Python VS code does not connect with IPython kernel

I have created a new virtual env and trying to connect with the VS code. When I open the folder in VS code that contains the file and virtual env, on the left bottom side I can see the python interperator selected as shown in the following figure:

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However, when I run the program, it shows the message that it is connecting to IPython Kernel as shown in the following picutre

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However, after some time it throws an error message that "unable to start session for kernel python" as shown in the following picture:

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The top right corner of VS code is shown in the following picture:

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Could anyone help me in fixing the issue?

Solution

I had the same issue starting yesterday with two new virtual environments and different python versions (3.8.1 and 3.8.5). I can confirm that Simm Enley's suggested terminal command worked for me.

python -m pip install 'traitlets==4.3.3' --force-reinstall

It has to be executed from within the corresponding virtual environment. A newer version of traitlets (5.0.0) installed by VSCode into the new virtual environment in order to to run the Interactive Terminal caused the issue, it seems like.