Cherry pick #7991 to v1.70.x

[arjan-bal]

Original PR: #7991
Relates issue: #7982

RELEASE NOTES: N/A

[codecov]

Codecov Report

All modified and coverable lines are covered by tests ✅

Project coverage is 81.98%. Comparing base (724f450) to head (6df0b67).
Report is 1 commits behind head on v1.70.x.

Additional details and impacted files

@@             Coverage Diff             @@
##           v1.70.x    #8004      +/-   ##
===========================================
- Coverage    82.28%   81.98%   -0.30%     
===========================================
  Files          381      381              
  Lines        38539    38542       +3     
===========================================
- Hits         31712    31600     -112     
- Misses        5535     5615      +80     
- Partials      1292     1327      +35     

Files with missing lines	Coverage Δ
...internal/balancer/clusterresolver/configbuilder.go	91.07% <100.00%> (+0.16%)	⬆️

... and 22 files with indirect coverage changes

[purnesh42H]

lgtm