diff --git a/src/spec-node/dockerCompose.ts b/src/spec-node/dockerCompose.ts
index c209fe95b..6dbbd4d05 100644
--- a/src/spec-node/dockerCompose.ts
+++ b/src/spec-node/dockerCompose.ts
@@ -6,7 +6,7 @@
 import * as yaml from 'js-yaml';
 import * as shellQuote from 'shell-quote';
 
-import { createContainerProperties, startEventSeen, ResolverResult, getTunnelInformation, DockerResolverParameters, inspectDockerImage, getEmptyContextFolder, getFolderImageName, SubstitutedConfig, checkDockerSupportForGPU } from './utils';
+import { createContainerProperties, startEventSeen, ResolverResult, getTunnelInformation, DockerResolverParameters, inspectDockerImage, getEmptyContextFolder, getFolderImageName, SubstitutedConfig, checkDockerSupportForGPU, isBuildKitImagePolicyError } from './utils';
 import { ContainerProperties, setupInContainer, ResolverProgress } from '../spec-common/injectHeadless';
 import { ContainerError } from '../spec-common/errors';
 import { Workspace } from '../spec-utils/workspaces';
@@ -274,6 +274,10 @@ ${cacheFromOverrideContent}
 				await dockerComposeCLI(infoParams, ...args);
 			}
 		} catch (err) {
+			if (isBuildKitImagePolicyError(err)) {
+				throw new ContainerError({ description: 'Could not resolve image due to policy.', originalError: err, data: { fileWithError: localComposeFiles[0] } });
+			}
+
 			throw err instanceof ContainerError ? err : new ContainerError({ description: 'An error occurred building the Docker Compose images.', originalError: err, data: { fileWithError: localComposeFiles[0] } });
 		}
 	}
diff --git a/src/spec-node/singleContainer.ts b/src/spec-node/singleContainer.ts
index a590d72b7..0aa45fa22 100644
--- a/src/spec-node/singleContainer.ts
+++ b/src/spec-node/singleContainer.ts
@@ -4,7 +4,7 @@
  *--------------------------------------------------------------------------------------------*/
 
 
-import { createContainerProperties, startEventSeen, ResolverResult, getTunnelInformation, getDockerfilePath, getDockerContextPath, DockerResolverParameters, isDockerFileConfig, uriToWSLFsPath, WorkspaceConfiguration, getFolderImageName, inspectDockerImage, logUMask, SubstitutedConfig, checkDockerSupportForGPU } from './utils';
+import { createContainerProperties, startEventSeen, ResolverResult, getTunnelInformation, getDockerfilePath, getDockerContextPath, DockerResolverParameters, isDockerFileConfig, uriToWSLFsPath, WorkspaceConfiguration, getFolderImageName, inspectDockerImage, logUMask, SubstitutedConfig, checkDockerSupportForGPU, isBuildKitImagePolicyError } from './utils';
 import { ContainerProperties, setupInContainer, ResolverProgress, ResolverParameters } from '../spec-common/injectHeadless';
 import { ContainerError, toErrorText } from '../spec-common/errors';
 import { ContainerDetails, listContainers, DockerCLIParameters, inspectContainers, dockerCLI, dockerPtyCLI, toPtyExecParameters, ImageDetails, toExecParameters } from '../spec-shutdown/dockerUtils';
@@ -248,6 +248,10 @@ async function buildAndExtendImage(buildParams: DockerResolverParameters, config
 			await dockerCLI(infoParams, ...args);
 		}
 	} catch (err) {
+		if (isBuildKitImagePolicyError(err)) {
+			throw new ContainerError({ description: 'Could not resolve image due to policy.', originalError: err, data: { fileWithError: dockerfilePath } });
+		}
+
 		throw new ContainerError({ description: 'An error occurred building the image.', originalError: err, data: { fileWithError: dockerfilePath } });
 	}
 
diff --git a/src/spec-node/utils.ts b/src/spec-node/utils.ts
index 514d8c343..5c27c46dc 100644
--- a/src/spec-node/utils.ts
+++ b/src/spec-node/utils.ts
@@ -205,6 +205,12 @@ export async function checkDockerSupportForGPU(params: DockerCLIParameters | Doc
 	return runtimeFound;
 }
 
+export function isBuildKitImagePolicyError(err: any): boolean {
+	const imagePolicyErrorString = 'could not resolve image due to policy';
+	return (err?.cmdOutput && typeof err.cmdOutput === 'string' && err.cmdOutput.indexOf(imagePolicyErrorString) > -1) ||
+		(err?.stderr && typeof err.stderr === 'string' && err.stderr.indexOf(imagePolicyErrorString) > -1);
+}
+
 export async function inspectDockerImage(params: DockerResolverParameters | DockerCLIParameters, imageName: string, pullImageOnError: boolean) {
 	try {
 		return await inspectImage(params, imageName);