update the readme file

README.md

@@ -76,7 +76,8 @@ Then access:
 
 ### Core Capabilities
 
-- 🤖 **Autonomous Multi-Step MCP Agents** – Intelligent tool-aware agent that plans and executes multi-step workflows across RAG, Web, Admin, and LLM tools with memory of previous tool outputs
+- 🤖 **Autonomous Multi-Step MCP Agents** – Intelligent tool-aware agent that plans and executes multi-step workflows across RAG, Web, Admin, and LLM tools with short-term conversation memory
+- 💭 **Short-Term Conversation Memory** – Automatic memory system that stores the last N tool outputs per session with configurable expiration (default: 10 outputs, 15 minutes TTL). Memory is keyed by session_id (not tenant_id) for safety, enabling better context awareness in multi-step workflows. Memory is automatically injected into tool payloads and cleared on session end.
 - 📚 **Enhanced Knowledge Base Management** – Upload raw text, URLs, or documents (PDF/DOCX/TXT/MD) with rich metadata (source URL, timestamp, document type) and optimized chunking (400-600 tokens)
 - 🔍 **Optimized RAG Search** – Semantic search with configurable similarity threshold (default 0.3) for better recall, with fallback to return top results even if below threshold
 - 🗑️ **Document Management** – Delete individual documents or bulk delete all documents for a tenant with confirmation dialogs
@@ -114,6 +115,32 @@ Then access:
 - 💾 **Persistent Analytics Storage** – Supabase-backed analytics store (with automatic SQLite fallback) for fast, multi-tenant queries
 - 🗄️ **Supabase Integration** – Production-ready Supabase support for admin rules with automatic table creation
 
+### Conversation Memory System
+
+IntegraChat includes a **short-term conversation memory** system that enhances multi-step workflows by maintaining context across tool calls:
+
+- **Automatic Storage**: Every tool output is automatically stored in memory for the session
+- **Bounded Size**: Keeps only the last N tool outputs (configurable via `MCP_MEMORY_MAX_ITEMS`, default: 10)
+- **Auto-Expiration**: Entries automatically expire after a configurable TTL (via `MCP_MEMORY_TTL_SECONDS`, default: 900 seconds / 15 minutes)
+- **Session-Based**: Memory is keyed by `session_id` (not `tenant_id`) for safety and isolation
+- **Automatic Injection**: Recent memory is automatically injected into tool payloads as a `memory` field for multi-step workflows
+- **Session Clearing**: Memory can be explicitly cleared by sending `end_session: true` or `endSession: true` in the payload
+
+**Usage Example:**
+```json
+{
+  "tenant_id": "acme",
+  "session_id": "chat-abc-123",
+  "query": "Search for X"
+}
+```
+
+Subsequent tool calls with the same `session_id` will receive a `memory` field containing recent tool outputs, enabling tools to make context-aware decisions in multi-step workflows.
+
+**Configuration:**
+- `MCP_MEMORY_MAX_ITEMS`: Maximum number of tool outputs to keep per session (default: 10)
+- `MCP_MEMORY_TTL_SECONDS`: Time-to-live for memory entries in seconds (default: 900)
+
 ---
 
 ## Installation & Setup
@@ -383,7 +410,7 @@ IntegraChat follows a modular architecture with clear separation of concerns:
 
 ### Enterprise-Grade Features
 
-1. **Autonomous Multi-Step Planning**: LLM-powered planning determines optimal tool sequences with memory of previous tool outputs in multi-step workflows.
+1. **Autonomous Multi-Step Planning**: LLM-powered planning determines optimal tool sequences with short-term conversation memory that stores and injects previous tool outputs into subsequent tool calls for better context awareness.
 
 2. **Regex-Based Governance**: Admin rules support regex patterns with fallback to keyword matching and semantic similarity scoring for flexible policy enforcement.
 
@@ -642,6 +669,14 @@ This project is licensed under the MIT License - see the [LICENSE](LICENSE) file
 - **Supabase Integration**: Production-ready Supabase support with automatic table creation
 - **Streaming Responses**: Word-by-word streaming for chat responses using Server-Sent Events (SSE)
 
+### Conversation Memory System (Latest)
+- **Short-Term Memory**: Automatic storage of tool outputs per session with configurable size limits and TTL
+- **Session-Based Isolation**: Memory keyed by session_id (not tenant_id) for safety
+- **Automatic Injection**: Recent memory automatically injected into tool payloads for multi-step workflows
+- **Auto-Expiration**: Memory entries expire after configurable TTL (default: 15 minutes)
+- **Session Management**: Memory can be explicitly cleared via `end_session` flag
+- **Comprehensive Testing**: Full test suite covering memory storage, retrieval, expiration, and multi-step workflows
+
 ### UI Improvements
 - **Modern Drag-and-Drop**: Intuitive file upload with visual feedback
 - **Enhanced Status Messages**: Clear success/error messages with icons

backend/README.md

@@ -122,6 +122,16 @@ Use the helper scripts in the repo root when validating backend changes:
 - **Enhanced tool selection** automatically triggers RAG for admin questions, fact lookups ("who is", "what is"), and internal knowledge queries
 - **Response unwrapping** in MCP client ensures orchestrator receives properly formatted results for tool scoring and prompt building
 
+### Conversation Memory System
+- **Short-Term Memory**: Automatic storage of tool outputs per session with configurable size limits (default: 10 outputs) and TTL (default: 900 seconds / 15 minutes)
+- **Session-Based Isolation**: Memory is keyed by `session_id` (not `tenant_id`) for safety, ensuring no cross-tenant data mixing
+- **Automatic Injection**: Recent memory is automatically injected into tool payloads as a `memory` field, enabling tools to make context-aware decisions in multi-step workflows
+- **Auto-Expiration**: Memory entries automatically expire after TTL or can be explicitly cleared via `end_session`/`endSession` flag
+- **Configuration**: Tune behavior via environment variables:
+  - `MCP_MEMORY_MAX_ITEMS`: Maximum number of tool outputs to keep per session (default: 10)
+  - `MCP_MEMORY_TTL_SECONDS`: Time-to-live for memory entries in seconds (default: 900)
+- **Comprehensive Testing**: Full test suite in `backend/tests/test_conversation_memory.py` covering storage, retrieval, expiration, and multi-step workflows
+
 ### UI Enhancements (app.py)
 - **Knowledge Base Library Tab**: 
   - Statistics cards showing document counts by type
@@ -159,6 +169,8 @@ Defined in `env.example`:
   - If not set, the system automatically falls back to SQLite in `data/` directory
   - See `SUPABASE_SETUP.md` in the root directory for detailed setup instructions
 - `GOOGLE_SEARCH_API_KEY`, `GOOGLE_SEARCH_CX_ID` - Credentials for Google Programmable Search used by `web.search`
+- `MCP_MEMORY_MAX_ITEMS` - Maximum number of tool outputs to keep per session (default: 10)
+- `MCP_MEMORY_TTL_SECONDS` - Time-to-live for memory entries in seconds (default: 900)
 - `APP_ENV`, `LOG_LEVEL`, `API_PORT`
 
 Update these before starting the servers to ensure the agent can reach every MCP endpoint and LLM runtime.
@@ -230,6 +242,7 @@ Agents that speak the Model Context Protocol should connect to the `integrachat`
 - All endpoints support both POST (with JSON payload) and direct HTTP methods (GET for list, DELETE for delete operations)
 - Tenant ID normalization handles whitespace and ensures documents can be listed and deleted consistently
 - RAG search uses a default threshold of 0.3 for better recall; adjust via `threshold` parameter if needed
+- **Conversation Memory**: Send `session_id` (or `sessionId`/`conversation_id`/`conversationId`) in tool payloads to enable short-term memory. Recent tool outputs are automatically stored and injected into subsequent tool calls as a `memory` field. Send `end_session: true` to clear memory for a session.
 
 ## Troubleshooting