I tried the second option you suggested. I removed the 100n caps and replaced it with a 22n(Triac) and 47n cap(for optocoupler) caps instead of 10n since I only had those with me.
Now the problem of flashing of LED is gone. I am wondering how much it will affect my snubber circuit performance and what could be the possible tradeoff.
As always: it depends ...
The primary reason for having a snubber across the triac is to limit the dV/dt to keep it from turning on unwanted. As long as it doesn't turn on when it's supposed to stay off, the snubber is sufficient. A well behaved load may not require a snubber at all, but there's still the power line as a source of transients which could turn on the triac randomly. There are some standards for lab EMI testing, you'd optimize the snubber under these conditions in an EMC lab, supposed you want to sell your product. If you don't intend to sell your circuit, use whatever components you like as long as it works for you.