diff --git a/src/vs/workbench/contrib/terminal/browser/media/terminal.css b/src/vs/workbench/contrib/terminal/browser/media/terminal.css
index 9370b48b871f6d..d06a2144d63f3d 100644
--- a/src/vs/workbench/contrib/terminal/browser/media/terminal.css
+++ b/src/vs/workbench/contrib/terminal/browser/media/terminal.css
@@ -474,9 +474,18 @@
 	display: block;
 }
 
+.monaco-action-bar .action-item:has(> .single-terminal-tab) {
+	flex: 1;
+	min-width: 0;
+	overflow: hidden;
+}
+
 .monaco-action-bar .action-item .single-terminal-tab {
 	display: flex !important;
 	align-items: center;
+	overflow: hidden;
+	min-width: 0;
+	white-space: nowrap;
 }
 
 .monaco-action-bar .action-item .single-terminal-tab .codicon:first-child {
diff --git a/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts b/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts
index 419fcddfbb85ae..a8b276c11ce12a 100644
--- a/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts
+++ b/src/vs/workbench/contrib/terminal/browser/terminalInstance.ts
@@ -2717,7 +2717,7 @@ export class TerminalLabelComputer extends Disposable {
 		super();
 	}
 
-	refreshLabel(instance: Pick<ITerminalInstance, 'shellLaunchConfig' | 'shellType' | 'cwd' | 'fixedCols' | 'fixedRows' | 'initialCwd' | 'processName' | 'sequence' | 'userHome' | 'workspaceFolder' | 'staticTitle' | 'capabilities' | 'title' | 'description'>, reset?: boolean): void {
+	refreshLabel(instance: Pick<ITerminalInstance, 'shellLaunchConfig' | 'shellType' | 'cwd' | 'fixedCols' | 'fixedRows' | 'initialCwd' | 'processName' | 'sequence' | 'userHome' | 'workspaceFolder' | 'staticTitle' | 'capabilities' | 'title' | 'description' | 'progressState'>, reset?: boolean): void {
 		const tabs = this._terminalConfigurationService.config.tabs;
 		const useAgentCliTitle = tabs.allowAgentCliTitle && TerminalLabelComputer.agentCliShellTypes.has(instance.shellType as GeneralShellType);
 		const titleTemplate = instance.shellLaunchConfig.titleTemplate ?? (useAgentCliTitle ? '${sequence}' : tabs.title);
diff --git a/src/vs/workbench/contrib/terminal/test/browser/terminalInstance.test.ts b/src/vs/workbench/contrib/terminal/test/browser/terminalInstance.test.ts
index 6797f7d6c464c8..c03c5cfbd9277b 100644
--- a/src/vs/workbench/contrib/terminal/test/browser/terminalInstance.test.ts
+++ b/src/vs/workbench/contrib/terminal/test/browser/terminalInstance.test.ts
@@ -398,7 +398,7 @@ suite('Workbench - TerminalInstance', () => {
 		let instantiationService: TestInstantiationService;
 		let capabilities: TerminalCapabilityStore;
 
-		function createInstance(partial?: Partial<ITerminalInstance>): Pick<ITerminalInstance, 'shellLaunchConfig' | 'shellType' | 'userHome' | 'cwd' | 'initialCwd' | 'processName' | 'sequence' | 'workspaceFolder' | 'staticTitle' | 'capabilities' | 'title' | 'description'> {
+		function createInstance(partial?: Partial<ITerminalInstance>): Pick<ITerminalInstance, 'shellLaunchConfig' | 'shellType' | 'userHome' | 'cwd' | 'initialCwd' | 'processName' | 'sequence' | 'workspaceFolder' | 'staticTitle' | 'capabilities' | 'title' | 'description' | 'progressState'> {
 			const capabilities = store.add(new TerminalCapabilityStore());
 			if (!isWindows) {
 				capabilities.add(TerminalCapability.NaiveCwdDetection, null!);
@@ -416,6 +416,7 @@ suite('Workbench - TerminalInstance', () => {
 				title: '',
 				description: '',
 				userHome: undefined,
+				progressState: undefined,
 				...partial
 			};
 		}
@@ -553,6 +554,36 @@ suite('Workbench - TerminalInstance', () => {
 				strictEqual(terminalLabelComputer.description, 'root2');
 			}
 		});
+		test('should resolve progress state 0 (no progress) as empty string', () => {
+			const terminalLabelComputer = createLabelComputer({ terminal: { integrated: { tabs: { separator: ' - ', title: '${process}${separator}${progress}', description: '' } } } });
+			terminalLabelComputer.refreshLabel(createInstance({ capabilities, processName: 'bash', progressState: { state: 0, value: 0 } }));
+			strictEqual(terminalLabelComputer.title, 'bash');
+		});
+		test('should resolve progress state 1 (normal) as percentage', () => {
+			const terminalLabelComputer = createLabelComputer({ terminal: { integrated: { tabs: { separator: ' - ', title: '${process}${separator}${progress}', description: '' } } } });
+			terminalLabelComputer.refreshLabel(createInstance({ capabilities, processName: 'bash', progressState: { state: 1, value: 75 } }));
+			strictEqual(terminalLabelComputer.title, 'bash - 75%');
+		});
+		test('should resolve progress state 2 (error) as error icon', () => {
+			const terminalLabelComputer = createLabelComputer({ terminal: { integrated: { tabs: { separator: ' - ', title: '${process}${separator}${progress}', description: '' } } } });
+			terminalLabelComputer.refreshLabel(createInstance({ capabilities, processName: 'bash', progressState: { state: 2, value: 0 } }));
+			strictEqual(terminalLabelComputer.title, 'bash - $(error)');
+		});
+		test('should resolve progress state 3 (indeterminate) as loading icon', () => {
+			const terminalLabelComputer = createLabelComputer({ terminal: { integrated: { tabs: { separator: ' - ', title: '${process}${separator}${progress}', description: '' } } } });
+			terminalLabelComputer.refreshLabel(createInstance({ capabilities, processName: 'bash', progressState: { state: 3, value: 0 } }));
+			strictEqual(terminalLabelComputer.title, 'bash - $(loading~spin)');
+		});
+		test('should resolve progress state 4 (warning) as alert icon', () => {
+			const terminalLabelComputer = createLabelComputer({ terminal: { integrated: { tabs: { separator: ' - ', title: '${process}${separator}${progress}', description: '' } } } });
+			terminalLabelComputer.refreshLabel(createInstance({ capabilities, processName: 'bash', progressState: { state: 4, value: 0 } }));
+			strictEqual(terminalLabelComputer.title, 'bash - $(alert)');
+		});
+		test('should resolve progress as empty when progressState is undefined', () => {
+			const terminalLabelComputer = createLabelComputer({ terminal: { integrated: { tabs: { separator: ' - ', title: '${process}${separator}${progress}', description: '' } } } });
+			terminalLabelComputer.refreshLabel(createInstance({ capabilities, processName: 'bash', progressState: undefined }));
+			strictEqual(terminalLabelComputer.title, 'bash');
+		});
 	});
 
 	suite('getCwdResource', () => {