DNS resolution not working: no reply from DNS upstream server, although pi-hole is forwarding queries
Expected Behaviour:
Forwarding queries to DNS service (for example 1.1.1.1) and returning an IP address, allowing for internet queries.
Actual Behaviour:
No internet connection when using pi-hole. All queries are documented with successful forwarding and no reply from DNS server.
$ nslookup pi-hole.net localhost
;; communications error to 127.0.0.1#53: timed out
;; no servers could be reached
I am running Pi-Hole on a local Ubuntu server, internet connection is working and is connected via Ethernet. Tried docker installation with same outcome. As a troubleshooted I accidentally messed up local DNS resolution so badly that I had to reinstall Ubuntu. Here we go again on a clean install!
I have run out of ideas regarding a probable cause for the issue. There seems to be a problem with IPv4 connectivity and pi hole according to the debug session. Another clue is that during installation through script it said that it can't dig pi-hole.net to check if my OS is supported. So I had to force-skip this check.
I would very much appreciate your ideas! 
It's driving me a bit crazy.