iOS 15 extension incorrect password

I had this issue after restoring from a backup. I only had one 1Password.com account added and both the 1Password app and the new Safari extension refused to accept it. It was stuck with my previous password which worked to unlock the app and extension, but when trying to change it in the app it said it was the wrong password.

The solution for me was to go to Settings -> Advanced -> Erase All 1Password Data and log in again. Could be worth a try if you have your account details available to set it up again.