The plugin.(*GRPCProvider).UpgradeResourceState request was cancelled


On our project we are using Terraform (1.1.7) with AzureRM (v3.0.2) provider on an Azure DevOps pipeline and it was working until Thursday (2022.03.31) without any issues. However on Thursday during the execution of terraform plan command the pipeline started to throw errors:

We are only having this issue for one of our environments, the other environments with the same terraform code is working properly. I’ve also tried to remove the .tfstate file from our Azure blob storage and the plan phase was successful again (it wanted to re-create the whole environment), so my assumption was something is wrong with the .tfstate file.

Can you please help what can be the issue? What else should I try?