As noted by MacRumors, A new configuration of the M1 MacBook Air with 128GB of storage and a lower US$799 price has today been spotted on Apple’s U.S. Education Institution Hardware and Software Price List. However, it should be noted that 128GB isn’t a lot of storage.
The M1 MacBook Air is only available with 256GB, 512GB, 1TB, or 2TB of storage with prices starting at $999. There is currently no 128GB configuration on the Apple Store.