diff --git a/features/tui_input_modes.feature b/features/tui_input_modes.feature
index 63a4f72c6..be4fa926f 100644
--- a/features/tui_input_modes.feature
+++ b/features/tui_input_modes.feature
@@ -42,3 +42,8 @@ Feature: TUI input modes
     Given a TUI prompt value "inspect @reso"
     When I clear pending TUI reference token via escape
     Then the TUI prompt value should be "inspect"
+
+  Scenario: Escape removes pending reference token embedded in text
+    Given a TUI prompt value "draft notes about @README.md formatting"
+    When I clear pending TUI reference token via escape
+    Then the TUI prompt value should be "draft notes about formatting"
diff --git a/src/cleveragents/tui/app.py b/src/cleveragents/tui/app.py
index 36c36f431..1021f8457 100644
--- a/src/cleveragents/tui/app.py
+++ b/src/cleveragents/tui/app.py
@@ -61,11 +61,13 @@ class SessionView:
 
 
 def _strip_pending_reference_token(value: str) -> str:
-    """Remove the trailing @ reference trigger (if any).
+    """Remove the most recent ``@`` reference trigger (if any).
 
-    This trims whitespace and drops the last token that begins with ``@`` when the
-    token does not contain any embedded whitespace. Escaped triggers (``\\@``)
-    remain untouched.
+    This trims whitespace and removes the final token that begins with ``@``. The
+    token is removed even when additional text follows it so prompts such as
+    ``"draft @README.md summary"`` normalise to ``"draft summary"``. Escaped
+    triggers (``\\@``) are preserved to avoid stripping literal ``@``
+    characters.
     """
 
     if not isinstance(value, str):
@@ -82,11 +84,24 @@ def _strip_pending_reference_token(value: str) -> str:
     if last_at > 0 and candidate[last_at - 1] == "\\":
         return candidate
 
-    suffix = candidate[last_at:]
-    if any(ch.isspace() for ch in suffix):
-        return candidate
+    prefix = candidate[:last_at]
+    suffix = candidate[last_at + 1 :]
 
-    return candidate[:last_at].rstrip()
+    token_end = 0
+    while token_end < len(suffix) and not suffix[token_end].isspace():
+        token_end += 1
+
+    suffix_after = suffix[token_end:]
+    prefix_clean = prefix.rstrip()
+    suffix_clean = suffix_after.lstrip()
+
+    if prefix_clean and suffix_clean:
+        return f"{prefix_clean} {suffix_clean}"
+    if prefix_clean:
+        return prefix_clean
+    if suffix_clean:
+        return suffix_clean
+    return ""
 
 
 class _CommandRouter(Protocol):
@@ -202,12 +217,10 @@ if _TEXTUAL_AVAILABLE:
 
             ref_picker = self.query_one("#reference-picker", ReferencePickerOverlay)
             if getattr(ref_picker, "visible", False):
-                self._remove_reference_trigger(prompt)
-                ref_picker.hide()
-                prompt = self.query_one("#prompt", PromptInput)
                 prompt_value = getattr(prompt, "value", "")
                 if isinstance(prompt_value, str):
                     prompt.value = _strip_pending_reference_token(prompt_value)
+                ref_picker.hide()
                 focus_method = getattr(prompt, "focus", None)
                 if callable(focus_method):
                     focus_method()
@@ -217,34 +230,6 @@ if _TEXTUAL_AVAILABLE:
             if callable(focus_method):
                 focus_method()
 
-        @staticmethod
-        def _remove_reference_trigger(prompt: PromptInput) -> None:
-            value = getattr(prompt, "value", "")
-            if not value:
-                return
-
-            trigger_index = value.rfind("@")
-            if trigger_index == -1:
-                return
-
-            prefix = value[:trigger_index]
-            suffix = value[trigger_index + 1 :]
-
-            token_end = 0
-            while token_end < len(suffix) and not suffix[token_end].isspace():
-                token_end += 1
-
-            suffix_after = suffix[token_end:]
-            prefix_clean = prefix.rstrip()
-            suffix_clean = suffix_after.lstrip()
-
-            if prefix_clean and suffix_clean:
-                prompt.value = f"{prefix_clean} {suffix_clean}"
-            elif prefix_clean:
-                prompt.value = prefix_clean
-            else:
-                prompt.value = suffix_clean
-
         def _refresh_persona_bar(self) -> None:
             persona = self._persona_state.active_persona(self._session.session_id)
             preset = self._persona_state.current_preset(self._session.session_id)