Thanks a lot. Just one question. Is it possible to use dns name instead of IP address in IOS configuration. i.e. for destination address in GRE tunnel?

no.You need to use only the IP address for GRE source and destination,

There actually is a nifty way to make this work: set up a config script which contains this:

---

interface tunnel

tunnel destination remote.host.name

end

---

Copy this script to the router via TFTP or HTTP, and set up a kron job to copy the file to running-config every minute. IOS will resolve the hostname to the correct IP address. You will also need to issue a "file prompt quiet" command to the router in config mode, or this will not work.

Lastly, whenever the IP address changes, your GRE tunnel may be down for a few minutes.

Great! Thanks a lot. Just to make clear for me: when I use coomand tunnel destination remote.host.name (DNS name instead IP addr.) IOS resolve remote.host.name once and cache IP address? It doesn't query DNS server anymore (i.e. when tunnel gets up)?

IOS resolves the DNS and applies the configuration with the resolved IP address. It's a command parsing feature - the actual configuration cannot be with DNS name. Therefor it resolves the name only once (during entering the command), and writes resolved IP address. If DNS server will not be available at the time when you issued the command, it will not resolve the IP address and configuration will be invalid.

Make sure DNS server is available whenever you are pasting/typing/issuing commands with DNS names.

Antonio, yes, that is correct. By setting up the kron job, you are simulating typing in the correct ip address every minute. We have a few tunnels running like this, and it works very well.