The workaround is to downgrade the Xdebug version (of course by choosing a version that matches project PHP version).
Others used the same workaround as stated here https://www.reddit.com/r/PHPhelp/comments/q4cd85/xdebug_causing_err_connection_reset/
I don't know where to submit this issue to get it fixed (or at least investigated). Please share if you know where to do it.
Also, please share if you have a better solution.
Hope this helps!