diff --git a/tcp_tests/templates/local_dns/underlay--meta-data.yaml b/tcp_tests/templates/local_dns/underlay--meta-data.yaml
new file mode 100644
index 0000000..3699401
--- /dev/null
+++ b/tcp_tests/templates/local_dns/underlay--meta-data.yaml
@@ -0,0 +1,4 @@
+| # All the data below will be stored as a string object
+  instance-id: iid-local1
+  hostname: {hostname}
+  local-hostname: {hostname}
diff --git a/tcp_tests/templates/local_dns/underlay--user-data1604.yaml b/tcp_tests/templates/local_dns/underlay--user-data1604.yaml
new file mode 100644
index 0000000..39ce86e
--- /dev/null
+++ b/tcp_tests/templates/local_dns/underlay--user-data1604.yaml
@@ -0,0 +1,100 @@
+| # All the data below will be stored as a string object
+  #cloud-config, see http://cloudinit.readthedocs.io/en/latest/topics/examples.html
+
+  ssh_pwauth: True
+  users:
+   - name: root
+     sudo: ALL=(ALL) NOPASSWD:ALL
+     shell: /bin/bash
+     ssh_authorized_keys:
+     {% for key in config.underlay.ssh_keys %}
+      - ssh-rsa {{ key['public'] }}
+     {% endfor %}
+
+  disable_root: false
+  chpasswd:
+   list: |
+    root:r00tme
+   expire: False
+
+  bootcmd:
+   # Block access to SSH while node is preparing
+   - cloud-init-per once sudo iptables -A INPUT -p tcp --dport 22 -j DROP
+   # Enable root access
+   - sed -i -e '/^PermitRootLogin/s/^.*$/PermitRootLogin yes/' /etc/ssh/sshd_config
+   - service sshd restart
+  output:
+    all: '| tee -a /var/log/cloud-init-output.log /dev/tty0'
+
+  runcmd:
+   - export TERM=linux
+   - export LANG=C
+   # Configure dhclient
+   - sudo echo "nameserver {gateway}" >> /etc/resolvconf/resolv.conf.d/base
+   - sudo resolvconf -u
+
+   # Prepare network connection
+   - sudo ifup ens3
+   #- sudo route add default gw {gateway} {interface_name}
+   - sudo ifup ens4
+
+   # Create swap
+   - fallocate -l 4G /swapfile
+   - chmod 600 /swapfile
+   - mkswap /swapfile
+   - swapon /swapfile
+   - echo "/swapfile   none    swap    defaults   0   0" >> /etc/fstab
+
+
+   ############## Cloud repo01 node ##################
+   - echo "nameserver 172.18.208.44" >> /etc/resolv.conf;
+   - echo "nameserver 8.8.8.8" >> /etc/resolv.conf;
+   - which wget >/dev/null || (apt-get update; apt-get install -y wget);
+
+   - echo "deb [arch=amd64] http://apt.mirantis.com/xenial {{ REPOSITORY_SUITE }} salt extra" > /etc/apt/sources.list.d/mcp_salt.list;
+   - wget -O - http://apt.mirantis.com/public.gpg | apt-key add -;
+   - echo "deb http://repo.saltstack.com/apt/ubuntu/16.04/amd64/2016.3 xenial main" > /etc/apt/sources.list.d/saltstack.list;
+   - wget -O - https://repo.saltstack.com/apt/ubuntu/16.04/amd64/2016.3/SALTSTACK-GPG-KEY.pub | apt-key add -;
+
+   - eatmydata apt-get clean && apt-get update
+
+   # Install common packages
+   - eatmydata apt-get install -y salt-minion python-pip git curl tmux byobu iputils-ping traceroute htop tree;
+   - cd /tmp;
+   - git clone https://github.com/TatyankaLeontovich/salt-formula-nginx;
+   - git clone https://github.com/TatyankaLeontovich/salt-dnsmasq;
+   - git clone https://github.com/TatyankaLeontovich/underpillar;
+   - mkdir -p /srv/pillar/;
+   - mkdir -p /srv/salt;
+   - cd /srv/salt;
+   - ln -s /tmp/salt-formula-nginx/nginx;
+   - ln -s /tmp/salt-dnsmasq/dnsmasq;
+   - cp /tmp/underpillar/pillar/*.sls /srv/pillar/;
+   - cp /tmp/underpillar/states/*.sls /srv/salt/;
+   - cp /srv/pillar/top_localdns.sls /srv/pillar/top.sls;
+   - cp /srv/salt/top_localdns.sls /srv/salt/top.sls;
+   - salt-call --local  --state-output=mixed state.sls dnsmasq;
+   - salt-call --local  --state-output=mixed state.sls nginx;
+   ########################################################
+   # Node is ready, allow SSH access
+   - echo "Allow SSH access ..."
+   - sudo iptables -D INPUT -p tcp --dport 22 -j DROP
+   ########################################################
+
+  write_files:
+   - path: /etc/network/interfaces
+     content: |
+          auto ens3
+          iface ens3 inet dhcp
+          auto ens4
+          iface ens4 inet dhcp
+
+   - path: /root/.ssh/config
+     owner: root:root
+     permissions: '0600'
+     content: |
+          Host *
+            ServerAliveInterval 300
+            ServerAliveCountMax 10
+            StrictHostKeyChecking no
+            UserKnownHostsFile /dev/null
\ No newline at end of file
diff --git a/tcp_tests/templates/local_dns/underlay.yaml b/tcp_tests/templates/local_dns/underlay.yaml
new file mode 100644
index 0000000..041f934
--- /dev/null
+++ b/tcp_tests/templates/local_dns/underlay.yaml
@@ -0,0 +1,112 @@
+# Set the repository suite, one of the: 'nightly', 'testing', 'stable', or any other required
+{% set REPOSITORY_SUITE = os_env('REPOSITORY_SUITE', 'testing') %}
+
+{% import 'local_dns/underlay--meta-data.yaml' as CLOUDINIT_META_DATA with context %}
+{% import 'local_dns/underlay--user-data1604.yaml' as CLOUDINIT_USER_DATA_1604 with context %}
+
+---
+aliases:
+ - &interface_model {{ os_env('INTERFACE_MODEL', 'virtio') }}
+ - &cloudinit_meta_data {{ CLOUDINIT_META_DATA }}
+ - &cloudinit_user_data_1604 {{ CLOUDINIT_USER_DATA_1604 }}
+
+{% set DOMAIN_NAME = os_env('LAB_CONFIG_NAME', 'local_dns') + '.local' %}
+{% set HOSTNAME_REPO01 = os_env('HOSTNAME_REPO01', 'repo01.' + DOMAIN_NAME) %}
+
+template:
+  devops_settings:
+    env_name: {{ os_env('ENV_NAME', 'local_dns_' + REPOSITORY_SUITE + "_" + os_env('BUILD_NUMBER', '')) }}
+
+    address_pools:
+      private-pool01:
+        net: {{ os_env('PRIVATE_ADDRESS_POOL01', '10.60.0.0/16:24') }}
+        params:
+          ip_reserved:
+            gateway: +1
+            l2_network_device: +1
+            default_{{ HOSTNAME_REPO01 }}: +122
+          ip_ranges:
+            dhcp: [+90, -10]
+
+      admin-pool01:
+        net: {{ os_env('ADMIN_ADDRESS_POOL01', '10.70.0.0/16:24') }}
+        params:
+          ip_reserved:
+            gateway: +1
+            l2_network_device: +1
+            default_{{ HOSTNAME_REPO01 }}: +122
+          ip_ranges:
+            dhcp: [+90, -10]
+
+    groups:
+      - name: default
+        driver:
+          name: devops.driver.libvirt
+          params:
+            connection_string: !os_env CONNECTION_STRING, qemu:///system
+            storage_pool_name: !os_env STORAGE_POOL_NAME, default
+            stp: False
+            hpet: False
+            enable_acpi: true
+            use_host_cpu: !os_env DRIVER_USE_HOST_CPU, true
+            use_hugepages: !os_env DRIVER_USE_HUGEPAGES, false
+
+        network_pools:
+          admin: admin-pool01
+          private: private-pool01
+
+        l2_network_devices:
+          private:
+            address_pool: private-pool01
+            dhcp: true
+
+          admin:
+            address_pool: admin-pool01
+            dhcp: true
+            forward:
+              mode: nat
+
+        group_volumes:
+         - name: cloudimage1604    # This name is used for 'backing_store' option for node volumes.
+           source_image: !os_env IMAGE_PATH1604  # https://cloud-images.ubuntu.com/xenial/current/xenial-server-cloudimg-amd64-disk1.img or
+                                             # http://apt.tcpcloud.eu/images/ubuntu-16-04-x64-201608231004.qcow2
+           format: qcow2
+
+        nodes:
+          - name: {{ HOSTNAME_REPO01 }}
+            role: local_repo
+            params:
+              vcpu: !os_env SLAVE_NODE_CPU, 2
+              memory: !os_env SLAVE_NODE_MEMORY, 2048
+              boot:
+                - hd
+              cloud_init_volume_name: iso
+              cloud_init_iface_up: ens3
+              volumes:
+                - name: system
+                  capacity: !os_env NODE_VOLUME_SIZE, 150
+                  backing_store: cloudimage1604
+                  format: qcow2
+                - name: iso  # Volume with name 'iso' will be used
+                             # for store image with cloud-init metadata.
+                  capacity: 1
+                  format: raw
+                  device: cdrom
+                  bus: ide
+                  cloudinit_meta_data: *cloudinit_meta_data
+                  cloudinit_user_data: *cloudinit_user_data_1604
+
+              interfaces:
+                - label: ens3
+                  l2_network_device: admin
+                  interface_model: *interface_model
+                - label: ens4
+                  l2_network_device: private
+                  interface_model: *interface_model
+              network_config:
+                ens3:
+                  networks:
+                    - admin
+                ens4:
+                  networks:
+                    - private