Padding oracle attacks are a huge nuisance when using CBC mode encryption without authentication. Wouldn't all those padding oracle attacks be avoided if we'd just use bit padding instead? Or is does bit padding also leak information during decryption?
With byte aligned data, bit padding allows the padding oracle attack. Every message has to end in a
0x80 byte followed by any number of zero bytes. You can iterate one byte at a time just like with many other byte paddings.
If you allowed plaintexts that are not a full number of bytes long, the attack wouldn't be possible. (Every plaintext that didn't end in a full block of zeros would decode, so no attack.) However, most real world encryption uses byte aligned data.