Steps for the process

1. Quit Docker Desktop

2. Open Command Prompt (or PowerShell) run with administrator

3. List existing WSL storages

wsl --list -v

4. Turn off WSL

wsl  --shutdown

5. Create following path (with all subfolders):

mkdir D:\Docker\wsl\data\

6. Export containers and their data. This step can actually take some time depending on the size of the original ext4.vhdx file.

wsl --export docker-desktop-data "D:\Docker\wsl\data\docker-desktop-data.tar"

7. Unregister the container data from WSL. It will also automatically delete the ext4.vhdx from original location.

wsl --unregister docker-desktop-data

8. Import the container data, but keep it into another location (i.e. on drive D: as defined above). This will automatically create ext4.vhdx file from the backup.

wsl --import docker-desktop-data "D:\Docker\wsl\data" "D:\Docker\wsl\data\docker-desktop-data.tar" --version 2

9. Delete the exported .tar file: D:\Docker\wsl\data\docker-desktop-data.tar

10. Start Docker Desktop and run your containers.