GIT LFS throws "cannot fork to run external filter" error when repository caching on remote agents is enabled

Summary

Source code checkout task throws the below error with LFS enabled GIT repositories when run on a remote agent.

error: cannot fork to run external filter 
error: external filter  failed

Steps to Reproduce

1. Dedicate a remote agent to a plan that has Source code checkout task that is tagged to a GIT LFS repository
2. Make sure the option 'Enabled repository caching on remote agents' option in the respecive Linked Repository settings page is enabled.
3. Run the plan

Expected Results

The plan executes successfully without any error

Actual Results

The below exception is thrown multiple times in the build log file:

simple	18-Mar-2018 01:15:09	error: cannot run : No such file or directory
simple	18-Mar-2018 01:15:09	error: cannot fork to run external filter 
simple	18-Mar-2018 01:15:09	error: external filter  failed

Workaround

Disable Cache by going to Linked Repositories -> Repo -> disable 'Enabled repository caching on remote agents'

Solution

Upgrade git to version 2.8