Error "Subscription was not found" when trying to create Azure Function App in VS Code

I’m gettting rather weird error when attempting to create new Azure Function App with Azure Functions VS Code extension:

Subscription MY_SUB_GUID_HERE was not found.

No matter what I’ve tried: reloading VS Code, re-installing Azure Functions extension (incl. older versions), logging out from my MS account in browser, restarting PC, clearing TenantId in VS Code Azure Account extension, removing Azure Functions extension completely including its folder in C:UsersUSER_NAME.vscodeextensions, signing out and back in via Azure Account extension, creating Azure Function application through the Azure portal incl. new resource group (I’ve found some old issue on GitHub which supposedly got fixed and one workaround was to create Azure func app through the portal first) – still the same error message, which occurs after selecting location, but actually in VS Code Log (Window) I can see that it fails immediately after 1st step (error code is SubscriptionNotFound + error message above) when you provide a unique name for the application.

At the same time, creating App Service, Resource Group, Static Web App all works like a charm through the corresponding extensions. Of course I see my subscription on Resources pane in VS Code and hence I’m saying that the error is a weird one.

OS: Windows 10 Pro x64 21H1, build 19043.1826
VS Code: 1.69.2
Azure Functions extension: 1.7.4
Azure subscription: free trial
Azure Functions version: ~4
.NET: 6.0

I cannot understand for love of god where the problem is – friend of mine tried it with his Visual Studio Enterprise subscription and it worked without any problem, so perhaps this is an account-related issue? Strange though that other things like App Service seem to work fine. I have "Owner" role for this subscription so it should not be due to the lack of rights or something similar.