Disable the Private Relay feature then. The router is doing what it's intended to do when that router setting is enabled: ensure that client devices cannot work around the router-provided DNS server. You have to decide if you want to continue blocking that DNS bypass (in which case disable the feature on your phone), or to allow it (in which case disable the setting on the router).
It's also a DNS encryption technology that uses a DNS server that is NOT your router's. That`s why it`s part of the DoH block feature of the router.
The reason behind the existence of the router setting is not to prevent DoH itself, it`s to prevent a device from bypassing what you configure on the router. If you configure a parental control DNS server on your router, you would obviously not want your kid's iPhone to just bypass it by using either a DoH server or some Apple-approved DoQ server (Private Relay uses QUIC, which also introduce its own set of potential issues). That's when you`ll need to also enable the Prevent DoH setting on the router.
If that does not fit your personal scenario, then just disable the router setting. The option is entirely yours.