diff --git a/package.json b/package.json
index e3b4709e7..ed07e855a 100644
--- a/package.json
+++ b/package.json
@@ -12,7 +12,7 @@
     "build": "npx lerna run build",
     "build:changed": "npx lerna run build --since main",
     "test": "npm run ui-test --workspace=extester-test",
-    "coverage": "npm run test -- -- --coverage",
+    "test:coverage": "npm run test -- -- --coverage",
     "test:build": "npm run build && npm install --workspace=extester-test && npm test"
   },
   "workspaces": [
diff --git a/packages/extester/src/browser.ts b/packages/extester/src/browser.ts
index 681cf2713..40973eb4d 100644
--- a/packages/extester/src/browser.ts
+++ b/packages/extester/src/browser.ts
@@ -15,7 +15,6 @@ export class VSBrowser {
     static readonly browserName = 'vscode';
     private storagePath: string;
     private extensionsFolder: string | undefined;
-    private extensionDevelopmentPath: string | undefined;
     private customSettings: Object;
     private _driver!: WebDriver;
     private codeVersion: string;
@@ -26,7 +25,6 @@ export class VSBrowser {
     constructor(codeVersion: string, releaseType: ReleaseQuality, customSettings: Object = {}, logLevel: logging.Level = logging.Level.INFO) {
         this.storagePath = process.env.TEST_RESOURCES ? process.env.TEST_RESOURCES : path.resolve(DEFAULT_STORAGE_FOLDER);
         this.extensionsFolder = process.env.EXTENSIONS_FOLDER ? process.env.EXTENSIONS_FOLDER : undefined;
-        this.extensionDevelopmentPath = process.env.EXTENSION_DEV_PATH ? process.env.EXTENSION_DEV_PATH : undefined;
         this.customSettings = customSettings;
         this.codeVersion = codeVersion;
         this.releaseType = releaseType;
@@ -78,8 +76,8 @@ export class VSBrowser {
                 fs.copyFileSync(path.resolve(__dirname, '..', '..', 'resources', 'state.vscdb'), path.join(userSettings, 'globalStorage', 'state.vscdb'));
             }
             args.push(`--extensionDevelopmentPath=${process.cwd()}`);
-        } else if(this.extensionDevelopmentPath) {
-           args.push(`--extensionDevelopmentPath=${this.extensionDevelopmentPath}`);
+        } else if(process.env.EXTENSION_DEV_PATH) {
+           args.push(`--extensionDevelopmentPath=${process.env.EXTENSION_DEV_PATH}`);
         }
 
         let options = new Options().setChromeBinaryPath(codePath).addArguments(...args) as any;
diff --git a/packages/extester/src/util/codeUtil.ts b/packages/extester/src/util/codeUtil.ts
index fc0e47b73..69a518702 100644
--- a/packages/extester/src/util/codeUtil.ts
+++ b/packages/extester/src/util/codeUtil.ts
@@ -28,8 +28,6 @@ export interface RunOptions {
     logLevel?: logging.Level;
     /** try to perform all setup without internet connection, needs all requirements pre-downloaded manually */
     offline?: boolean;
-    /** path to unbundled extension sources */
-    extensionDevelopmentPath?: string;
     /** list of resources to be opened by VS Code */
     resources: string[];
 }
@@ -57,7 +55,6 @@ export class CodeUtil {
     private cliEnv!: string;
     private availableVersions: string[];
     private extensionsFolder: string | undefined;
-    private extensionDevelopmentPath: string | undefined;
     private coverage: boolean | undefined;
 
     /**
@@ -73,11 +70,6 @@ export class CodeUtil {
         this.coverage = coverage;
         this.releaseType = type;
 
-        // If code coverage is enabled, set extensionDevelopmentPath to the current directory.
-        if (this.coverage) {
-            this.extensionDevelopmentPath = path.resolve(".");
-        }
-
         if (type === ReleaseQuality.Stable) {
             this.codeFolder = path.join(this.downloadFolder, (process.platform === 'darwin')
                 ? 'Visual Studio Code.app' : `VSCode-${this.downloadPlatform}`);
@@ -267,7 +259,7 @@ export class CodeUtil {
         process.env = finalEnv;
         process.env.TEST_RESOURCES = this.downloadFolder;
         process.env.EXTENSIONS_FOLDER = this.extensionsFolder;
-        process.env.EXTENSION_DEV_PATH = this.extensionDevelopmentPath;
+        process.env.EXTENSION_DEV_PATH = this.coverage ? process.cwd() : undefined;
         const runner = new VSRunner(this.executablePath, literalVersion, this.parseSettings(runOptions.settings ?? DEFAULT_RUN_OPTIONS.settings), runOptions.cleanup, this.releaseType, runOptions.config);
         return await runner.runTests(testFilesPattern, this, runOptions.logLevel, runOptions.resources);
     }