VSTS online new build system error "The specified path, file name, or both are too long."

I'm running simple build with the new Visual Studio Team Services Online including the following tasks on a custom windows server 2012 R2 VM:

1. nuget installer
2. npm
3. Gulp
4. Visual Studio Build
5. Visual Studio Test
6. Azure Web App Deployment
7. Index Sources & Publish Symbols
8. Publish Build Artifact

tasks #1 to #4 run successfully, and task #5 (vstest) throws the following error:

Starting task: Test Assemblies **\$(BuildConfiguration)\*test*.dll;-:**\obj\**
Executing the powershell script: C:\a\tasks\VSTest\1.0.34\VSTest.ps1
Entering script VSTest.ps1
vsTestVersion = 14.0
testAssembly = **\release\*test*.dll;-:**\obj\**
testFiltercriteria = 
runSettingsFile = C:\a\_work\1\s
codeCoverageEnabled = false
pathtoCustomTestAdapters = 
overrideTestrunParameters = 
otherConsoleOptions = 
testRunTitle = 
platform = any cpu
configuration = release
publishRunAttachments = true
##[error]The specified path, file name, or both are too long. The fully qualified file name must be less than 260 characters, and the directory name must be less than 248 characters.
##[warning]No test assemblies found matching the pattern: '**\release\*test*.dll;-:**\obj\**'.
Finishing task: VSTest

This blog posts explains the problem (npm downloads create a path which is too long) and how to work around it.