diff --git a/src/test/project.test.ts b/src/test/project.test.ts
index 69d1ccd4d..7170b6da7 100644
--- a/src/test/project.test.ts
+++ b/src/test/project.test.ts
@@ -74,12 +74,16 @@ suite("Project tests", () => {
     const templateCCppPropertiesJsonJson = await readJson(
       join(templateFolder, ".vscode", "c_cpp_properties.json")
     );
-    const compilerPath = await isBinInPath(
+    const compilerAbsolutePath = await isBinInPath(
       "xtensa-esp32-elf-gcc",
       targetFolder,
       process.env
     );
-    templateCCppPropertiesJsonJson.configurations[0].compilerPath = compilerPath;
+    let compilerRelativePath = compilerAbsolutePath.split(
+      process.env.IDF_TOOLS_PATH
+    )[1];
+    templateCCppPropertiesJsonJson.configurations[0].compilerPath =
+      "${config:idf.toolsPath}" + compilerRelativePath;
     const targetCCppPropertiesJsonJson = await readJson(
       join(targetFolder, ".vscode", "c_cpp_properties.json")
     );
diff --git a/src/utils.ts b/src/utils.ts
index efeb3d692..b2a916b6e 100644
--- a/src/utils.ts
+++ b/src/utils.ts
@@ -231,18 +231,23 @@ export async function setCCppPropertiesJsonCompilerPath(
   const modifiedEnv = appendIdfAndToolsToPath(curWorkspaceFsPath);
   const idfTarget = modifiedEnv.IDF_TARGET || "esp32";
   const gccTool = getToolchainToolName(idfTarget, "gcc");
-  const compilerPath = await isBinInPath(
+  const compilerAbsolutePath = await isBinInPath(
     gccTool,
     curWorkspaceFsPath.fsPath,
     modifiedEnv
   );
+
   const cCppPropertiesJson = await readJSON(cCppPropertiesJsonPath);
   if (
     cCppPropertiesJson &&
     cCppPropertiesJson.configurations &&
     cCppPropertiesJson.configurations.length
   ) {
-    cCppPropertiesJson.configurations[0].compilerPath = compilerPath;
+    let compilerRelativePath = compilerAbsolutePath.split(
+      modifiedEnv.IDF_TOOLS_PATH
+    )[1];
+    cCppPropertiesJson.configurations[0].compilerPath =
+      "${config:idf.toolsPath}" + compilerRelativePath;
     await writeJSON(cCppPropertiesJsonPath, cCppPropertiesJson, {
       spaces: vscode.workspace.getConfiguration().get("editor.tabSize") || 2,
     });