diff --git a/packages/fx-core/resource/yaml-schema/v1.8/yaml.schema.json b/packages/fx-core/resource/yaml-schema/v1.8/yaml.schema.json
index 709ee98960..674cf064df 100644
--- a/packages/fx-core/resource/yaml-schema/v1.8/yaml.schema.json
+++ b/packages/fx-core/resource/yaml-schema/v1.8/yaml.schema.json
@@ -1304,6 +1304,10 @@
                 "symlinkDir": {
                   "type": "string",
                   "description": "The path of the symlink target for the folder containing Teams App Test Tool binaries."
+                },
+                "releaseType": {
+                  "type": "string",
+                  "description": "The release type of Teams App Test Tool: binary or npm. Default to 'npm'."
                 }
               }
             }
diff --git a/packages/fx-core/resource/yaml-schema/yaml.schema.json b/packages/fx-core/resource/yaml-schema/yaml.schema.json
index df17cc4a29..674cf064df 100644
--- a/packages/fx-core/resource/yaml-schema/yaml.schema.json
+++ b/packages/fx-core/resource/yaml-schema/yaml.schema.json
@@ -14,7 +14,7 @@
     "version": {
       "type": "string",
       "description": "The version of the yaml file schema",
-      "const": "v1.7"
+      "const": "v1.8"
     },
     "additionalMetadata": {
       "type": "object",
@@ -1277,10 +1277,6 @@
                 "symlinkDir": {
                   "type": "string",
                   "description": "The path of the symlink target for the folder containing Azure Functions Core Tools binaries."
-                },
-                "releaseType": {
-                  "type": "string",
-                  "description": "The release type of Teams App Test Tool: binary or npm. Default to 'npm'."
                 }
               }
             },
@@ -1308,6 +1304,10 @@
                 "symlinkDir": {
                   "type": "string",
                   "description": "The path of the symlink target for the folder containing Teams App Test Tool binaries."
+                },
+                "releaseType": {
+                  "type": "string",
+                  "description": "The release type of Teams App Test Tool: binary or npm. Default to 'npm'."
                 }
               }
             }
diff --git a/templates/python/custom-copilot-assistant-assistants-api/.vscode/launch.json.tpl b/templates/python/custom-copilot-assistant-assistants-api/.vscode/launch.json.tpl
index f8b27df9db..9fa1003879 100644
--- a/templates/python/custom-copilot-assistant-assistants-api/.vscode/launch.json.tpl
+++ b/templates/python/custom-copilot-assistant-assistants-api/.vscode/launch.json.tpl
@@ -7,7 +7,7 @@
       "request": "launch",
       "url": "https://teams.microsoft.com/l/app/${{TEAMS_APP_ID}}?installAppPackage=true&webjoin=true&${account-hint}",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 4
       },
       "internalConsoleOptions": "neverOpen"
@@ -18,7 +18,7 @@
       "request": "launch",
       "url": "https://teams.microsoft.com/l/app/${{TEAMS_APP_ID}}?installAppPackage=true&webjoin=true&${account-hint}",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 5
       },
       "internalConsoleOptions": "neverOpen"
@@ -29,7 +29,7 @@
       "request": "launch",
       "preLaunchTask": "Start Teams App in Desktop Client (Remote)",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 6
       },
       "internalConsoleOptions": "neverOpen"
@@ -63,18 +63,6 @@
       "program": "${workspaceFolder}/src/app.py",
       "cwd": "${workspaceFolder}/src",
       "console": "integratedTerminal"
-    },
-    {
-        "name": "Start Test Tool",
-        "type": "node",
-        "request": "launch",
-        "program": "${workspaceFolder}/devTools/teamsapptester/node_modules/@microsoft/teams-app-test-tool/cli.js",
-        "args": [
-            "start"
-        ],
-        "cwd": "${workspaceFolder}",
-        "console": "integratedTerminal",
-        "internalConsoleOptions": "neverOpen"
     {{#CEAEnabled}}
     },
     {
@@ -150,7 +138,7 @@
       "cascadeTerminateToConfigurations": ["Start Python"],
       "preLaunchTask": "Start Teams App Locally",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 1
       },
       "stopAll": true
@@ -161,7 +149,7 @@
       "cascadeTerminateToConfigurations": ["Start Python"],
       "preLaunchTask": "Start Teams App Locally",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 2
       },
       "stopAll": true
@@ -171,7 +159,7 @@
       "configurations": ["Start Python"],
       "preLaunchTask": "Start Teams App in Desktop Client",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 3
       },
       "stopAll": true
@@ -180,14 +168,10 @@
         "name": "Debug in Test Tool",
         "configurations": [
             "Start Python",
-            "Start Test Tool"
-        ],
-        "cascadeTerminateToConfigurations": [
-            "Start Test Tool"
         ],
-        "preLaunchTask": "Deploy (Test Tool)",
+        "preLaunchTask": "Test Tool",
         "presentation": {
-            "group": "2-local",
+            "group": "1-local",
             "order": 1
         },
         "stopAll": true
diff --git a/templates/python/custom-copilot-assistant-assistants-api/.vscode/tasks.json b/templates/python/custom-copilot-assistant-assistants-api/.vscode/tasks.json
index a964abf89f..ac21817e51 100644
--- a/templates/python/custom-copilot-assistant-assistants-api/.vscode/tasks.json
+++ b/templates/python/custom-copilot-assistant-assistants-api/.vscode/tasks.json
@@ -4,6 +4,14 @@
 {
     "version": "2.0.0",
     "tasks": [
+        {
+            "label": "Test Tool",
+            "dependsOn": ["Validate prerequisites (Test Tool)", "Deploy (Test Tool)", "Start Test Tool"],
+            "dependsOrder": "sequence",
+            "presentation": {
+              "reveal": "never"
+            },
+        },
         {
             // Check all required prerequisites.
             // See https://aka.ms/teamsfx-tasks/check-prerequisites to know the details and how to customize the args.
@@ -34,6 +42,31 @@
                 "env": "testtool",
             }
         },
+        {
+            "label": "Start Test Tool",
+            "type": "shell",
+            "command": "${workspaceFolder}/devTools/teamsapptester/teamsapptester.exe",
+            "args": [
+                "start"
+            ],
+            "isBackground": true,
+            "problemMatcher": {
+                "owner": "custom",
+                "pattern": {
+                    "regexp": ".*InternalServiceError: (.*)",
+                    "message": 1
+                },
+                "background": {
+                    "activeOnStart": true,
+                    "beginsPattern": {
+                        "regexp": ".*Teams App Test Tool"
+                    },
+                    "endsPattern": {
+                        "regexp": ".*started web socket client"
+                    }
+                },
+            }
+        },
         {
             "label": "Start Teams App Locally",
             "dependsOn": [
diff --git a/templates/python/custom-copilot-assistant-assistants-api/teamsapp.testtool.yml.tpl b/templates/python/custom-copilot-assistant-assistants-api/teamsapp.testtool.yml.tpl
index d0c953fa05..ea0bcab7ea 100644
--- a/templates/python/custom-copilot-assistant-assistants-api/teamsapp.testtool.yml.tpl
+++ b/templates/python/custom-copilot-assistant-assistants-api/teamsapp.testtool.yml.tpl
@@ -1,7 +1,7 @@
-# yaml-language-server: $schema=https://aka.ms/teams-toolkit/v1.7/yaml.schema.json
+# yaml-language-server: $schema=https://aka.ms/teams-toolkit/v1.8/yaml.schema.json
 # Visit https://aka.ms/teamsfx-v5.0-guide for details on this file
 # Visit https://aka.ms/teamsfx-actions for details on actions
-version: v1.7
+version: v1.8
 
 deploy:
   # Install development tool(s)
@@ -10,6 +10,7 @@ deploy:
       testTool:
         version: ~0.2.1
         symlinkDir: ./devTools/teamsapptester
+        releaseType: binary
 
   # Generate runtime environment variables
   - uses: file/createOrUpdateEnvironmentFile
diff --git a/templates/python/custom-copilot-assistant-new/.vscode/launch.json.tpl b/templates/python/custom-copilot-assistant-new/.vscode/launch.json.tpl
index f8b27df9db..9fa1003879 100644
--- a/templates/python/custom-copilot-assistant-new/.vscode/launch.json.tpl
+++ b/templates/python/custom-copilot-assistant-new/.vscode/launch.json.tpl
@@ -7,7 +7,7 @@
       "request": "launch",
       "url": "https://teams.microsoft.com/l/app/${{TEAMS_APP_ID}}?installAppPackage=true&webjoin=true&${account-hint}",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 4
       },
       "internalConsoleOptions": "neverOpen"
@@ -18,7 +18,7 @@
       "request": "launch",
       "url": "https://teams.microsoft.com/l/app/${{TEAMS_APP_ID}}?installAppPackage=true&webjoin=true&${account-hint}",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 5
       },
       "internalConsoleOptions": "neverOpen"
@@ -29,7 +29,7 @@
       "request": "launch",
       "preLaunchTask": "Start Teams App in Desktop Client (Remote)",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 6
       },
       "internalConsoleOptions": "neverOpen"
@@ -63,18 +63,6 @@
       "program": "${workspaceFolder}/src/app.py",
       "cwd": "${workspaceFolder}/src",
       "console": "integratedTerminal"
-    },
-    {
-        "name": "Start Test Tool",
-        "type": "node",
-        "request": "launch",
-        "program": "${workspaceFolder}/devTools/teamsapptester/node_modules/@microsoft/teams-app-test-tool/cli.js",
-        "args": [
-            "start"
-        ],
-        "cwd": "${workspaceFolder}",
-        "console": "integratedTerminal",
-        "internalConsoleOptions": "neverOpen"
     {{#CEAEnabled}}
     },
     {
@@ -150,7 +138,7 @@
       "cascadeTerminateToConfigurations": ["Start Python"],
       "preLaunchTask": "Start Teams App Locally",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 1
       },
       "stopAll": true
@@ -161,7 +149,7 @@
       "cascadeTerminateToConfigurations": ["Start Python"],
       "preLaunchTask": "Start Teams App Locally",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 2
       },
       "stopAll": true
@@ -171,7 +159,7 @@
       "configurations": ["Start Python"],
       "preLaunchTask": "Start Teams App in Desktop Client",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 3
       },
       "stopAll": true
@@ -180,14 +168,10 @@
         "name": "Debug in Test Tool",
         "configurations": [
             "Start Python",
-            "Start Test Tool"
-        ],
-        "cascadeTerminateToConfigurations": [
-            "Start Test Tool"
         ],
-        "preLaunchTask": "Deploy (Test Tool)",
+        "preLaunchTask": "Test Tool",
         "presentation": {
-            "group": "2-local",
+            "group": "1-local",
             "order": 1
         },
         "stopAll": true
diff --git a/templates/python/custom-copilot-assistant-new/.vscode/tasks.json b/templates/python/custom-copilot-assistant-new/.vscode/tasks.json
index a964abf89f..ac21817e51 100644
--- a/templates/python/custom-copilot-assistant-new/.vscode/tasks.json
+++ b/templates/python/custom-copilot-assistant-new/.vscode/tasks.json
@@ -4,6 +4,14 @@
 {
     "version": "2.0.0",
     "tasks": [
+        {
+            "label": "Test Tool",
+            "dependsOn": ["Validate prerequisites (Test Tool)", "Deploy (Test Tool)", "Start Test Tool"],
+            "dependsOrder": "sequence",
+            "presentation": {
+              "reveal": "never"
+            },
+        },
         {
             // Check all required prerequisites.
             // See https://aka.ms/teamsfx-tasks/check-prerequisites to know the details and how to customize the args.
@@ -34,6 +42,31 @@
                 "env": "testtool",
             }
         },
+        {
+            "label": "Start Test Tool",
+            "type": "shell",
+            "command": "${workspaceFolder}/devTools/teamsapptester/teamsapptester.exe",
+            "args": [
+                "start"
+            ],
+            "isBackground": true,
+            "problemMatcher": {
+                "owner": "custom",
+                "pattern": {
+                    "regexp": ".*InternalServiceError: (.*)",
+                    "message": 1
+                },
+                "background": {
+                    "activeOnStart": true,
+                    "beginsPattern": {
+                        "regexp": ".*Teams App Test Tool"
+                    },
+                    "endsPattern": {
+                        "regexp": ".*started web socket client"
+                    }
+                },
+            }
+        },
         {
             "label": "Start Teams App Locally",
             "dependsOn": [
diff --git a/templates/python/custom-copilot-assistant-new/teamsapp.testtool.yml.tpl b/templates/python/custom-copilot-assistant-new/teamsapp.testtool.yml.tpl
index bb5d6a35d4..5a83247796 100644
--- a/templates/python/custom-copilot-assistant-new/teamsapp.testtool.yml.tpl
+++ b/templates/python/custom-copilot-assistant-new/teamsapp.testtool.yml.tpl
@@ -1,7 +1,7 @@
-# yaml-language-server: $schema=https://aka.ms/teams-toolkit/v1.7/yaml.schema.json
+# yaml-language-server: $schema=https://aka.ms/teams-toolkit/v1.8/yaml.schema.json
 # Visit https://aka.ms/teamsfx-v5.0-guide for details on this file
 # Visit https://aka.ms/teamsfx-actions for details on actions
-version: v1.7
+version: v1.8
 
 deploy:
   # Install development tool(s)
@@ -10,6 +10,7 @@ deploy:
       testTool:
         version: ~0.2.1
         symlinkDir: ./devTools/teamsapptester
+        releaseType: binary
 
   # Generate runtime environment variables
   - uses: file/createOrUpdateEnvironmentFile
diff --git a/templates/python/custom-copilot-basic/teamsapp.testtool.yml.tpl b/templates/python/custom-copilot-basic/teamsapp.testtool.yml.tpl
index 9a7ea88032..5a83247796 100644
--- a/templates/python/custom-copilot-basic/teamsapp.testtool.yml.tpl
+++ b/templates/python/custom-copilot-basic/teamsapp.testtool.yml.tpl
@@ -1,7 +1,7 @@
-# yaml-language-server: $schema=https://aka.ms/teams-toolkit/v1.7/yaml.schema.json
+# yaml-language-server: $schema=https://aka.ms/teams-toolkit/v1.8/yaml.schema.json
 # Visit https://aka.ms/teamsfx-v5.0-guide for details on this file
 # Visit https://aka.ms/teamsfx-actions for details on actions
-version: v1.7
+version: v1.8
 
 deploy:
   # Install development tool(s)
diff --git a/templates/python/custom-copilot-rag-azure-ai-search/.vscode/launch.json.tpl b/templates/python/custom-copilot-rag-azure-ai-search/.vscode/launch.json.tpl
index f8b27df9db..9fa1003879 100644
--- a/templates/python/custom-copilot-rag-azure-ai-search/.vscode/launch.json.tpl
+++ b/templates/python/custom-copilot-rag-azure-ai-search/.vscode/launch.json.tpl
@@ -7,7 +7,7 @@
       "request": "launch",
       "url": "https://teams.microsoft.com/l/app/${{TEAMS_APP_ID}}?installAppPackage=true&webjoin=true&${account-hint}",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 4
       },
       "internalConsoleOptions": "neverOpen"
@@ -18,7 +18,7 @@
       "request": "launch",
       "url": "https://teams.microsoft.com/l/app/${{TEAMS_APP_ID}}?installAppPackage=true&webjoin=true&${account-hint}",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 5
       },
       "internalConsoleOptions": "neverOpen"
@@ -29,7 +29,7 @@
       "request": "launch",
       "preLaunchTask": "Start Teams App in Desktop Client (Remote)",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 6
       },
       "internalConsoleOptions": "neverOpen"
@@ -63,18 +63,6 @@
       "program": "${workspaceFolder}/src/app.py",
       "cwd": "${workspaceFolder}/src",
       "console": "integratedTerminal"
-    },
-    {
-        "name": "Start Test Tool",
-        "type": "node",
-        "request": "launch",
-        "program": "${workspaceFolder}/devTools/teamsapptester/node_modules/@microsoft/teams-app-test-tool/cli.js",
-        "args": [
-            "start"
-        ],
-        "cwd": "${workspaceFolder}",
-        "console": "integratedTerminal",
-        "internalConsoleOptions": "neverOpen"
     {{#CEAEnabled}}
     },
     {
@@ -150,7 +138,7 @@
       "cascadeTerminateToConfigurations": ["Start Python"],
       "preLaunchTask": "Start Teams App Locally",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 1
       },
       "stopAll": true
@@ -161,7 +149,7 @@
       "cascadeTerminateToConfigurations": ["Start Python"],
       "preLaunchTask": "Start Teams App Locally",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 2
       },
       "stopAll": true
@@ -171,7 +159,7 @@
       "configurations": ["Start Python"],
       "preLaunchTask": "Start Teams App in Desktop Client",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 3
       },
       "stopAll": true
@@ -180,14 +168,10 @@
         "name": "Debug in Test Tool",
         "configurations": [
             "Start Python",
-            "Start Test Tool"
-        ],
-        "cascadeTerminateToConfigurations": [
-            "Start Test Tool"
         ],
-        "preLaunchTask": "Deploy (Test Tool)",
+        "preLaunchTask": "Test Tool",
         "presentation": {
-            "group": "2-local",
+            "group": "1-local",
             "order": 1
         },
         "stopAll": true
diff --git a/templates/python/custom-copilot-rag-azure-ai-search/.vscode/tasks.json b/templates/python/custom-copilot-rag-azure-ai-search/.vscode/tasks.json
index a964abf89f..ac21817e51 100644
--- a/templates/python/custom-copilot-rag-azure-ai-search/.vscode/tasks.json
+++ b/templates/python/custom-copilot-rag-azure-ai-search/.vscode/tasks.json
@@ -4,6 +4,14 @@
 {
     "version": "2.0.0",
     "tasks": [
+        {
+            "label": "Test Tool",
+            "dependsOn": ["Validate prerequisites (Test Tool)", "Deploy (Test Tool)", "Start Test Tool"],
+            "dependsOrder": "sequence",
+            "presentation": {
+              "reveal": "never"
+            },
+        },
         {
             // Check all required prerequisites.
             // See https://aka.ms/teamsfx-tasks/check-prerequisites to know the details and how to customize the args.
@@ -34,6 +42,31 @@
                 "env": "testtool",
             }
         },
+        {
+            "label": "Start Test Tool",
+            "type": "shell",
+            "command": "${workspaceFolder}/devTools/teamsapptester/teamsapptester.exe",
+            "args": [
+                "start"
+            ],
+            "isBackground": true,
+            "problemMatcher": {
+                "owner": "custom",
+                "pattern": {
+                    "regexp": ".*InternalServiceError: (.*)",
+                    "message": 1
+                },
+                "background": {
+                    "activeOnStart": true,
+                    "beginsPattern": {
+                        "regexp": ".*Teams App Test Tool"
+                    },
+                    "endsPattern": {
+                        "regexp": ".*started web socket client"
+                    }
+                },
+            }
+        },
         {
             "label": "Start Teams App Locally",
             "dependsOn": [
diff --git a/templates/python/custom-copilot-rag-azure-ai-search/teamsapp.testtool.yml.tpl b/templates/python/custom-copilot-rag-azure-ai-search/teamsapp.testtool.yml.tpl
index 9c6e57ec46..8d16ff098f 100644
--- a/templates/python/custom-copilot-rag-azure-ai-search/teamsapp.testtool.yml.tpl
+++ b/templates/python/custom-copilot-rag-azure-ai-search/teamsapp.testtool.yml.tpl
@@ -1,7 +1,7 @@
-# yaml-language-server: $schema=https://aka.ms/teams-toolkit/v1.7/yaml.schema.json
+# yaml-language-server: $schema=https://aka.ms/teams-toolkit/v1.8/yaml.schema.json
 # Visit https://aka.ms/teamsfx-v5.0-guide for details on this file
 # Visit https://aka.ms/teamsfx-actions for details on actions
-version: v1.7
+version: v1.8
 
 deploy:
   # Install development tool(s)
@@ -10,6 +10,7 @@ deploy:
       testTool:
         version: ~0.2.1
         symlinkDir: ./devTools/teamsapptester
+        releaseType: binary
 
   # Generate runtime environment variables
   - uses: file/createOrUpdateEnvironmentFile
diff --git a/templates/python/custom-copilot-rag-custom-api/.vscode/launch.json.tpl b/templates/python/custom-copilot-rag-custom-api/.vscode/launch.json.tpl
index f8b27df9db..9fa1003879 100644
--- a/templates/python/custom-copilot-rag-custom-api/.vscode/launch.json.tpl
+++ b/templates/python/custom-copilot-rag-custom-api/.vscode/launch.json.tpl
@@ -7,7 +7,7 @@
       "request": "launch",
       "url": "https://teams.microsoft.com/l/app/${{TEAMS_APP_ID}}?installAppPackage=true&webjoin=true&${account-hint}",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 4
       },
       "internalConsoleOptions": "neverOpen"
@@ -18,7 +18,7 @@
       "request": "launch",
       "url": "https://teams.microsoft.com/l/app/${{TEAMS_APP_ID}}?installAppPackage=true&webjoin=true&${account-hint}",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 5
       },
       "internalConsoleOptions": "neverOpen"
@@ -29,7 +29,7 @@
       "request": "launch",
       "preLaunchTask": "Start Teams App in Desktop Client (Remote)",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 6
       },
       "internalConsoleOptions": "neverOpen"
@@ -63,18 +63,6 @@
       "program": "${workspaceFolder}/src/app.py",
       "cwd": "${workspaceFolder}/src",
       "console": "integratedTerminal"
-    },
-    {
-        "name": "Start Test Tool",
-        "type": "node",
-        "request": "launch",
-        "program": "${workspaceFolder}/devTools/teamsapptester/node_modules/@microsoft/teams-app-test-tool/cli.js",
-        "args": [
-            "start"
-        ],
-        "cwd": "${workspaceFolder}",
-        "console": "integratedTerminal",
-        "internalConsoleOptions": "neverOpen"
     {{#CEAEnabled}}
     },
     {
@@ -150,7 +138,7 @@
       "cascadeTerminateToConfigurations": ["Start Python"],
       "preLaunchTask": "Start Teams App Locally",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 1
       },
       "stopAll": true
@@ -161,7 +149,7 @@
       "cascadeTerminateToConfigurations": ["Start Python"],
       "preLaunchTask": "Start Teams App Locally",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 2
       },
       "stopAll": true
@@ -171,7 +159,7 @@
       "configurations": ["Start Python"],
       "preLaunchTask": "Start Teams App in Desktop Client",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 3
       },
       "stopAll": true
@@ -180,14 +168,10 @@
         "name": "Debug in Test Tool",
         "configurations": [
             "Start Python",
-            "Start Test Tool"
-        ],
-        "cascadeTerminateToConfigurations": [
-            "Start Test Tool"
         ],
-        "preLaunchTask": "Deploy (Test Tool)",
+        "preLaunchTask": "Test Tool",
         "presentation": {
-            "group": "2-local",
+            "group": "1-local",
             "order": 1
         },
         "stopAll": true
diff --git a/templates/python/custom-copilot-rag-custom-api/.vscode/tasks.json b/templates/python/custom-copilot-rag-custom-api/.vscode/tasks.json
index a964abf89f..ac21817e51 100644
--- a/templates/python/custom-copilot-rag-custom-api/.vscode/tasks.json
+++ b/templates/python/custom-copilot-rag-custom-api/.vscode/tasks.json
@@ -4,6 +4,14 @@
 {
     "version": "2.0.0",
     "tasks": [
+        {
+            "label": "Test Tool",
+            "dependsOn": ["Validate prerequisites (Test Tool)", "Deploy (Test Tool)", "Start Test Tool"],
+            "dependsOrder": "sequence",
+            "presentation": {
+              "reveal": "never"
+            },
+        },
         {
             // Check all required prerequisites.
             // See https://aka.ms/teamsfx-tasks/check-prerequisites to know the details and how to customize the args.
@@ -34,6 +42,31 @@
                 "env": "testtool",
             }
         },
+        {
+            "label": "Start Test Tool",
+            "type": "shell",
+            "command": "${workspaceFolder}/devTools/teamsapptester/teamsapptester.exe",
+            "args": [
+                "start"
+            ],
+            "isBackground": true,
+            "problemMatcher": {
+                "owner": "custom",
+                "pattern": {
+                    "regexp": ".*InternalServiceError: (.*)",
+                    "message": 1
+                },
+                "background": {
+                    "activeOnStart": true,
+                    "beginsPattern": {
+                        "regexp": ".*Teams App Test Tool"
+                    },
+                    "endsPattern": {
+                        "regexp": ".*started web socket client"
+                    }
+                },
+            }
+        },
         {
             "label": "Start Teams App Locally",
             "dependsOn": [
diff --git a/templates/python/custom-copilot-rag-custom-api/teamsapp.testtool.yml.tpl b/templates/python/custom-copilot-rag-custom-api/teamsapp.testtool.yml.tpl
index 4982515f0e..868b040d52 100644
--- a/templates/python/custom-copilot-rag-custom-api/teamsapp.testtool.yml.tpl
+++ b/templates/python/custom-copilot-rag-custom-api/teamsapp.testtool.yml.tpl
@@ -1,7 +1,7 @@
-# yaml-language-server: $schema=https://aka.ms/teams-toolkit/v1.7/yaml.schema.json
+# yaml-language-server: $schema=https://aka.ms/teams-toolkit/v1.8/yaml.schema.json
 # Visit https://aka.ms/teamsfx-v5.0-guide for details on this file
 # Visit https://aka.ms/teamsfx-actions for details on actions
-version: v1.7
+version: v1.8
 
 deploy:
   # Install development tool(s)
@@ -10,6 +10,7 @@ deploy:
       testTool:
         version: ~0.2.1
         symlinkDir: ./devTools/teamsapptester
+        releaseType: binary
 
   # Generate runtime environment variables
   - uses: file/createOrUpdateEnvironmentFile
diff --git a/templates/python/custom-copilot-rag-customize/.vscode/launch.json.tpl b/templates/python/custom-copilot-rag-customize/.vscode/launch.json.tpl
index f8b27df9db..9fa1003879 100644
--- a/templates/python/custom-copilot-rag-customize/.vscode/launch.json.tpl
+++ b/templates/python/custom-copilot-rag-customize/.vscode/launch.json.tpl
@@ -7,7 +7,7 @@
       "request": "launch",
       "url": "https://teams.microsoft.com/l/app/${{TEAMS_APP_ID}}?installAppPackage=true&webjoin=true&${account-hint}",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 4
       },
       "internalConsoleOptions": "neverOpen"
@@ -18,7 +18,7 @@
       "request": "launch",
       "url": "https://teams.microsoft.com/l/app/${{TEAMS_APP_ID}}?installAppPackage=true&webjoin=true&${account-hint}",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 5
       },
       "internalConsoleOptions": "neverOpen"
@@ -29,7 +29,7 @@
       "request": "launch",
       "preLaunchTask": "Start Teams App in Desktop Client (Remote)",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 6
       },
       "internalConsoleOptions": "neverOpen"
@@ -63,18 +63,6 @@
       "program": "${workspaceFolder}/src/app.py",
       "cwd": "${workspaceFolder}/src",
       "console": "integratedTerminal"
-    },
-    {
-        "name": "Start Test Tool",
-        "type": "node",
-        "request": "launch",
-        "program": "${workspaceFolder}/devTools/teamsapptester/node_modules/@microsoft/teams-app-test-tool/cli.js",
-        "args": [
-            "start"
-        ],
-        "cwd": "${workspaceFolder}",
-        "console": "integratedTerminal",
-        "internalConsoleOptions": "neverOpen"
     {{#CEAEnabled}}
     },
     {
@@ -150,7 +138,7 @@
       "cascadeTerminateToConfigurations": ["Start Python"],
       "preLaunchTask": "Start Teams App Locally",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 1
       },
       "stopAll": true
@@ -161,7 +149,7 @@
       "cascadeTerminateToConfigurations": ["Start Python"],
       "preLaunchTask": "Start Teams App Locally",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 2
       },
       "stopAll": true
@@ -171,7 +159,7 @@
       "configurations": ["Start Python"],
       "preLaunchTask": "Start Teams App in Desktop Client",
       "presentation": {
-        "group": "1-Teams",
+        "group": "2-Teams",
         "order": 3
       },
       "stopAll": true
@@ -180,14 +168,10 @@
         "name": "Debug in Test Tool",
         "configurations": [
             "Start Python",
-            "Start Test Tool"
-        ],
-        "cascadeTerminateToConfigurations": [
-            "Start Test Tool"
         ],
-        "preLaunchTask": "Deploy (Test Tool)",
+        "preLaunchTask": "Test Tool",
         "presentation": {
-            "group": "2-local",
+            "group": "1-local",
             "order": 1
         },
         "stopAll": true
diff --git a/templates/python/custom-copilot-rag-customize/.vscode/tasks.json b/templates/python/custom-copilot-rag-customize/.vscode/tasks.json
index a964abf89f..ac21817e51 100644
--- a/templates/python/custom-copilot-rag-customize/.vscode/tasks.json
+++ b/templates/python/custom-copilot-rag-customize/.vscode/tasks.json
@@ -4,6 +4,14 @@
 {
     "version": "2.0.0",
     "tasks": [
+        {
+            "label": "Test Tool",
+            "dependsOn": ["Validate prerequisites (Test Tool)", "Deploy (Test Tool)", "Start Test Tool"],
+            "dependsOrder": "sequence",
+            "presentation": {
+              "reveal": "never"
+            },
+        },
         {
             // Check all required prerequisites.
             // See https://aka.ms/teamsfx-tasks/check-prerequisites to know the details and how to customize the args.
@@ -34,6 +42,31 @@
                 "env": "testtool",
             }
         },
+        {
+            "label": "Start Test Tool",
+            "type": "shell",
+            "command": "${workspaceFolder}/devTools/teamsapptester/teamsapptester.exe",
+            "args": [
+                "start"
+            ],
+            "isBackground": true,
+            "problemMatcher": {
+                "owner": "custom",
+                "pattern": {
+                    "regexp": ".*InternalServiceError: (.*)",
+                    "message": 1
+                },
+                "background": {
+                    "activeOnStart": true,
+                    "beginsPattern": {
+                        "regexp": ".*Teams App Test Tool"
+                    },
+                    "endsPattern": {
+                        "regexp": ".*started web socket client"
+                    }
+                },
+            }
+        },
         {
             "label": "Start Teams App Locally",
             "dependsOn": [
diff --git a/templates/python/custom-copilot-rag-customize/teamsapp.testtool.yml.tpl b/templates/python/custom-copilot-rag-customize/teamsapp.testtool.yml.tpl
index bb5d6a35d4..5a83247796 100644
--- a/templates/python/custom-copilot-rag-customize/teamsapp.testtool.yml.tpl
+++ b/templates/python/custom-copilot-rag-customize/teamsapp.testtool.yml.tpl
@@ -1,7 +1,7 @@
-# yaml-language-server: $schema=https://aka.ms/teams-toolkit/v1.7/yaml.schema.json
+# yaml-language-server: $schema=https://aka.ms/teams-toolkit/v1.8/yaml.schema.json
 # Visit https://aka.ms/teamsfx-v5.0-guide for details on this file
 # Visit https://aka.ms/teamsfx-actions for details on actions
-version: v1.7
+version: v1.8
 
 deploy:
   # Install development tool(s)
@@ -10,6 +10,7 @@ deploy:
       testTool:
         version: ~0.2.1
         symlinkDir: ./devTools/teamsapptester
+        releaseType: binary
 
   # Generate runtime environment variables
   - uses: file/createOrUpdateEnvironmentFile