Having trouble creating Lambdas due to proxy related issues? This template might help.

helloworld-lambda.yml

########
# Deploys a "Hello World" Lambda Function
# @createdby Christian Dechery
# @date 25-nov-2022
########

AWSTemplateFormatVersion: "2010-09-09"

Description: Deploys a very basic "Hello World" Lambda function

Parameters:
  UseVPC:
    Type: String
    AllowedValues:
      - "yes"
      - "no"
    Default: "no"
  VpcId:
    Type: AWS::EC2::VPC::Id
    Description: Select a VPC to launch EC2 instances (if UseVPC=yes)
  SubnetIDs:
    Type: List<AWS::EC2::Subnet::Id>
    Description: Select two private subnets to host the server (if UseVPC=yes)
  Runtime:
    Type: String
    Description: Select the runtime of your function (default = python3.8)
    AllowedValues:
      - dotnet6
      - dotnetcore3.1
      - go1.x
      - java11
      - java8
      - java8.al2
      - nodejs12.x
      - nodejs14.x
      - nodejs16.x
      - provided
      - provided.al2
      - python3.7
      - python3.8
      - python3.9
      - ruby2.7
    Default: python3.8

Conditions:
  WithVPC: !Equals [!Ref UseVPC, "yes"]
  NoVPC: !Equals [!Ref UseVPC, "no"]

Resources:
  LambdaSecurityGroup:
    Condition: WithVPC
    Type: AWS::EC2::SecurityGroup
    Properties:
      GroupDescription: Sandbox Lambda security group (egress = all)
      VpcId: !Ref VpcId

  LambdaSecurityGroupOutbound:
    Condition: WithVPC
    Type: AWS::EC2::SecurityGroupEgress
    Properties:
      GroupId: !Ref LambdaSecurityGroup
      IpProtocol: -1
      CidrIp: 0.0.0.0/0

  LambdaRole:
    Type: AWS::IAM::Role
    Properties:
      AssumeRolePolicyDocument:
        Statement:
          - Action: sts:AssumeRole
            Effect: Allow
            Principal:
              Service: lambda.amazonaws.com
      Description: "Give access to Lambda do execute"
      ManagedPolicyArns:
        - arn:aws:iam::aws:policy/service-role/AWSLambdaBasicExecutionRole
        - arn:aws:iam::aws:policy/service-role/AWSLambdaVPCAccessExecutionRole

  LambdaFunctionWithVPC:
    Condition: WithVPC
    Type: AWS::Lambda::Function
    Properties:
      Role: !GetAtt LambdaRole.Arn
      Code: 
        ZipFile: |
          import os
          import json
                  
          def lambda_handler(event, context):
              json_region = os.environ['AWS_REGION']
              return {
                  "statusCode": 200,
                  "headers": {
                      "Content-Type": "application/json"
                  },
                  "body": json.dumps({
                      "Region ": json_region
                  })
              }

      Runtime: !Ref Runtime
      Handler: lambda_function.lambda_handler
      VpcConfig:
        SecurityGroupIds:
          - !Ref LambdaSecurityGroup
        SubnetIds: !Ref SubnetIDs

  LambdaFunctionNoVPC:
    Type: AWS::Lambda::Function
    Condition: NoVPC
    Properties:
      Role: !GetAtt LambdaRole.Arn
      Code: 
        ZipFile: |
          import os
          import json
                  
          def lambda_handler(event, context):
              json_region = os.environ['AWS_REGION']
              return {
                  "statusCode": 200,
                  "headers": {
                      "Content-Type": "application/json"
                  },
                  "body": json.dumps({
                      "Region ": json_region
                  })
              }

      Runtime: !Ref Runtime
      Handler: lambda_function.lambda_handler