VSCode PHPDebug ignores breakpoints on a project inside Docker

Question

I have a Laravel project running inside Docker container on WSL2. Xdebug.log shows successful connection: Connected to debugging client: host.docker.internal:9003. When I set a breakpoint and try to run the debugger though, nothing is being catched, and debugger never stops.

launch.json:

{
    "version": "0.2.0",
    "configurations": [
      {
        "name": "php-laravel debugger",
        "type": "php",
        "request": "launch",
        "port": 9003,
        "pathMappings": {
          "/var/www/html": "${workspaceFolder}/server"
        },
      },
    ]
  }

docker-php-ext-xdebug.ini:

zend_extension=xdebug
xdebug.mode=debug
xdebug.start_with_request=yes
xdebug.client_host=host.docker.internal
xdebug.discover_client_host=0
xdebug.client_port=9003
xdebug.start_upon_error=yes
xdebug.log=/tmp/xdebug.log

Relevant parts of docker-compose.yml:

  server:
    working_dir: /var/www/html
    volumes:
      - ./server:/var/www/html  
    ports:
      - "8000:8000"  
      - "9003:9003"
    environment:
      XDEBUG_MODE: debug
      XDEBUG_CLIENT_HOST: host.docker.internal 
      XDEBUG_CLIENT_PORT: 9003    
    extra_hosts:
      - "host.docker.internal:host-gateway"  

Edit:
As soon as I remove the ports: - "9003:9003" line, XDebug is not able to connect anymore.

[1] [Config] INFO: Control socket set up succesfully: '@xdebug-ctrl.1'
[1] [Step Debug] INFO: Connecting to configured address/port: host.docker.internal:9003.
[1] [Step Debug] WARN: Creating socket for 'host.docker.internal:9003', poll success, but error: Operation in progress (29).
[1] [Step Debug] ERR: Could not connect to debugging client. Tried: host.docker.internal:9003 (through xdebug.client_host/xdebug.client_port).

Edit 2:
wsl hostname -I in xdebug.client_host seemed to do the trick, connection is established. As soon as I rebuild the container and turn on debugger, it throws an error: Symfony\Component\Console\Exception\RuntimeException: The "--host" option does not exist. , seemingly relating to CMD php artisan serve --host=0.0.0.0 --port=8000 line in the Dockerfile. When I remove this line, error disappears, but I cannot interact with breakpoints whatsoever. It is as if VSCode is resolving exceptions in the background somehow, because all I can see is the logs that look like this: [24] [Step Debug] DEBUG: Breakpoint 240002 (type: line). [24] [Step Debug] DEBUG: D: Breakpoint 240002 (type: line) is already resolved.