diff --git a/agentydragon/tasks/21-compact-markdown-rendering.md b/agentydragon/tasks/21-compact-markdown-rendering.md
new file mode 100644
index 0000000000..9bd9956a9b
--- /dev/null
+++ b/agentydragon/tasks/21-compact-markdown-rendering.md
@@ -0,0 +1,28 @@
+---
+id: 21
+title: Compact Markdown Rendering Option
+status: Not started  # one of: Not started, Started, Needs manual review, Done, Cancelled
+summary: Provide an option to render Markdown without blank lines between headings and content for more vertical packing.
+goal: |
+  Add a configuration flag to control Markdown rendering in the chat UI and logs so that headings render immediately adjacent to their content with no separating blank line.
+
+## Acceptance Criteria
+
+- Introduce a config flag `markdown_compact = true|false` under the UI settings.
+- When enabled, the renderer omits the default blank line between headings (lines starting with `#`) and their subsequent content.
+- The flag applies globally to all Markdown rendering (diffs, docs, help messages).
+- Default behavior remains unchanged (blank lines preserved) when `markdown_compact` is false or unset.
+- Add tests to verify both compact and default rendering modes across heading levels.
+
+## Implementation
+
+**How it was implemented**  
+- Extend the Markdown-to-TUI formatter to check `markdown_compact` and collapse heading/content spacing.
+- Implement a post-processing step that removes blank lines immediately following heading tokens (`^#{1,6} `) when `markdown_compact` is true.
+- Expose the new flag via the config parser and default it to `false`.
+- Add unit tests covering H1–H6 headings, verifying absence of blank line in compact mode and presence in default mode.
+
+## Notes
+
+- This option improves vertical density for screens with limited height.
+- Ensure compatibility with existing Markdown features like lists and code blocks; only target heading-content spacing.