Getting error: "Failed to load docker configuration: invalid character '\x00' looking for beginning of value" during docker-compose up

I am using window 10 Docker Desktop version 4.26.1 (131620) and docker --version gives me:
Docker version 24.0.7, build afdd53b

Everything was working fine until few days back I am getting this error while doing docker-compose up or docker-compose version etc related commands:

“Failed to load docker configuration: invalid character ‘\x00’ looking for beginning of value”

I tried lot of things like restarting docker engine, uninstalling Docker Desktop, deleting config file from C:\Users\10052076.docker location but nothing worked.

Strange thing is when I used docker pull command to fetch image then it works fine. Issue is while using docker-compose.yaml file

I checked docker-compose.yaml file and it is correct, used to work a few days back.
I am running out of ideas, please help