Unable to read serverless .zip deploy file (probably)

Hi all,
I have a project that worked all the time and today after another deploy command lambda totally broke. I keep getting following error:

{“errorType”:“Error”,“errorMessage”:"
Could not find module root given file: “/var/task/_optimize/ac-pd-tw
o-way-sync-dev-main/src/lambda.js”. Do you have a package.json fil
e? ",“stack”:["Error: Could not find module root given file: “/var/t
ask/_optimize/ac-pd-two-way-sync-dev-main/src/lambda.js”. Do you hav
e a package.json file? “,”

From what I have been able to find so far it might mean that .zip deployment file on S3 has wrong format and it can’t be read by AWS.
Do you have any tips?

Maks