azure-functions-dotnet-worker: Isolated Process Azure function v4 with .net 6 fails on AKS (linux)

We have multiple function apps running fine with .net core 3.1 and currently hosted in AKS (linux). We are moving all of the apps to .net 6 and func v4. While this works locally pretty good, its not same once deployed to azure environment with below error. While we dont have any direct dependency on the framework ‘<FrameworkReference>’ but we do have multiple asp.net related packages

error

info: Host.Startup[314]
      Loading functions metadata
info: Host.Startup[315]
      8 functions loaded
info: Host.Startup[0]
      Generating 8 job function(s)
info: Host.Function.Console[0]
      It was not possible to find any compatible framework version
info: Host.Function.Console[0]
      The framework 'Microsoft.AspNetCore.App', version '6.0.0' (x64) was not found.
info: Host.Function.Console[0]
        - No frameworks were found.
info: Host.Function.Console[0]
info: Host.Function.Console[0]
      You can resolve the problem by installing the specified framework and/or SDK.
info: Host.Function.Console[0]
info: Host.Function.Console[0]
      The specified framework can be found at:
info: Host.Function.Console[0]
        - https://aka.ms/dotnet-core-applaunch?framework=Microsoft.AspNetCore.App&framework_version=6.0.0&arch=x64&rid=debian.11-x64
// DELETED Messages //
info: Host.Startup[413]
      Host started (959ms)
info: Host.Startup[0]
      Job host started
Hosting environment: Production
Content root path: /home/site/wwwroot
Now listening on: http://[::]:80
Application started. Press Ctrl+C to shut down.
info: Host.General[337]
      Host lock lease acquired by instance ID '00000000000000000000000077302ED5'.
fail: Microsoft.Azure.WebJobs.Script.Description.WorkerFunctionInvoker[0]
      Final functionDispatcher state: WorkerProcessRestarting. Initialization timed out and host is shutting down
fail: Microsoft.Azure.WebJobs.Script.Description.WorkerFunctionInvoker[0]
      Final functionDispatcher state: WorkerProcessRestarting. Initialization timed out and host is shutting down
info: Microsoft.Azure.WebJobs.Host.DrainModeManager[0]
      DrainMode mode enabled
info: Microsoft.Azure.WebJobs.Host.DrainModeManager[0]
      Requesting cancellation for function invocation 'c5a5fd42-a17f-4893-9d20-21859e1a21ec'
info: Microsoft.Azure.WebJobs.Host.DrainModeManager[0]
      Requesting cancellation for function invocation '6e447eb8-08ec-4d6b-92f3-e958c6ceeb90'
info: Microsoft.Azure.WebJobs.Host.DrainModeManager[0]
      Requesting cancellation for function invocation '6a07fa27-d2c8-4dac-9bf0-4a5711b64b93'
info: Microsoft.Azure.WebJobs.Host.DrainModeManager[0]
      Requesting cancellation for function invocation '10a87052-fb25-4480-a30e-e8b6a95e881d'
info: Microsoft.Azure.WebJobs.Host.DrainModeManager[0]
      Calling StopAsync on the registered listeners

This is the csproj

<Project Sdk="Microsoft.NET.Sdk">
  <PropertyGroup>
    <RuntimeIdentifiers>win-x86;win-x64;win-arm;linux-x64;linux-arm</RuntimeIdentifiers>
    <TargetFramework>net6.0</TargetFramework>
    <AzureFunctionsVersion>v4</AzureFunctionsVersion>
    <UserSecretsId>r98c7709-6050-4530-bd33-ed0et8b1b448</UserSecretsId>
    <OutputType>Exe</OutputType>
    <_FunctionsSkipCleanOutput>true</_FunctionsSkipCleanOutput>
    <DockerFastModeProjectMountDirectory>/home/site/wwwroot</DockerFastModeProjectMountDirectory>
    <DockerDefaultTargetOS>Linux</DockerDefaultTargetOS>
    <DockerfileContext>..\..</DockerfileContext>
  </PropertyGroup>
  
  <ItemGroup>
    // some business related projects referred here, all targeting either .net 6 or .net core 3.1
  </ItemGroup>

  <ItemGroup>
    <PackageReference Include="Microsoft.Azure.Functions.Worker.Sdk" Version="1.3.0" OutputItemType="Analyzer" />
    <PackageReference Include="Microsoft.VisualStudio.Azure.Containers.Tools.Targets" Version="1.14.0" />

    <PackageReference Include="AutoMapper" Version="10.1.1" />
    <PackageReference Include="Microsoft.AspNetCore.Http" Version="2.2.2" />
    <PackageReference Include="Azure.Identity" Version="1.5.0" />
    <PackageReference Include="AutoMapper.Extensions.Microsoft.DependencyInjection" Version="8.1.1" />
    <PackageReference Include="Microsoft.Extensions.Configuration.UserSecrets" Version="6.0.0" />
    <PackageReference Include="Microsoft.Extensions.Http.Polly" Version="6.0.0" />
    <PackageReference Include="Azure.Extensions.AspNetCore.Configuration.Secrets" Version="1.2.1" />
    <PackageReference Include="Azure.Messaging.EventHubs" Version="5.6.2" />
    <PackageReference Include="System.Text.Encodings.Web" Version="6.0.0" />
    <PackageReference Include="Polly" Version="7.2.2" />

    <PackageReference Include="Microsoft.Azure.Functions.Worker" Version="1.6.0" />
    <PackageReference Include="Microsoft.Azure.EventGrid" Version="3.2.1" />
    <PackageReference Include="Microsoft.Azure.Functions.Worker.Extensions.EventHubs" Version="4.3.0" />
    <PackageReference Include="Microsoft.Azure.Functions.Worker.Extensions.ServiceBus" Version="4.2.1" />
    <PackageReference Include="Microsoft.Azure.Functions.Worker.Extensions.CosmosDB" Version="3.0.9" />
    <PackageReference Include="Microsoft.Azure.Functions.Worker.Extensions.Storage" Version="4.0.4" />
    <PackageReference Include="Microsoft.Azure.Functions.Worker.Extensions.Timer" Version="4.1.0" />
  </ItemGroup>
  
  <ItemGroup>
    <None Update="host.json">
      <CopyToOutputDirectory>PreserveNewest</CopyToOutputDirectory>
    </None>
    <None Update="local.settings.json">
      <CopyToOutputDirectory>PreserveNewest</CopyToOutputDirectory>
      <CopyToPublishDirectory>Never</CopyToPublishDirectory>
    </None>
  </ItemGroup>
</Project>

ADO command to package the app is dotnet publish -o /SomeOutputPath -c release (using linux agents)

docker file format is below (where we copy from already published folder ‘SomeOutputPath’ (this is to avoid nuget restore auth etc inside docker build for now)

FROM mcr.microsoft.com/azure-functions/dotnet-isolated:4-dotnet-isolated6.0 AS base
WORKDIR /home/site/wwwroot
EXPOSE 80

COPY SomeOutputPath .

ENV AzureWebJobsScriptRoot=/home/site/wwwroot \
    AzureFunctionsJobHost__Logging__Console__IsEnabled=true

Even if we use FROM mcr.microsoft.com/dotnet/sdk:6.0 AS base image, its same error.

All the AKS pods have env variable set as FUNCTIONS_WORKER_RUNTIME=dotnet-isolated

Is this a known issue? Any help appreciated.