diff --git a/web/packages/teleterm/src/ui/Search/pickers/ActionPicker.tsx b/web/packages/teleterm/src/ui/Search/pickers/ActionPicker.tsx
index a4e6f661b69b6..98367d01db9ac 100644
--- a/web/packages/teleterm/src/ui/Search/pickers/ActionPicker.tsx
+++ b/web/packages/teleterm/src/ui/Search/pickers/ActionPicker.tsx
@@ -51,7 +51,7 @@ import { CrossClusterResourceSearchResult } from '../useSearch';
 
 import { useActionAttempts } from './useActionAttempts';
 import { getParameterPicker } from './pickers';
-import { ResultList, NonInteractiveItem } from './ResultList';
+import { ResultList, NonInteractiveItem, IconAndContent } from './ResultList';
 import { PickerContainer } from './PickerContainer';
 
 export function ActionPicker(props: { input: ReactElement }) {
@@ -374,30 +374,9 @@ type SearchResultItem<T> = {
   getOptionalClusterName: (uri: uri.ResourceUri) => string;
 };
 
-function Item(
-  props: React.PropsWithChildren<{
-    Icon: React.ComponentType<{
-      color: string;
-      fontSize: string;
-      lineHeight: string;
-    }>;
-    iconColor: string;
-  }>
-) {
-  return (
-    <Flex alignItems="flex-start" gap={2}>
-      {/* lineHeight of the icon needs to match the line height of the first row of props.children */}
-      <props.Icon color={props.iconColor} fontSize="20px" lineHeight="24px" />
-      <Flex flexDirection="column" gap={1} minWidth={0} flex="1">
-        {props.children}
-      </Flex>
-    </Flex>
-  );
-}
-
 function ClusterFilterItem(props: SearchResultItem<SearchResultCluster>) {
   return (
-    <Item Icon={icons.Lan} iconColor="text.slightlyMuted">
+    <IconAndContent Icon={icons.Lan} iconColor="text.slightlyMuted">
       <Text typography="body1">
         Search only in{' '}
         <strong>
@@ -407,7 +386,7 @@ function ClusterFilterItem(props: SearchResultItem<SearchResultCluster>) {
           />
         </strong>
       </Text>
-    </Item>
+    </IconAndContent>
   );
 }
 
@@ -428,7 +407,7 @@ function ResourceTypeFilterItem(
   props: SearchResultItem<SearchResultResourceType>
 ) {
   return (
-    <Item
+    <IconAndContent
       Icon={resourceIcons[props.searchResult.resource]}
       iconColor="text.slightlyMuted"
     >
@@ -441,7 +420,7 @@ function ResourceTypeFilterItem(
           />
         </strong>
       </Text>
-    </Item>
+    </IconAndContent>
   );
 }
 
@@ -453,7 +432,7 @@ export function ServerItem(props: SearchResultItem<SearchResultServer>) {
   );
 
   return (
-    <Item Icon={icons.Server} iconColor="brand">
+    <IconAndContent Icon={icons.Server} iconColor="brand">
       <Flex
         justifyContent="space-between"
         alignItems="center"
@@ -493,7 +472,7 @@ export function ServerItem(props: SearchResultItem<SearchResultServer>) {
           )}
         </ResourceFields>
       </Labels>
-    </Item>
+    </IconAndContent>
   );
 }
 
@@ -527,7 +506,7 @@ export function DatabaseItem(props: SearchResultItem<SearchResultDatabase>) {
   );
 
   return (
-    <Item Icon={icons.Database} iconColor="brand">
+    <IconAndContent Icon={icons.Database} iconColor="brand">
       <Flex
         justifyContent="space-between"
         alignItems="center"
@@ -558,7 +537,7 @@ export function DatabaseItem(props: SearchResultItem<SearchResultDatabase>) {
       ) : (
         <Labels searchResult={searchResult}>{$resourceFields}</Labels>
       )}
-    </Item>
+    </IconAndContent>
   );
 }
 
@@ -566,7 +545,7 @@ export function KubeItem(props: SearchResultItem<SearchResultKube>) {
   const { searchResult } = props;
 
   return (
-    <Item Icon={icons.Kubernetes} iconColor="brand">
+    <IconAndContent Icon={icons.Kubernetes} iconColor="brand">
       <Flex
         justifyContent="space-between"
         alignItems="center"
@@ -587,7 +566,7 @@ export function KubeItem(props: SearchResultItem<SearchResultKube>) {
       </Flex>
 
       <Labels searchResult={searchResult} />
-    </Item>
+    </IconAndContent>
   );
 }
 
@@ -613,10 +592,10 @@ export function NoResultsItem(props: {
 
   return (
     <NonInteractiveItem>
-      <Item Icon={icons.Info} iconColor="text.slightlyMuted">
+      <IconAndContent Icon={icons.Info} iconColor="text.slightlyMuted">
         <Text typography="body1">No matching results found.</Text>
         {expiredCertsCopy && <Text typography="body2">{expiredCertsCopy}</Text>}
-      </Item>
+      </IconAndContent>
     </NonInteractiveItem>
   );
 }
@@ -660,7 +639,7 @@ export function ResourceSearchErrorsItem(props: {
 
   return (
     <NonInteractiveItem>
-      <Item Icon={icons.Warning} iconColor="#f3af3d">
+      <IconAndContent Icon={icons.Warning} iconColor="warning.main">
         <Text typography="body1">
           Some of the search results are incomplete.
         </Text>
@@ -687,7 +666,7 @@ export function ResourceSearchErrorsItem(props: {
             Show details
           </ButtonBorder>
         </Flex>
-      </Item>
+      </IconAndContent>
     </NonInteractiveItem>
   );
 }
diff --git a/web/packages/teleterm/src/ui/Search/pickers/ParameterPicker.tsx b/web/packages/teleterm/src/ui/Search/pickers/ParameterPicker.tsx
index b37154e1916fe..e40c2b26b31c0 100644
--- a/web/packages/teleterm/src/ui/Search/pickers/ParameterPicker.tsx
+++ b/web/packages/teleterm/src/ui/Search/pickers/ParameterPicker.tsx
@@ -21,11 +21,13 @@ import {
   mapAttempt,
   useAsync,
 } from 'shared/hooks/useAsync';
+import { Text } from 'design';
+import * as icons from 'design/Icon';
 
 import { useSearchContext } from '../SearchContext';
 import { ParametrizedAction } from '../actions';
 
-import { ResultList } from './ResultList';
+import { IconAndContent, NonInteractiveItem, ResultList } from './ResultList';
 import { actionPicker } from './pickers';
 import { PickerContainer } from './PickerContainer';
 
@@ -42,14 +44,21 @@ export function ParameterPicker(props: ParameterPickerProps) {
     resetInput,
     addWindowEventListener,
   } = useSearchContext();
-  const [suggestionsAttempt, fetch] = useAsync(
+  const [suggestionsAttempt, getSuggestions] = useAsync(
     props.action.parameter.getSuggestions
   );
   const inputSuggestionAttempt = makeSuccessAttempt(inputValue && [inputValue]);
+  const $suggestionsError =
+    suggestionsAttempt.status === 'error' ? (
+      <SuggestionsError statusText={suggestionsAttempt.statusText} />
+    ) : null;
 
   useEffect(() => {
-    fetch();
-  }, [props.action]);
+    getSuggestions();
+    // We want to get suggestions only once on mount.
+    // useAsync already handles cleanup and calling the hook twice.
+    // eslint-disable-next-line react-hooks/exhaustive-deps
+  }, []);
 
   const attempt = mapAttempt(suggestionsAttempt, suggestions =>
     suggestions.filter(
@@ -80,6 +89,7 @@ export function ParameterPicker(props: ParameterPickerProps) {
       {props.input}
       <ResultList<string>
         attempts={[inputSuggestionAttempt, attempt]}
+        ExtraTopComponent={$suggestionsError}
         onPick={onPick}
         onBack={onBack}
         addWindowEventListener={addWindowEventListener}
@@ -93,3 +103,14 @@ export function ParameterPicker(props: ParameterPickerProps) {
     </PickerContainer>
   );
 }
+
+export const SuggestionsError = ({ statusText }: { statusText: string }) => (
+  <NonInteractiveItem>
+    <IconAndContent Icon={icons.Warning} iconColor="warning.main">
+      <Text typography="body1">
+        Could not fetch suggestions. Type in the desired value to continue.
+      </Text>
+      <Text typography="body2">{statusText}</Text>
+    </IconAndContent>
+  </NonInteractiveItem>
+);
diff --git a/web/packages/teleterm/src/ui/Search/pickers/ResultList.tsx b/web/packages/teleterm/src/ui/Search/pickers/ResultList.tsx
index a9e0de2049977..bcc2a097f6edf 100644
--- a/web/packages/teleterm/src/ui/Search/pickers/ResultList.tsx
+++ b/web/packages/teleterm/src/ui/Search/pickers/ResultList.tsx
@@ -20,7 +20,9 @@ import React, {
   useMemo,
   useRef,
   useState,
+  useCallback,
 } from 'react';
+import { Flex } from 'design';
 import styled, { css } from 'styled-components';
 import { Attempt } from 'shared/hooks/useAsync';
 
@@ -55,6 +57,13 @@ export function ResultList<T>(props: ResultListProps<T>) {
   } = props;
   const activeItemRef = useRef<HTMLDivElement>();
   const [activeItemIndex, setActiveItemIndex] = useState(0);
+  const pickAndResetActiveItem = useCallback(
+    (item: T) => {
+      onPick(item);
+      setActiveItemIndex(0);
+    },
+    [onPick]
+  );
 
   const items = useMemo(() => {
     return attempts.map(a => a.data || []).flat();
@@ -83,7 +92,7 @@ export function ResultList<T>(props: ResultListProps<T>) {
 
           const item = items[activeItemIndex];
           if (item) {
-            onPick(item);
+            pickAndResetActiveItem(item);
           }
           break;
         }
@@ -110,7 +119,13 @@ export function ResultList<T>(props: ResultListProps<T>) {
       capture: true,
     });
     return cleanup;
-  }, [items, onPick, onBack, activeItemIndex, addWindowEventListener]);
+  }, [
+    items,
+    pickAndResetActiveItem,
+    onBack,
+    activeItemIndex,
+    addWindowEventListener,
+  ]);
 
   return (
     <>
@@ -131,7 +146,7 @@ export function ResultList<T>(props: ResultListProps<T>) {
               role="menuitem"
               active={isActive}
               key={key}
-              onClick={() => props.onPick(r)}
+              onClick={() => pickAndResetActiveItem(r)}
             >
               {Component}
             </InteractiveItem>
@@ -173,6 +188,30 @@ const InteractiveItem = styled(NonInteractiveItem)`
   }}
 `;
 
+/**
+ * IconAndContent is supposed to be used within InteractiveItem & NonInteractiveItem.
+ */
+export function IconAndContent(
+  props: React.PropsWithChildren<{
+    Icon: React.ComponentType<{
+      color: string;
+      fontSize: string;
+      lineHeight: string;
+    }>;
+    iconColor: string;
+  }>
+) {
+  return (
+    <Flex alignItems="flex-start" gap={2}>
+      {/* lineHeight of the icon needs to match the line height of the first row of props.children */}
+      <props.Icon color={props.iconColor} fontSize="20px" lineHeight="24px" />
+      <Flex flexDirection="column" gap={1} minWidth={0} flex="1">
+        {props.children}
+      </Flex>
+    </Flex>
+  );
+}
+
 function getNext(selectedIndex = 0, max = 0) {
   let index = selectedIndex % max;
   if (index < 0) {
diff --git a/web/packages/teleterm/src/ui/Search/pickers/ActionPicker.story.tsx b/web/packages/teleterm/src/ui/Search/pickers/results.story.tsx
similarity index 96%
rename from web/packages/teleterm/src/ui/Search/pickers/ActionPicker.story.tsx
rename to web/packages/teleterm/src/ui/Search/pickers/results.story.tsx
index 0fbb64231092f..6513f3a94f169 100644
--- a/web/packages/teleterm/src/ui/Search/pickers/ActionPicker.story.tsx
+++ b/web/packages/teleterm/src/ui/Search/pickers/results.story.tsx
@@ -37,19 +37,20 @@ import {
   ResourceSearchErrorsItem,
   TypeToSearchItem,
 } from './ActionPicker';
+import { SuggestionsError } from './ParameterPicker';
 import { ResultList } from './ResultList';
 
 import type * as uri from 'teleterm/ui/uri';
 
 export default {
-  title: 'Teleterm/Search/ActionPicker',
+  title: 'Teleterm/Search',
 };
 
 const clusterUri: uri.ClusterUri = '/clusters/teleport-local';
 const longClusterUri: uri.ClusterUri =
   '/clusters/teleport-very-long-cluster-name-with-uuid-2f96e498-88ec-442f-a25b-569fa915041c';
 
-export const Items = (props: { maxWidth: string }) => {
+export const Results = (props: { maxWidth: string }) => {
   const { maxWidth = '600px' } = props;
 
   return (
@@ -92,8 +93,8 @@ export const Items = (props: { maxWidth: string }) => {
   );
 };
 
-export const ItemsNarrow = () => {
-  return <Items maxWidth="300px" />;
+export const ResultsNarrow = () => {
+  return <Results maxWidth="300px" />;
 };
 
 const SearchResultItems = () => {
@@ -397,6 +398,11 @@ const AuxiliaryItems = () => (
             ),
           ]}
         />
+        <SuggestionsError
+          statusText={
+            '2 UNKNOWN: Unable to connect to ssh proxy at teleport.local:443. Confirm connectivity and availability.\n	dial tcp: lookup teleport.local: no such host'
+          }
+        />
         <TypeToSearchItem hasNoRemainingFilterActions={false} />
         <TypeToSearchItem hasNoRemainingFilterActions={true} />
       </>