docker - dial tcp: lookup docker on 192.168.1.254:53: no such host

Question

Trying to run a docker image with docker inside it, however, it fails with this error:

docker: error during connect: Post "http://docker:2375/v1.24/containers/create": dial tcp: lookup docker on 192.168.1.254:53: no such host.

Dockerfile:

FROM docker:24.0.6-dind

RUN apk update && \
    apk add --no-cache python3

COPY build.sh ./build.sh

RUN chmod +x /build.sh

VOLUME ["/var/run/docker.sock"]

build.sh is a script that will create a docker container for the build.

Any idea?

Tried changing nameserver to 8.8.8.8 on my local etc/resolv.conf. Did not fix.