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Thanks a lot. It was just a typo in dhcp_agent.ini in line :- dnsmasq_config_file = /etc/neutron/dnsmasq.conf This typo clearly shows up in previous comment : dmasq_config_file = /etc/neutron/dnsmasq.conf <- wrong Last line from dnsmasq.log :- Mar 16 13:35:08 dnsmasq-dhcp[26111]: 1830014980 sent size: 2 option: 26 mtu 1454 Thank you once again.