macOS Tahoe update breaks using external display in clamshell mode (discussions.apple.com)

I've just run into this issue. At first I thought that there was something wrong with the cable or the power, but now stumbled on this thread.

Laptop: 13" MacBook Pro, M1 processor, 2020 edition Display: Apple Studio Display

Update: Running this in the terminal works:

sudo pmset -a disablesleep 1

And if you want to revert that, run this:

sudo pmset -a disablesleep 0