DNS resolution inside LKE kubernetes not working

For some reason DNS resolution inside my kubernetes is not working: psql.default.svc.cluster.local could not be resolved (3: Host not found). Using a direct IP works.

Checking host from a test pod works: psql.test.pod.cluster.local has address 10.10.10.1

Endpoints are:

NAME           ENDPOINTS            AGE
kubernetes     192.168.128.27:6443   2d13h
package-repo   10.2.0.30:8080       168m
psql           10.2.0.27:5432       82m

pod -o wide:

NAME                            READY   STATUS    RESTARTS   AGE     IP          NODE                        NOMINATED NODE   READINESS GATES
dnsutils                        1/1     Running   0          20m     10.2.0.29   lke5178-6252-5fr4cb31ac7f   <none>           <none>
package-repo-67f47d87f7-pjpsb   1/1     Running   0          7m38s   10.2.0.30   lke5178-6252-5fr4cb31ac7f   <none>           <none>
psql-d99d4868c-c9v57            1/1     Running   0          62m     10.2.0.27   lke5178-6252-5fr4cb31ac7f   <none>           <none>

All system pods are functional:

NAME                                      READY   STATUS    RESTARTS   AGE
calico-kube-controllers-77587f49b-snow   1/1     Running   6          2d13h
calico-node-55zfs                         1/1     Running   1          2d13h
coredns-6955765f44-2kx49                  1/1     Running   1          2d13h
coredns-6955765f44-6snbn                  1/1     Running   1          2d13h
csi-linode-controller-0                   3/3     Running   3          2d13h
csi-linode-node-5p4j7                     2/2     Running   2          2d13h
kube-proxy-963jp                          1/1     Running   1          2d13h

Really strange. What could be wrong?