'npm' is not recognized as an internal or external command + VS Code + Salesforce

I started facing the same issue, the very moment I updated Salesforce CLI to the latest version "sfdx-cli/7.56.1-2773b53bf5".

Everything was fine before this version of CLI, however, seems that this version requires NPM package manager as well for CLI to run but it's not auto-installed or prompted by any means during CLI update that it's required.

The only solution I found to make it work as of now on my Windows machine, is by installing the NPM package manager and it started to work like it was.

I was also facing this error..... is because of the Node.js not installed or it has older version. I have installed latest node.js with npm from https://www.npmjs.com/get-npm

this solved the issue!