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I think the error message is telling you that the SDK isn't able to unambiguously resolve the managed identity to use.

Have you tried configuring the "cloud.credentialOptions.managedIdentity" setting in your bicepconfig.json?

{
  "moduleAliases": { ... },
  "cloud": {
    "currentProfile": "AzureCloud",
    "credentialPrecedence": [
      "ManagedIdentity"
    ],
    "credentialOptions": {
      "managedIdentity": {
        "type": "UserAssigned",
        // TODO either set clientId or resourceId
        "resourceId": "...",
        "clientId": "..."
      }
    }
  }
}

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@SunidhiShastry
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@SunidhiShastry
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