VS Code Retrieve and Deploy Commands are not working from command palette/right click menu while working great from Terminal commands

Getting below error when I Retrieve or Deploy any component in my VS Code -

Error deploying or retrieving source: The file or directory that you tried to deploy or retrieve isn't in a package directory that's specified in your sfdx-project.json file. Add this location to your "packageDirectories" value, or deploy or retrieve a different file or directory. For details about sfdx-project.json, see: https://developer.salesforce.com/docs/atlas.en-us.sfdx_dev.meta/sfdx_dev/sfdx_dev_ws_config.htm

Retrieve/Deploy are working fine by using below commands from Terminal -

sfdx force:source:retrieve --sourcepath .\force-app\main\default\lwc\helloWorld
sfdx force:source:retrieve --sourcepath .\force-app\main\default\lwc\helloWorld

I think the problem started after an update in VS Code extensions "Salesforce CLI Integration" or/and "Salesforce Extension Pack", however I revert the previous version still not able to resolve.

Below is my sfdx-project.json

{
  "packageDirectories": [
    {
      "path": "force-app",
      "default": true
    }
  ],
  "namespace": "",
  "sfdcLoginUrl": "https://login.salesforce.com",
  "sourceApiVersion": "56.0"
}

I appreciate for any help, thank you.