Hi Kaarlo Räihä •,
Thanks for sharing the solution with Q&A community.
I'm glad that you were able to resolve your issue and thank you for posting your solution so that others experiencing the same thing can easily reference this! Since the Microsoft Q&A community has a policy that "The question author cannot accept their own answer. They can only accept answers by others ", I'll repost your solution in case you'd like to "Accept " the answer.
Solution adopted is as below:
Issue was related to Azure AD login. It was fixed by Microsoft on 5th September 2023.
Thanks