diff --git a/changelogs/fragments/7360-lxd-remote-addr-host.yml b/changelogs/fragments/7360-lxd-remote-addr-host.yml
new file mode 100644
index 0000000000..31a389e7a6
--- /dev/null
+++ b/changelogs/fragments/7360-lxd-remote-addr-host.yml
@@ -0,0 +1,3 @@
+minor_changes:
+  - lxd connection plugin - automatically translate ``remote_addr`` from FQDN to (short) hostname (https://github.com/ansible-collections/community.general/pull/7360).
+  - lxd connection plugin - update error parsing to work with newer messages mentioning instances (https://github.com/ansible-collections/community.general/pull/7360).
diff --git a/plugins/connection/lxd.py b/plugins/connection/lxd.py
index affb87dfd0..4ad81be399 100644
--- a/plugins/connection/lxd.py
+++ b/plugins/connection/lxd.py
@@ -16,7 +16,9 @@ DOCUMENTATION = '''
     options:
       remote_addr:
         description:
-            - Container identifier.
+            - Instance (container/VM) identifier.
+            - Since community.general 8.0.0, a FQDN can be provided; in that case, the first component (the part before C(.))
+              is used as the instance identifier.
         default: inventory_hostname
         vars:
             - name: inventory_hostname
@@ -71,26 +73,30 @@ class Connection(ConnectionBase):
         if self._play_context.remote_user is not None and self._play_context.remote_user != 'root':
             self._display.warning('lxd does not support remote_user, using container default: root')
 
+    def _host(self):
+        """ translate remote_addr to lxd (short) hostname """
+        return self.get_option("remote_addr").split(".", 1)[0]
+
     def _connect(self):
         """connect to lxd (nothing to do here) """
         super(Connection, self)._connect()
 
         if not self._connected:
-            self._display.vvv(u"ESTABLISH LXD CONNECTION FOR USER: root", host=self.get_option('remote_addr'))
+            self._display.vvv(u"ESTABLISH LXD CONNECTION FOR USER: root", host=self._host())
             self._connected = True
 
     def exec_command(self, cmd, in_data=None, sudoable=True):
         """ execute a command on the lxd host """
         super(Connection, self).exec_command(cmd, in_data=in_data, sudoable=sudoable)
 
-        self._display.vvv(u"EXEC {0}".format(cmd), host=self.get_option('remote_addr'))
+        self._display.vvv(u"EXEC {0}".format(cmd), host=self._host())
 
         local_cmd = [self._lxc_cmd]
         if self.get_option("project"):
             local_cmd.extend(["--project", self.get_option("project")])
         local_cmd.extend([
             "exec",
-            "%s:%s" % (self.get_option("remote"), self.get_option("remote_addr")),
+            "%s:%s" % (self.get_option("remote"), self._host()),
             "--",
             self.get_option("executable"), "-c", cmd
         ])
@@ -104,11 +110,11 @@ class Connection(ConnectionBase):
         stdout = to_text(stdout)
         stderr = to_text(stderr)
 
-        if stderr == "error: Container is not running.\n":
-            raise AnsibleConnectionFailure("container not running: %s" % self.get_option('remote_addr'))
+        if "is not running" in stderr:
+            raise AnsibleConnectionFailure("instance not running: %s" % self._host())
 
-        if stderr == "error: not found\n":
-            raise AnsibleConnectionFailure("container not found: %s" % self.get_option('remote_addr'))
+        if "not found" in stderr:
+            raise AnsibleConnectionFailure("instance not found: %s" % self._host())
 
         return process.returncode, stdout, stderr
 
@@ -116,7 +122,7 @@ class Connection(ConnectionBase):
         """ put a file from local to lxd """
         super(Connection, self).put_file(in_path, out_path)
 
-        self._display.vvv(u"PUT {0} TO {1}".format(in_path, out_path), host=self.get_option('remote_addr'))
+        self._display.vvv(u"PUT {0} TO {1}".format(in_path, out_path), host=self._host())
 
         if not os.path.isfile(to_bytes(in_path, errors='surrogate_or_strict')):
             raise AnsibleFileNotFound("input path is not a file: %s" % in_path)
@@ -127,7 +133,7 @@ class Connection(ConnectionBase):
         local_cmd.extend([
             "file", "push",
             in_path,
-            "%s:%s/%s" % (self.get_option("remote"), self.get_option("remote_addr"), out_path)
+            "%s:%s/%s" % (self.get_option("remote"), self._host(), out_path)
         ])
 
         local_cmd = [to_bytes(i, errors='surrogate_or_strict') for i in local_cmd]
@@ -139,14 +145,14 @@ class Connection(ConnectionBase):
         """ fetch a file from lxd to local """
         super(Connection, self).fetch_file(in_path, out_path)
 
-        self._display.vvv(u"FETCH {0} TO {1}".format(in_path, out_path), host=self.get_option('remote_addr'))
+        self._display.vvv(u"FETCH {0} TO {1}".format(in_path, out_path), host=self._host())
 
         local_cmd = [self._lxc_cmd]
         if self.get_option("project"):
             local_cmd.extend(["--project", self.get_option("project")])
         local_cmd.extend([
             "file", "pull",
-            "%s:%s/%s" % (self.get_option("remote"), self.get_option("remote_addr"), in_path),
+            "%s:%s/%s" % (self.get_option("remote"), self._host(), in_path),
             out_path
         ])