diff --git a/.wordlist.txt b/.wordlist.txt
index 46f50c53c..107e1cdb9 100644
--- a/.wordlist.txt
+++ b/.wordlist.txt
@@ -123,6 +123,7 @@ sudo
 tc
 TCP
 tcpdump
+TEID
 TRex
 UDP
 UE
diff --git a/VERSION b/VERSION
index ec802c662..227cea215 100644
--- a/VERSION
+++ b/VERSION
@@ -1 +1 @@
-1.5.1-dev
+2.0.0
diff --git a/go.mod b/go.mod
index 04b6cc748..bac5f63cc 100644
--- a/go.mod
+++ b/go.mod
@@ -1,6 +1,6 @@
 module github.com/omec-project/upf-epc
 
-go 1.21
+go 1.23
 
 require (
 	github.com/Showmax/go-fqdn v1.0.0
diff --git a/pfcpiface/fteid.go b/pfcpiface/fteid.go
new file mode 100644
index 000000000..8d8c49d44
--- /dev/null
+++ b/pfcpiface/fteid.go
@@ -0,0 +1,75 @@
+// SPDX-License-Identifier: Apache-2.0
+// Copyright 2024 Canonical Ltd.
+
+package pfcpiface
+
+import (
+	"errors"
+	"math"
+	"sync"
+)
+
+const (
+	minValue = 1
+	maxValue = math.MaxUint32
+)
+
+type FTEIDGenerator struct {
+	lock    sync.Mutex
+	offset  uint32
+	usedMap map[uint32]bool
+}
+
+func NewFTEIDGenerator() *FTEIDGenerator {
+	return &FTEIDGenerator{
+		offset:  0,
+		usedMap: make(map[uint32]bool),
+	}
+}
+
+// Allocate and return an id in range [minValue, maxValue]
+func (idGenerator *FTEIDGenerator) Allocate() (uint32, error) {
+	idGenerator.lock.Lock()
+	defer idGenerator.lock.Unlock()
+
+	offsetBegin := idGenerator.offset
+	for {
+		if _, ok := idGenerator.usedMap[idGenerator.offset]; ok {
+			idGenerator.updateOffset()
+
+			if idGenerator.offset == offsetBegin {
+				return 0, errors.New("no available value range to allocate id")
+			}
+		} else {
+			break
+		}
+	}
+	idGenerator.usedMap[idGenerator.offset] = true
+	id := idGenerator.offset + minValue
+	idGenerator.updateOffset()
+	return id, nil
+}
+
+func (idGenerator *FTEIDGenerator) FreeID(id uint32) {
+	if id < minValue {
+		return
+	}
+	idGenerator.lock.Lock()
+	defer idGenerator.lock.Unlock()
+	delete(idGenerator.usedMap, id-minValue)
+}
+
+func (idGenerator *FTEIDGenerator) IsAllocated(id uint32) bool {
+	if id < minValue {
+		return false
+	}
+	idGenerator.lock.Lock()
+	defer idGenerator.lock.Unlock()
+	_, ok := idGenerator.usedMap[id-minValue]
+	return ok
+}
+
+func (idGenerator *FTEIDGenerator) updateOffset() {
+	idGenerator.offset++
+	idGenerator.offset = idGenerator.offset % maxValue
+}
diff --git a/pfcpiface/fteid_test.go b/pfcpiface/fteid_test.go
new file mode 100644
index 000000000..d663948db
--- /dev/null
+++ b/pfcpiface/fteid_test.go
@@ -0,0 +1,39 @@
+// SPDX-License-Identifier: Apache-2.0
+// Copyright 2024 Canonical Ltd.
+
+package pfcpiface_test
+
+import (
+	"testing"
+
+	"github.com/omec-project/upf-epc/pfcpiface"
+)
+
+func TestFTEIDAllocate(t *testing.T) {
+	fteidGenerator := pfcpiface.NewFTEIDGenerator()
+
+	fteid, err := fteidGenerator.Allocate()
+	if err != nil {
+		t.Errorf("FTEID allocation failed: %v", err)
+	}
+	if fteid < 1 {
+		t.Errorf("FTEID allocation failed, value is too small: %v", fteid)
+	}
+	if !fteidGenerator.IsAllocated(fteid) {
+		t.Errorf("FTEID was not allocated")
+	}
+}
+
+func TestFTEIDFree(t *testing.T) {
+	fteidGenerator := pfcpiface.NewFTEIDGenerator()
+	fteid, err := fteidGenerator.Allocate()
+	if err != nil {
+		t.Errorf("FTEID allocation failed: %v", err)
+	}
+
+	fteidGenerator.FreeID(fteid)
+
+	if fteidGenerator.IsAllocated(fteid) {
+		t.Errorf("FTEID was not freed")
+	}
+}
diff --git a/pfcpiface/messages_conn.go b/pfcpiface/messages_conn.go
index 7300ddf4d..ebed1366f 100644
--- a/pfcpiface/messages_conn.go
+++ b/pfcpiface/messages_conn.go
@@ -107,6 +107,8 @@ func (pConn *PFCPConn) associationIEs() []*ie.IE {
 		setUeipFeature(features...)
 	}
 
+	setFTUPFeature(features...)
+
 	if upf.enableEndMarker {
 		setEndMarkerFeature(features...)
 	}
diff --git a/pfcpiface/messages_session.go b/pfcpiface/messages_session.go
index f5a60bb0c..f5344f15f 100644
--- a/pfcpiface/messages_session.go
+++ b/pfcpiface/messages_session.go
@@ -92,6 +92,18 @@ func (pConn *PFCPConn) handleSessionEstablishmentRequest(msg message.Message) (m
 			return errProcessReply(err, ie.CauseRequestRejected)
 		}
 
+		if p.UPAllocateFteid {
+			var fteid uint32
+			fteid, err = pConn.upf.fteidGenerator.Allocate()
+			if err != nil {
+				return errProcessReply(err, ie.CauseNoResourcesAvailable)
+			}
+			p.tunnelTEID = fteid
+			p.tunnelTEIDMask = 0xFFFFFFFF
+			p.tunnelIP4Dst = ip2int(upf.accessIP)
+			p.tunnelIP4DstMask = 0xFFFFFFFF
+		}
+
 		p.fseidIP = fseidIP
 		session.CreatePDR(p)
 		addPDRs = append(addPDRs, p)
@@ -164,8 +176,7 @@ func (pConn *PFCPConn) handleSessionEstablishmentRequest(msg message.Message) (m
 		ie.NewCause(ie.CauseRequestAccepted), /* accept it blindly for the time being */
 		localFSEID,
 	)
-
-	addPdrInfo(seres, &session)
+	addPdrInfo(seres, addPDRs)
 
 	return seres, nil
 }
@@ -231,6 +242,7 @@ func (pConn *PFCPConn) handleSessionModificationRequest(msg message.Message) (me
 		session.CreatePDR(p)
 		addPDRs = append(addPDRs, p)
 	}
+	logger.PfcpLog.Debugln("PDRs added:", addPDRs)
 
 	for _, cFAR := range smreq.CreateFAR {
 		var f far
diff --git a/pfcpiface/parse_pdr.go b/pfcpiface/parse_pdr.go
index 601fba496..d29b6dc38 100644
--- a/pfcpiface/parse_pdr.go
+++ b/pfcpiface/parse_pdr.go
@@ -269,10 +269,11 @@ type applicationFilter struct {
 }
 
 type pdr struct {
-	srcIface     uint8
-	tunnelIP4Dst uint32
-	tunnelTEID   uint32
-	ueAddress    uint32
+	UPAllocateFteid bool
+	srcIface        uint8
+	tunnelIP4Dst    uint32
+	tunnelTEID      uint32
+	ueAddress       uint32
 
 	srcIfaceMask     uint8
 	tunnelIP4DstMask uint32
@@ -390,13 +391,14 @@ func (p *pdr) parseFTEID(teidIE *ie.IE) error {
 	}
 
 	teid := fteid.TEID
-	tunnelIPv4Address := fteid.IPv4Address
-
-	if teid != 0 {
+	if fteid.HasCh() {
+		p.UPAllocateFteid = true
+	} else if teid != 0 {
 		p.tunnelTEID = teid
 		p.tunnelTEIDMask = 0xFFFFFFFF
-		p.tunnelIP4Dst = ip2int(tunnelIPv4Address)
+		p.tunnelIP4Dst = ip2int(fteid.IPv4Address)
 		p.tunnelIP4DstMask = 0xFFFFFFFF
+
 	}
 
 	return nil
diff --git a/pfcpiface/session_pdr.go b/pfcpiface/session_pdr.go
index afcf71d23..1b2b80a9b 100644
--- a/pfcpiface/session_pdr.go
+++ b/pfcpiface/session_pdr.go
@@ -23,23 +23,28 @@ func releaseAllocatedIPs(ippool *IPPool, session *PFCPSession) error {
 			return ippool.DeallocIP(session.localSEID)
 		}
 	}
-
 	return nil
 }
 
-func addPdrInfo(msg *message.SessionEstablishmentResponse,
-	session *PFCPSession) {
+func addPdrInfo(msg *message.SessionEstablishmentResponse, pdrs []pdr) {
 	logger.PfcpLog.Infoln("add PDRs with UPF alloc IPs to Establishment response")
-
-	for _, pdr := range session.pdrs {
+	logger.PfcpLog.Infoln("PDRs:", pdrs)
+	for _, pdr := range pdrs {
+		logger.PfcpLog.Infoln("pdrID:", pdr.pdrID)
+		if pdr.UPAllocateFteid {
+			logger.PfcpLog.Infoln("adding PDR with tunnel TEID:", pdr.tunnelTEID)
+			msg.CreatedPDR = append(msg.CreatedPDR,
+				ie.NewCreatedPDR(
+					ie.NewPDRID(uint16(pdr.pdrID)),
+					ie.NewFTEID(0x01, pdr.tunnelTEID, int2ip(pdr.tunnelIP4Dst), nil, 0),
+				))
+		}
 		if (pdr.allocIPFlag) && (pdr.srcIface == core) {
 			logger.PfcpLog.Debugln("pdrID:", pdr.pdrID)
-
 			var (
 				flags uint8  = 0x02
 				ueIP  net.IP = int2ip(pdr.ueAddress)
 			)
-
 			logger.PfcpLog.Debugln("ueIP:", ueIP.String())
 			msg.CreatedPDR = append(msg.CreatedPDR,
 				ie.NewCreatedPDR(
diff --git a/pfcpiface/upf.go b/pfcpiface/upf.go
index 33003eaeb..82e22bc41 100644
--- a/pfcpiface/upf.go
+++ b/pfcpiface/upf.go
@@ -51,6 +51,7 @@ type upf struct {
 	reportNotifyChan  chan uint64
 	sliceInfo         *SliceInfo
 	readTimeout       time.Duration
+	fteidGenerator    *FTEIDGenerator
 
 	datapath
 	maxReqRetries uint8
@@ -129,6 +130,7 @@ func NewUPF(conf *Conf, fp datapath) *upf {
 		maxReqRetries:     conf.MaxReqRetries,
 		enableHBTimer:     conf.EnableHBTimer,
 		readTimeout:       time.Second * time.Duration(conf.ReadTimeout),
+		fteidGenerator:    NewFTEIDGenerator(),
 		n4addr:            conf.N4Addr,
 	}
 
diff --git a/pfcpiface/utils.go b/pfcpiface/utils.go
index f340d8d32..5b715305d 100644
--- a/pfcpiface/utils.go
+++ b/pfcpiface/utils.go
@@ -30,6 +30,13 @@ func setUeipFeature(features ...uint8) {
 	}
 }
 
+// Set the 5th bit of the first octet to 1.
+func setFTUPFeature(features ...uint8) {
+	if len(features) >= 1 {
+		features[0] = features[0] | 0x10
+	}
+}
+
 func setEndMarkerFeature(features ...uint8) {
 	if len(features) >= 2 {
 		features[1] = features[1] | 0x01
diff --git a/pfcpiface/utils_test.go b/pfcpiface/utils_test.go
index a5df2e659..8032a9f03 100644
--- a/pfcpiface/utils_test.go
+++ b/pfcpiface/utils_test.go
@@ -5,6 +5,7 @@ package pfcpiface
 
 import (
 	"github.com/stretchr/testify/require"
+	"github.com/wmnsk/go-pfcp/ie"
 
 	"net"
 	"reflect"
@@ -91,3 +92,27 @@ func TestGetSliceTcMeterIndex(t *testing.T) {
 		)
 	}
 }
+
+func TestSetUeipFeature(t *testing.T) {
+	features := make([]uint8, 4)
+
+	setUeipFeature(features...)
+
+	ie := ie.NewUPFunctionFeatures(features...)
+	hasUeIPAlloc := ie.HasUEIP()
+	if !hasUeIPAlloc {
+		t.Errorf("Expected UEIPAlloc to be set")
+	}
+}
+
+func TestSetFTUPFeature(t *testing.T) {
+	features := make([]uint8, 4)
+
+	setFTUPFeature(features...)
+
+	ie := ie.NewUPFunctionFeatures(features...)
+	hasFTUP := ie.HasFTUP()
+	if !hasFTUP {
+		t.Errorf("Expected FTUP to be set")
+	}
+}