[angular-cli] Error: Local workspace file ('angular.json') could not be found

I also faced same issue and i just executed below command.

ng update @angular/cli --migrate-only --from=1.6.4

It simply delete angular-cli.json and create angular.json. You can find this in logs.

Once you start execution. You will be able to see below logs in your terminal.

        Updating karma configuration
        Updating configuration
        Removing old config file (.angular-cli.json)
        Writing config file (angular.json)
        Some configuration options have been changed, please make sure to update any                                     
        npm scripts which you may have modified.
        DELETE .angular-cli.json
        CREATE angular.json (3599 bytes)
        UPDATE karma.conf.js (962 bytes)
        UPDATE src/tsconfig.spec.json (324 bytes)
        UPDATE package.json (1405 bytes)
        UPDATE tsconfig.json (407 bytes)
        UPDATE tslint.json (3026 bytes)