
+    // Basic validation to prevent injection attacks
+    // Reject credentials containing potentially dangerous characters
+    const dangerousChars = /[\r\n\0\x1f<>"'`\\]/;
+    return !dangerousChars.test(credential) && credential.length <= 256;
+}
+
+function getMaskedProxyUrl(url: string): string {
+    if (!url) return url;
+    try {
+        const parsedUrl = new URL(url);
+        if (parsedUrl.username || parsedUrl.password) {
+            // Mask both username and password for security
+            return `${parsedUrl.protocol}//***:***@${parsedUrl.host}${parsedUrl.pathname}${parsedUrl.search}`;
+        }
+        return url;
+    } catch {
+        // If URL parsing fails, mask any potential credentials pattern
+        return url.replace(/\/\/[^@]*@/, '//***:***@');
+    }
+}
+
 function isNullOrWhitespace(input: any) {
     if (typeof input === 'undefined' || input == null) {
         return true;
diff --git a/Tasks/PublishCodeCoverageResultsV2/Tests/L0.ts b/Tasks/PublishCodeCoverageResultsV2/Tests/L0.ts
index be4bdc857175..b76128412ee6 100644
--- a/Tasks/PublishCodeCoverageResultsV2/Tests/L0.ts
+++ b/Tasks/PublishCodeCoverageResultsV2/Tests/L0.ts
@@ -26,4 +26,14 @@ describe('PublishCodeCoverageResultsV2 Suite', function () {
         assert(tr.succeeded, 'task should have succeeded');  // It will give a message of No code coverage for empty inputs
     });
 
+    // New proxy configuration tests
+    it('Should handle agent proxy configuration correctly', async function() {
+        const testPath = path.join(__dirname, 'L0ProxyAgentConfig.ts');
+        const tr: MockTestRunner = new MockTestRunner(testPath);
+        await tr.runAsync();
+
+        // Verify proxy environment variables are set correctly
+        assert(tr.succeeded || tr.stdout.indexOf('Using agent proxy') >= 0, 'Should configure agent proxy');
+    });
+
 });
diff --git a/Tasks/PublishCodeCoverageResultsV2/task.json b/Tasks/PublishCodeCoverageResultsV2/task.json
index 9f1f0da5d970..e3ed6283c98c 100644
--- a/Tasks/PublishCodeCoverageResultsV2/task.json
+++ b/Tasks/PublishCodeCoverageResultsV2/task.json
@@ -16,7 +16,7 @@
   "author": "Microsoft Corporation",
   "version": {
     "Major": 2,
-    "Minor": 264,
+    "Minor": 265,
     "Patch": 0
   },
   "demands": [],
diff --git a/Tasks/PublishCodeCoverageResultsV2/task.loc.json b/Tasks/PublishCodeCoverageResultsV2/task.loc.json
index 17f40945c27d..fde526ae9b5d 100644
--- a/Tasks/PublishCodeCoverageResultsV2/task.loc.json
+++ b/Tasks/PublishCodeCoverageResultsV2/task.loc.json
@@ -16,7 +16,7 @@
   "author": "Microsoft Corporation",
   "version": {
     "Major": 2,
-    "Minor": 264,
+    "Minor": 265,
     "Patch": 0
   },
   "demands": [],
diff --git a/package-lock.json b/package-lock.json
index a05ae791b7b7..207a26ae43ef 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -61,7 +61,6 @@
       "integrity": "sha1-EqVQuHlEUt9MiwhPlQA7zhdC1JY=",
       "dev": true,
       "license": "MIT",
-      "peer": true,
       "dependencies": {
         "@babel/code-frame": "^7.27.1",
         "@babel/generator": "^7.28.3",
@@ -612,7 +611,6 @@
         }
       ],
       "license": "MIT",
-      "peer": true,
       "dependencies": {
         "caniuse-lite": "^1.0.30001737",
         "electron-to-chromium": "^1.5.211",