diff --git a/.github/workflows/nightly-release.yml b/.github/workflows/nightly-release.yml
index 7a09448..72e8a9d 100644
--- a/.github/workflows/nightly-release.yml
+++ b/.github/workflows/nightly-release.yml
@@ -78,14 +78,18 @@ jobs:
               run: |
                   mkdir -p "${RELEASE_DIR}"
 
+                  # Read base version from VERSION file at the root
+                  BASE_VERSION=$(cat ../VERSION)
+
                   # Generate version suffix
                   TIMESTAMP=$(date +'%Y%m%d-%H%M')
                   SHORT_SHA=$(git rev-parse --short HEAD)
-                  VERSION_SUFFIX="-${TIMESTAMP}-${SHORT_SHA}"
+                  FULL_VERSION="${BASE_VERSION}-${TIMESTAMP}-${SHORT_SHA}"
+                  echo "FULL_VERSION=${FULL_VERSION}" >> $GITHUB_ENV
 
                   command_exp='.mcpServers."devops-mcp".command = "${extensionPath}${/}'
                   command_exp="${command_exp}${BIN_FILE}\""
-                  command_exp="${command_exp} | .version += \"${VERSION_SUFFIX}\""
+                  command_exp="${command_exp} | .version = \"${FULL_VERSION}\""
                   jq "${command_exp}" < ../gemini-extension.json >"${RELEASE_DIR}/gemini-extension.json"
 
                   cp ../README.md "${RELEASE_DIR}/"
@@ -107,7 +111,7 @@ jobs:
                   export GOARCH=${{ matrix.platform.goarch }}
 
                   output_path="${RELEASE_DIR}/${{ matrix.platform.bin_file }}"
-                  go build -o "${output_path}"
+                  go build -ldflags "-X main.version=${{ env.FULL_VERSION }}" -o "${output_path}"
 
             - name: Create release assets
               id: archive
diff --git a/.github/workflows/release.yml b/.github/workflows/release.yml
index 07fbbad..e48843d 100644
--- a/.github/workflows/release.yml
+++ b/.github/workflows/release.yml
@@ -79,8 +79,16 @@ jobs:
               run: |
                   mkdir -p "${RELEASE_DIR}"
 
-                  # Extract version from tag (v1.2.3 -> 1.2.3)
-                  VERSION="${TAG_NAME#v}"
+                  # Prioritize TAG based versioning if it matches v[0-9].[0-9].[0-9]
+                  if [[ "${TAG_NAME}" =~ ^v[0-9]+\.[0-9]+\.[0-9]+$ ]]; then
+                    VERSION="${TAG_NAME#v}"
+                    echo "Using version from tag: ${VERSION}"
+                  else
+                    VERSION=$(cat ../VERSION)
+                    echo "Using version from VERSION file: ${VERSION}"
+                  fi
+                  
+                  echo "VERSION=${VERSION}" >> $GITHUB_ENV
                   
                   command_exp='.mcpServers."devops-mcp".command = "${extensionPath}${/}'
                   command_exp="${command_exp}${BIN_FILE}\""
@@ -107,7 +115,7 @@ jobs:
                   export GOARCH=${{ matrix.platform.goarch }}
 
                   output_path="${RELEASE_DIR}/${{ matrix.platform.bin_file }}"
-                  go build -o "${output_path}"
+                  go build -ldflags "-X main.version=${{ env.VERSION }}" -o "${output_path}"
 
             - name: Create release assets
               id: archive
diff --git a/VERSION b/VERSION
new file mode 100644
index 0000000..17e51c3
--- /dev/null
+++ b/VERSION
@@ -0,0 +1 @@
+0.1.1
diff --git a/build.sh b/build.sh
index 313264f..addedb2 100755
--- a/build.sh
+++ b/build.sh
@@ -66,11 +66,18 @@ build_mcp() {
     err "Error: MCP serverdirectory '${MCP_SERVER_DIR}' not found."
     return 1
   fi
+
+  # Read version from root VERSION file and validate it
+  VERSION=$(cat VERSION | xargs)
+  if [[ -z "${VERSION}" ]]; then
+    err "Error: VERSION file is empty or contains only whitespace."
+    return 1
+  fi
   (
     cd ${MCP_SERVER_DIR}
     go mod tidy
-    go build -o "../${BINARY_NAME}"
-    echo "Successfully built '${BINARY_NAME}' Please move it to `.gemini/extensions/devops/bin/devops-mcp-server`"
+    go build -ldflags "-X main.version=${VERSION}" -o "../${BINARY_NAME}"
+    echo "Successfully built '${BINARY_NAME}' version ${VERSION}. Please move it to `.gemini/extensions/devops/bin/devops-mcp-server`"
   )
 }
 
diff --git a/devops-mcp-server/server.go b/devops-mcp-server/server.go
index 5da2399..cccb764 100644
--- a/devops-mcp-server/server.go
+++ b/devops-mcp-server/server.go
@@ -46,8 +46,7 @@ import (
 	"github.com/modelcontextprotocol/go-sdk/mcp"
 )
 
-//go:embed version.txt
-var version string
+var version = "0.1.0-dev"
 
 func createServer() *mcp.Server {
 	opts := &mcp.ServerOptions{
diff --git a/devops-mcp-server/version.txt b/devops-mcp-server/version.txt
deleted file mode 100644
index 6da28dd..0000000
--- a/devops-mcp-server/version.txt
+++ /dev/null
@@ -1 +0,0 @@
-0.1.1
\ No newline at end of file
diff --git a/gemini-extension.json b/gemini-extension.json
index cd26031..86af6d2 100644
--- a/gemini-extension.json
+++ b/gemini-extension.json
@@ -1,6 +1,6 @@
 {
   "name": "devops",
-  "version": "0.1.1",
+  "version": "0.1.0-dev",
   "description": "The DevOps extension provides Gemini powered AI assisted CI/CD. It supports deployment to Cloud Run and Cloud Storage as well as creation of a robust CI/CD pipeline.",
   "mcpServers": {
     "devops-mcp": {