Consistently getting: command failed: {0} Exit code 1 Start: Run in container: test -f '/var/devcontainer/.patchEtcProfileMarker'

Hi, I'm using docker-compose setup with the latest devcontainer extension 0.375 and the latest VSCode as of now (1.91.0).

The setup was working until I recently rebuilt the project (so I think it has to do with any recent VSCode or this CLI update). I am getting:

Then, looking at the logs I consistently get:

[2024-07-08T13:52:52.612Z] 
[2024-07-08T13:52:52.612Z] Stop (1 ms): Run in container: (cat /etc/os-release || cat /usr/lib/os-release) 2>/dev/null
[2024-07-08T13:52:52.612Z] Start: Run in container:  (command -v getent >/dev/null 2>&1 && getent passwd 'vscode' || grep -E '^vscode|^[^:]*:[^:]*:vscode:' /etc/passwd || true)
[2024-07-08T13:52:52.613Z] Stop (1 ms): Run in container:  (command -v getent >/dev/null 2>&1 && getent passwd 'vscode' || grep -E '^vscode|^[^:]*:[^:]*:vscode:' /etc/passwd || true)
[2024-07-08T13:52:52.613Z] Start: Run in container: test -f '/var/devcontainer/.patchEtcEnvironmentMarker'
[2024-07-08T13:52:52.614Z] 
[2024-07-08T13:52:52.614Z] 
[2024-07-08T13:52:52.614Z] Stop (1 ms): Run in container: test -f '/var/devcontainer/.patchEtcEnvironmentMarker'
[2024-07-08T13:52:52.614Z] Start: Run in container: test -f '/var/devcontainer/.patchEtcProfileMarker'
[2024-07-08T13:52:52.615Z] 
[2024-07-08T13:52:52.615Z] 
[2024-07-08T13:52:52.615Z] Stop (1 ms): Run in container: test -f '/var/devcontainer/.patchEtcProfileMarker'
[2024-07-08T13:52:52.615Z] Stop (249 ms): Resolving Remote
...

I've tried removing all added devcontainer features, changing the base image to the official Ubuntu (mcr.microsoft.com/vscode/devcontainers/base:ubuntu-22.04), and removing any environment variables. I still get the same message.

Does anyone know what could be the culprit?
Downgrading either the CLI/VSCode could be a workaround but it's not a solution for me.

Thank you!