gr.Dropdown value is cleared or choices fail to update when using key_up for dynamic filtering

[onlyrobot]

Describe the bug

When using the key_up event to dynamically update the choices of a gr.Dropdown (e.g., for a search/autocomplete feature), the component exhibits unstable behavior. Specifically:
The current value (the text the user is typing) is often cleared/reset automatically after the backend returns the new choices.
Even when explicitly returning the current value in gr.update(choices=..., value=...), it can trigger an unwanted change event, leading to infinite loops or redundant logic.
If the Dropdown is placed inside a gr.Group, the UI flickering and value-clearing issues become more severe.
This makes it nearly impossible to implement a standard "Search-as-you-type" dropdown without breaking the user's input flow.

Have you searched existing issues? 🔎

• I have searched and found no existing issues

Reproduction

import gradio as gr

def dynamic_search(val):
    # Simulate fetching new options based on input
    new_choices = [f"{val} item 1", f"{val} item 2", f"{val} item 3"]
    # Issue: If we don't return 'value', the textbox often clears. 
    # Issue: If we DO return 'value', it triggers the 'change' event unexpectedly.
    return gr.update(choices=new_choices)

with gr.Blocks() as demo:
    gr.Markdown("### Dropdown key_up Issue")
    
    with gr.Group():
        dropdown = gr.Dropdown(
            label="Search Here (Inside Group)", 
            choices=[], 
            allow_custom_value=True, 
            interactive=True
        )
    
    status = gr.Textbox(label="Change Event Tracker")

    # Triggered on every keystroke
    dropdown.key_up(
        fn=dynamic_search, 
        inputs=dropdown, 
        outputs=dropdown,
        queue=False
    )
    
    # This should only trigger on selection, but often triggers during key_up updates
    dropdown.change(lambda: "Change event fired!", outputs=status)

demo.launch()

Screenshot

No response

Logs

System Info

Operating System: macOS (M1/M2/Intel)
Python Version: 3.10+
Gradio Version: 6.0.0+ (Tested on latest 6.x)

Severity

Blocking usage of gradio

[viditkbhatnagar]

Hi! I'd like to work on this. The issue seems to be that updating
choices via key_up clears the input value and triggers unwanted
change events. I'll investigate the Dropdown's Svelte component
and submit a PR.