2.42.0 bug: The element XCLocalSwiftPackageReference is not supported when generating mocks with Mockingbird

I have the following problem.

I am using Mockingbird (https://github.com/typealiased/mockingbird) for mocking.
When i am building my test target, i get an error in my generate mockingbird mocks custom shell script.

The script is the following:

set -eu

# Prevent Xcode 13 from running this script while indexing.
[[ "${ACTION}" == "indexbuild" ]] && exit 0

# Infer the derived data location from the build environment.
[[ -z "${DERIVED_DATA+x}" ]] && DERIVED_DATA="$(echo "${BUILD_ROOT}" | sed -n 's|\(.*\)/Build/.*|\1|p')"

"${DERIVED_DATA}/SourcePackages/checkouts/mockingbird/mockingbird" generate --targets "develop" "developTests"

In my project.yml i have the following target:

  developTests:
    type: bundle.unit-test
    platform: iOS
    settings:
    dependencies:
      - target: develop
      - package: Mockingbird
    sources:
      - path: appTests
      - path: MockingbirdMocks
        optional: true
    preBuildScripts:
      - path: ./bin/mockingbird.sh
        name: Generate Mockingbird Mocks
        outputFiles:
          - $(SRCROOT)/MockingbirdMocks/developMocks.generated.swift
          - $(SRCROOT)/MockingbirdMocks/developTestsMocks.generated.swift
        basedOnDependencyAnalysis: false

The problem started when update xcodegen to 2.42.0.
I am using MacOS Sequoia 15, and XCode 16.0.0

Any help would be highly appreciated.
Thanks in advance!

Start with the reported version change from XcodeGen 2.42.0 and inspect the project.yml dependency configuration and bin/mockingbird.sh generation command. Reproduce the unsupported XCLocalSwiftPackageReference error with the stated Xcode and macOS versions, then verify that generated projects support the Mockingbird setup without that error.