Vmintegration and dns

When I deploy istio vmintegration using this guide: https://istio.io/latest/docs/setup/install/virtual-machine/ to a vm that has preinstalled consul and dnsmasq the consul dns stops working, so I cannot use dns to resolve consul addresses. external dns works fine.

One thing is if the config is not working on the vm and I start the istio, the vm dns does not work at all. Stopping istio service does not resolve the issue. Only way to resolve is to reboot the server.

This might be due to the fact that the istio proxy is intercepting DNS queries. https://preliminary.istio.io/latest/blog/2020/dns-proxy/