diff --git a/tests/full_tests/ci_gsm8k_tests.sh b/tests/full_tests/ci_gsm8k_tests.sh
index 8c0136c2..18ef9b9c 100644
--- a/tests/full_tests/ci_gsm8k_tests.sh
+++ b/tests/full_tests/ci_gsm8k_tests.sh
@@ -158,6 +158,14 @@ run_gsm8k_granite_test() {
     echo "✅ Test with granite-8b passed."
 }
 
+# GSM8K on granite-8b (unified attn)
+run_gsm8k_granite_test_unified_attn() {
+    echo "➡️ Testing GSM8K on granite-8b with unified attention..."
+    VLLM_UNIFIED_ATTN=True VLLM_SKIP_WARMUP=True PT_HPU_LAZY_MODE=1 VLLM_USE_V1=1 \
+    pytest -v -s "${VLLM_GAUDI_PREFIX}/tests/models/language/generation/test_common.py" --model_card_path "${VLLM_GAUDI_PREFIX}/tests/full_tests/model_cards/granite-8b.yaml"
+    echo "✅ Test with granite-8b unified attention passed."
+}
+
 # GSM8K on granite-8b with async scheduling
 run_gsm8k_granite_async_test() {
     echo "➡️ Testing GSM8K on granite-8b with async scheduling..."
@@ -230,6 +238,7 @@ launch_all_tests() {
     run_compressed_w4a16_channelwise_test
     run_compressed_w4a16_moe_gidx_test
     run_gsm8k_granite_test
+    run_gsm8k_granite_test_unified_attn
     run_gsm8k_granite_async_test
     run_gsm8k_deepseek_test
     run_gsm8k_qwen3_30b_test
diff --git a/vllm_gaudi/extension/unified.py b/vllm_gaudi/extension/unified.py
index 6ed2a3ad..b9942e1f 100644
--- a/vllm_gaudi/extension/unified.py
+++ b/vllm_gaudi/extension/unified.py
@@ -357,8 +357,12 @@ def create(total_tokens: torch.tensor, block_table: torch.tensor, block_size: in
 
         group_ids, group_offsets = indices_and_offsets(num_ctx_blocks)
         block_ids = fetch_2d(block_table, group_ids, group_offsets)
-        block_usages = torch.clamp(
-            total_tokens.index_select(0, group_ids) - group_offsets * block_size + 1, 1, block_size)
+        #NOTE(kzawora): Originally, we were clamping
+        # total_tokens.index_select(0, group_ids) - group_offsets * block_size + 1
+        # I'm not sure why +1 was there originally, but in non-block-aligned prefix-prefill scenarios
+        # it made causal mask not cover the first unused token.
+        # (e.g. with context 28, the 28th slot was unmasked, causing the effective context length to be 29)
+        block_usages = torch.clamp(total_tokens.index_select(0, group_ids) - group_offsets * block_size, 1, block_size)
 
         ctx = Context(group_ids, group_offsets, block_ids, block_usages)
         all_shapes = [v.shape for v in ctx._values() if torch.is_tensor(v)]
diff --git a/vllm_gaudi/v1/worker/hpu_model_runner.py b/vllm_gaudi/v1/worker/hpu_model_runner.py
index 4049b09a..3e9adab8 100644
--- a/vllm_gaudi/v1/worker/hpu_model_runner.py
+++ b/vllm_gaudi/v1/worker/hpu_model_runner.py
@@ -2825,6 +2825,18 @@ def unified_execute_model(
         self.input_batch.token_ids_cpu_tensor.index_put_((batch.logits_groups_cpu, batch.new_token_positions_cpu),
                                                          sampled_token_ids_cpu)
 
+        ######### UPDATE REQUEST STATE WITH GENERATED TOKENS #########
+        num_reqs = len(selected_req_ids)
+        for req_id in self.input_batch.req_ids[:num_reqs]:
+            req_state = self.requests[req_id]
+            i = self.input_batch.req_id_to_index[req_id]
+            seq_len = (req_state.num_computed_tokens + scheduler_output.num_scheduled_tokens[req_id])
+            token_ids = sampled_token_ids[i]
+            num_tokens = len(token_ids)
+            self.input_batch.token_ids_cpu[i, seq_len:seq_len + num_tokens] = token_ids
+            self.input_batch.num_tokens[i] += len(token_ids)
+            req_state.output_token_ids.extend(token_ids)
+
         model_runner_output = ModelRunnerOutput(
             req_ids=batch.req_ids_cpu,
             req_id_to_index=self.input_batch.req_id_to_index,