diff --git a/packages/cli/src/config/policy-engine.integration.test.ts b/packages/cli/src/config/policy-engine.integration.test.ts
index 935248ab64..49b603a126 100644
--- a/packages/cli/src/config/policy-engine.integration.test.ts
+++ b/packages/cli/src/config/policy-engine.integration.test.ts
@@ -323,116 +323,64 @@ describe('Policy Engine Integration Tests', () => {
       ).toBe(PolicyDecision.DENY);
     });
 
-    it('should allow write_file to plans directory in Plan mode', async () => {
-      const settings: Settings = {};
+    describe.each(['write_file', 'replace'])(
+      'Plan Mode policy for %s',
+      (toolName) => {
+        it(`should allow ${toolName} to plans directory`, async () => {
+          const settings: Settings = {};
+          const config = await createPolicyEngineConfig(
+            settings,
+            ApprovalMode.PLAN,
+          );
+          const engine = new PolicyEngine(config);
 
-      const config = await createPolicyEngineConfig(
-        settings,
-        ApprovalMode.PLAN,
-      );
-      const engine = new PolicyEngine(config);
+          // Valid plan file paths
+          const validPaths = [
+            '/home/user/.gemini/tmp/a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2/plans/my-plan.md',
+            '/home/user/.gemini/tmp/a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2/plans/feature_auth.md',
+          ];
 
-      // Valid plan file path (64-char hex hash, .md extension, safe filename)
-      const validPlanPath =
-        '/home/user/.gemini/tmp/a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2/plans/my-plan.md';
-      expect(
-        (
-          await engine.check(
-            { name: 'write_file', args: { file_path: validPlanPath } },
-            undefined,
-          )
-        ).decision,
-      ).toBe(PolicyDecision.ALLOW);
+          for (const file_path of validPaths) {
+            expect(
+              (
+                await engine.check(
+                  { name: toolName, args: { file_path } },
+                  undefined,
+                )
+              ).decision,
+            ).toBe(PolicyDecision.ALLOW);
+          }
+        });
 
-      // Valid plan with underscore in filename
-      const validPlanPath2 =
-        '/home/user/.gemini/tmp/a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2/plans/feature_auth.md';
-      expect(
-        (
-          await engine.check(
-            { name: 'write_file', args: { file_path: validPlanPath2 } },
-            undefined,
-          )
-        ).decision,
-      ).toBe(PolicyDecision.ALLOW);
-    });
+        it(`should deny ${toolName} outside plans directory`, async () => {
+          const settings: Settings = {};
+          const config = await createPolicyEngineConfig(
+            settings,
+            ApprovalMode.PLAN,
+          );
+          const engine = new PolicyEngine(config);
 
-    it('should deny write_file outside plans directory in Plan mode', async () => {
-      const settings: Settings = {};
+          const invalidPaths = [
+            '/project/src/file.ts', // Workspace
+            '/home/user/.gemini/tmp/a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2/plans/script.js', // Wrong extension
+            '/home/user/.gemini/tmp/a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2/plans/../../../etc/passwd.md', // Path traversal
+            '/home/user/.gemini/tmp/abc123/plans/plan.md', // Invalid hash length
+            '/home/user/.gemini/tmp/a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2/plans/subdir/plan.md', // Subdirectory
+          ];
 
-      const config = await createPolicyEngineConfig(
-        settings,
-        ApprovalMode.PLAN,
-      );
-      const engine = new PolicyEngine(config);
-
-      // Write to workspace (not plans dir) should be denied
-      expect(
-        (
-          await engine.check(
-            { name: 'write_file', args: { file_path: '/project/src/file.ts' } },
-            undefined,
-          )
-        ).decision,
-      ).toBe(PolicyDecision.DENY);
-
-      // Write to plans dir but wrong extension should be denied
-      const wrongExtPath =
-        '/home/user/.gemini/tmp/a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2/plans/script.js';
-      expect(
-        (
-          await engine.check(
-            { name: 'write_file', args: { file_path: wrongExtPath } },
-            undefined,
-          )
-        ).decision,
-      ).toBe(PolicyDecision.DENY);
-
-      // Path traversal attempt should be denied (filename contains /)
-      const traversalPath =
-        '/home/user/.gemini/tmp/a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2/plans/../../../etc/passwd.md';
-      expect(
-        (
-          await engine.check(
-            { name: 'write_file', args: { file_path: traversalPath } },
-            undefined,
-          )
-        ).decision,
-      ).toBe(PolicyDecision.DENY);
-
-      // Invalid hash length should be denied
-      const shortHashPath = '/home/user/.gemini/tmp/abc123/plans/plan.md';
-      expect(
-        (
-          await engine.check(
-            { name: 'write_file', args: { file_path: shortHashPath } },
-            undefined,
-          )
-        ).decision,
-      ).toBe(PolicyDecision.DENY);
-    });
-
-    it('should deny write_file to subdirectories in Plan mode', async () => {
-      const settings: Settings = {};
-
-      const config = await createPolicyEngineConfig(
-        settings,
-        ApprovalMode.PLAN,
-      );
-      const engine = new PolicyEngine(config);
-
-      // Write to subdirectory should be denied
-      const subdirPath =
-        '/home/user/.gemini/tmp/a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2c3d4e5f6a1b2/plans/subdir/plan.md';
-      expect(
-        (
-          await engine.check(
-            { name: 'write_file', args: { file_path: subdirPath } },
-            undefined,
-          )
-        ).decision,
-      ).toBe(PolicyDecision.DENY);
-    });
+          for (const file_path of invalidPaths) {
+            expect(
+              (
+                await engine.check(
+                  { name: toolName, args: { file_path } },
+                  undefined,
+                )
+              ).decision,
+            ).toBe(PolicyDecision.DENY);
+          }
+        });
+      },
+    );
 
     it('should verify priority ordering works correctly in practice', async () => {
       const settings: Settings = {
diff --git a/packages/core/src/core/__snapshots__/prompts.test.ts.snap b/packages/core/src/core/__snapshots__/prompts.test.ts.snap
index 611ba2721e..be6ffd3493 100644
--- a/packages/core/src/core/__snapshots__/prompts.test.ts.snap
+++ b/packages/core/src/core/__snapshots__/prompts.test.ts.snap
@@ -130,6 +130,7 @@ You are operating in **Plan Mode** - a structured planning workflow for designin
 The following read-only tools are available in Plan Mode:
 
 - \`write_file\` - Save plans to the plans directory (see Plan Storage below)
+- \`replace\` - Update plans in the plans directory
 
 ## Plan Storage
 - Save your plans as Markdown (.md) files ONLY within: \`/tmp/project-temp/plans/\`
diff --git a/packages/core/src/policy/config.test.ts b/packages/core/src/policy/config.test.ts
index 7b310027e0..cebe6a8d4b 100644
--- a/packages/core/src/policy/config.test.ts
+++ b/packages/core/src/policy/config.test.ts
@@ -327,7 +327,10 @@ describe('createPolicyEngineConfig', () => {
       ApprovalMode.AUTO_EDIT,
     );
     const rule = config.rules?.find(
-      (r) => r.toolName === 'replace' && r.decision === PolicyDecision.ALLOW,
+      (r) =>
+        r.toolName === 'replace' &&
+        r.decision === PolicyDecision.ALLOW &&
+        r.modes?.includes(ApprovalMode.AUTO_EDIT),
     );
     expect(rule).toBeDefined();
     // Priority 15 in default tier → 1.015
diff --git a/packages/core/src/policy/policies/plan.toml b/packages/core/src/policy/policies/plan.toml
index 4bcecab29f..74f1777747 100644
--- a/packages/core/src/policy/policies/plan.toml
+++ b/packages/core/src/policy/policies/plan.toml
@@ -77,9 +77,9 @@ decision = "ask_user"
 priority = 50
 modes = ["plan"]
 
-# Allow write_file for .md files in plans directory
+# Allow write_file and replace for .md files in plans directory
 [[rule]]
-toolName = "write_file"
+toolName = ["write_file", "replace"]
 decision = "allow"
 priority = 50
 modes = ["plan"]
diff --git a/packages/core/src/prompts/snippets.ts b/packages/core/src/prompts/snippets.ts
index 2fc43a4b7a..2b18832380 100644
--- a/packages/core/src/prompts/snippets.ts
+++ b/packages/core/src/prompts/snippets.ts
@@ -305,6 +305,7 @@ You are operating in **Plan Mode** - a structured planning workflow for designin
 The following read-only tools are available in Plan Mode:
 ${options.planModeToolsList}
 - \`${WRITE_FILE_TOOL_NAME}\` - Save plans to the plans directory (see Plan Storage below)
+- \`${EDIT_TOOL_NAME}\` - Update plans in the plans directory
 
 ## Plan Storage
 - Save your plans as Markdown (.md) files ONLY within: \`${options.plansDir}/\`