diff --git a/.buildkite/run-hpu-test.sh b/.buildkite/run-hpu-test.sh
index 8f3b08212fd6a..bdbb5195ce95f 100644
--- a/.buildkite/run-hpu-test.sh
+++ b/.buildkite/run-hpu-test.sh
@@ -8,9 +8,12 @@ set -ex
 docker build -t hpu-test-env -f Dockerfile.hpu .
 
 # Setup cleanup
+EXITCODE=1
 remove_docker_container() { docker rm -f hpu-test || true; }
-trap remove_docker_container EXIT
+remove_docker_container_and_exit() { remove_docker_container; exit $EXITCODE; }
+trap remove_docker_container_and_exit EXIT
 remove_docker_container
 
 # Run the image and launch offline inference
-docker run --runtime=habana --name=hpu-test --network=host -e HABANA_VISIBLE_DEVICES=all -e VLLM_SKIP_WARMUP=true --entrypoint="" hpu-test-env python3 examples/offline_inference/basic.py
\ No newline at end of file
+docker run --runtime=habana --name=hpu-test --network=host -e HABANA_VISIBLE_DEVICES=all -e VLLM_SKIP_WARMUP=true --entrypoint="" hpu-test-env python3 examples/offline_inference/basic.py
+EXITCODE=$?
diff --git a/Dockerfile.hpu b/Dockerfile.hpu
index 87e0c1a6a934e..66cf68c32f2ca 100644
--- a/Dockerfile.hpu
+++ b/Dockerfile.hpu
@@ -1,4 +1,4 @@
-FROM vault.habana.ai/gaudi-docker/1.18.0/ubuntu22.04/habanalabs/pytorch-installer-2.4.0:latest
+FROM vault.habana.ai/gaudi-docker/1.19.1/ubuntu22.04/habanalabs/pytorch-installer-2.5.1:latest
 
 COPY ./ /workspace/vllm
 
diff --git a/vllm/worker/hpu_model_runner.py b/vllm/worker/hpu_model_runner.py
index 3e5105f3b62e3..260ffaf27f9a1 100644
--- a/vllm/worker/hpu_model_runner.py
+++ b/vllm/worker/hpu_model_runner.py
@@ -289,12 +289,14 @@ def forward_hook(module, args, output):
 
 class HpuModelAdapter:
 
-    def __init__(self, model, block_size, dtype, enforce_eager):
+    def __init__(self, model, vllm_config):
         self.model = model
         self.prefill_use_fusedsdpa = os.getenv('VLLM_PROMPT_USE_FUSEDSDPA',
                                                '0').lower() in ['1', 'true']
-        self.block_size = block_size
-        self.dtype = dtype
+        self.vllm_config = vllm_config
+        self.block_size = vllm_config.cache_config.block_size
+        self.dtype = vllm_config.model_config.dtype
+        enforce_eager = vllm_config.model_config.enforce_eager
         if not htorch.utils.internal.is_lazy() and not enforce_eager:
             self.model = torch.compile(self.model,
                                        backend='hpu_backend',
@@ -353,14 +355,20 @@ def forward(self, *args, **kwargs):
         selected_token_indices = kwargs.pop('selected_token_indices')
         if 'warmup_mode' in kwargs:
             kwargs.pop('warmup_mode')
+        virtual_engine = 0
+        if 'virtual_engine' in kwargs:
+            virtual_engine = kwargs.pop('virtual_engine')
         input_ids = kwargs['input_ids']
         kwargs['attn_metadata'] = self._update_metadata(
             kwargs['attn_metadata'], input_ids.size(0), input_ids.size(1),
             input_ids.device, self.dtype)
         LoraMask.setLoraMask(kwargs.pop('lora_mask'))
-        hidden_states = self.model(*args, **kwargs)
-        hidden_states = hidden_states.view(-1, hidden_states.shape[-1])
-        hidden_states = hidden_states.index_select(0, selected_token_indices)
+        with set_forward_context(kwargs['attn_metadata'], self.vllm_config,
+                                 virtual_engine):
+            hidden_states = self.model(*args, **kwargs)
+            hidden_states = hidden_states.view(-1, hidden_states.shape[-1])
+            hidden_states = hidden_states.index_select(0,
+                                                       selected_token_indices)
         return hidden_states
 
     def compute_logits(self, *args, **kwargs):
@@ -660,10 +668,7 @@ def load_model(self) -> None:
 
             with HabanaMemoryProfiler() as m_wrap:
                 self.model = _maybe_wrap_in_hpu_graph(
-                    self.model,
-                    self.block_size,
-                    dtype=self.model_config.dtype,
-                    enforce_eager=self.enforce_eager)
+                    self.model, vllm_config=self.vllm_config)
             msg = f"Wrapping in HPU Graph took {m_wrap.get_summary_string()}"
             logger.info(msg)
 
@@ -1934,6 +1939,7 @@ def execute_model(
             "attn_metadata": self.trim_attn_metadata(attn_metadata),
             "intermediate_tensors": intermediate_tensors,
             "lora_mask": lora_mask,
+            "virtual_engine": model_input.virtual_engine,
             **(model_input.multi_modal_kwargs or {}),
         }
         if htorch.utils.internal.is_lazy():
@@ -1948,11 +1954,7 @@ def execute_model(
                                 f"graphs{'T' if use_graphs else 'F'}")
         else:
             model_event_name = 'model_executable'
-        with set_forward_context(
-                model_input.attn_metadata, self.vllm_config,
-                model_input.virtual_engine), \
-            self.profiler.record_event(
-                    'internal', model_event_name):
+        with self.profiler.record_event('internal', model_event_name):
             hidden_states = self.model.forward(
                 **execute_model_kwargs,
                 selected_token_indices=sampling_metadata.selected_token_indices