SPFX 18.2 gulp serve issues

I have recently updated a number of modern spfx webparts to spfx 18.2 and this morning when I try to debug in workbench (locally and on tenant) I am getting serve errors in relation to react and react-dom

I am able to serve projects not using react successfully but when using spfx 18.2 but not react 16.8.4 - has anybody else encountered this issue.

I have restored to previous code backup, as well as restoring to previous days last git commit neither had a positive effect.

I get no errors in terminal but workbench shows the following message:

SPLoaderError.loadComponentError]:
***Failed to load component "174429f3-8ff8-4143-8f12-7c398d264e9a" (FusionWebPartWebPart).
Original error: ***Failed to load URL 'https://localhost:4321/node_modules/react/dist/react.js' for resource 'react' in component '174429f3-8ff8-4143-8f12-7c398d264e9a' (FusionWebPartWebPart). The file was not found in the server.
Make sure that you are running 'gulp serve'.

***INNERERROR:
***Failed to load URL 'https://localhost:4321/node_modules/react/dist/react.js' for resource 'react' in component '174429f3-8ff8-4143-8f12-7c398d264e9a' (FusionWebPartWebPart). The file was not found in the server.
Make sure that you are running 'gulp serve'.
***CALLSTACK:
Error
    at SPLoaderError.SPError [as constructor] (https://localhost:4321/temp/workbench-packages/@microsoft_sp-loader/dist/sp-loader-assembly_default.js:8390:24)
    at new SPLoaderError (https://localhost:4321/temp/workbench-packages/@microsoft_sp-loader/dist/sp-loader-assembly_default.js:4036:28)
    at Function.ErrorBuilder.buildErrorWithVerboseLog (https://localhost:4321/temp/workbench-packages/@microsoft_sp-loader/dist/sp-loader-assembly_default.js:3789:21)
    at Function.ErrorBuilder.buildLoadComponentError (https://localhost:4321/temp/workbench-packages/@microsoft_sp-loader/dist/sp-loader-assembly_default.js:3697:21)
    at https://localhost:4321/temp/workbench-packages/@microsoft_sp-loader/dist/sp-loader-assembly_default.js:6275:47

Vesa Juvonen