There's an issue in the SPFx v1.23.1 which is blocking development for new project. Please use the 1.23 version as the workaround. You can install 1.23 version with following command.

npm install -g @microsoft/generator-sharepoint@1.23.0

If you have an option to open up ICM with Microsoft - please do so - that will speed up the long-term resolution of this issue. 🙏 Not quite optimal, but a way for everyone to move forward with this as fast as possible with long term resolution.

Issue is known and will be addressed to default build as soon as possible.

This bug is referenced with following issues #10901 & #10897. Related one as #10891