diff --git a/modules/openvino_code/README.md b/modules/openvino_code/README.md
index 84a286ee0..6558cf465 100644
--- a/modules/openvino_code/README.md
+++ b/modules/openvino_code/README.md
@@ -1,32 +1,16 @@
 # OpenVINO Code - VSCode extension for AI code completion with OpenVINO™
 
-VSCode extension for helping developers writing code with AI code assistant. OpenVINO Code is working with Large Language Model for Code (Code LLM) deployed on local or remote server.
+VSCode extension for helping developers writing code with AI code assistant. 
+OpenVINO Code is working with Large Language Model for Code (Code LLM) deployed on local server 
+or remote server using [Remote Explorer](https://marketplace.visualstudio.com/items?itemName=ms-vscode.remote-explorer).
 
-## Installing Extension
+OpenVINO Code provides the following features:
+- Inline Code Completion
+- Summarization via docstring
 
-VSCode extension can be installed from built `*.vsix` file:
-
-1. Open `Extensions` side bar in VSCode.
-2. Click on the menu icon (three dots menu icon aka "meatballs" icon) in the top right corner of Extensions side panel.
-3. Select "Instal from VSIX..." option and select extension file.
-
-For instructions on how to build extension `vsix` file please refer to the [Build Extension](#build-extension) section.
-
-## Extension Configuration
-
-To work with extension you should configure endpoint to server with Code LLM where requests will be sent:
-
-1. Open extension settings.
-2. Fill `Server URL` parameter with server endpoint URL.
-
-For instructions on how to start server locally please refer to the [server README.md](./server/README.md).
-
-Also in extension settings you can configure special tokens.
 
 ## Working with Extension
 
-TDB
-
 1. Create a new python file
 2. Try typing `def main():`
 3. Press shortcut buttons (TBD) for code completion
@@ -35,41 +19,5 @@ TDB
 
 You can see input to and output from the code generation API:
 
-1. Open VSCode `OUTPUT` panel
-2. Select extension output source from the dropdown menu
-
-## Developing
-
-> **Prerequisite:** You should have `Node.js` installed (v16 and above).
-
-#### Install dependencies
-
-To install dependencies run the following command from the project root directory:
-
-```
-npm install
-```
-
-#### Run Extension from Source & Debugging
-
-Open `Run and Debug` side bar in VSCode and click `Launch Extension` (or press `F5`).
-
-#### Build Extension
-
-To build extension and generate `*.vsix` file for further installation in VSCode, run the following command:
-
-```
-npm run vsce:package
-```
-
-#### Linting
-
-To perform linting with `ESLint`, execute the following command:
-
-```
-npm run lint
-```
-
-#### Testing
-
-TBD
+1. Open VSCode Side Panel
+2. Click `Show Server Log` or `Show Extension Log`
diff --git a/modules/openvino_code/openvino-code-completion-0.0.1.vsix b/modules/openvino_code/openvino-code-completion-0.0.1.vsix
deleted file mode 100644
index 409074aa1..000000000
Binary files a/modules/openvino_code/openvino-code-completion-0.0.1.vsix and /dev/null differ
diff --git a/modules/openvino_code/openvino-code-completion-0.0.2.vsix b/modules/openvino_code/openvino-code-completion-0.0.2.vsix
new file mode 100644
index 000000000..cb7d8c923
Binary files /dev/null and b/modules/openvino_code/openvino-code-completion-0.0.2.vsix differ
diff --git a/modules/openvino_code/package-lock.json b/modules/openvino_code/package-lock.json
index 4c30cdd09..e07168a2c 100644
--- a/modules/openvino_code/package-lock.json
+++ b/modules/openvino_code/package-lock.json
@@ -1,13 +1,13 @@
 {
   "name": "openvino-code-completion",
-  "version": "0.0.1",
+  "version": "0.0.2",
   "lockfileVersion": 2,
   "requires": true,
   "packages": {
     "": {
       "name": "openvino-code-completion",
-      "version": "0.0.1",
-      "license": "License at https://github.com/openvinotoolkit/openvino_contrib/tree/master/modules/openvino_code",
+      "version": "0.0.2",
+      "license": "https://github.com/openvinotoolkit/openvino_contrib/blob/master/LICENSE",
       "workspaces": [
         "side-panel-ui"
       ],
diff --git a/modules/openvino_code/package.json b/modules/openvino_code/package.json
index 6abccb37e..95888d54f 100644
--- a/modules/openvino_code/package.json
+++ b/modules/openvino_code/package.json
@@ -1,13 +1,13 @@
 {
   "publisher": "OpenVINO",
   "name": "openvino-code-completion",
-  "version": "0.0.1",
+  "version": "0.0.2",
   "displayName": "OpenVINO Code Completion",
   "description": "VSCode extension for AI code completion with OpenVINO",
   "icon": "media/logo.png",
   "author": "",
   "contributors": [],
-  "license": "License at https://github.com/openvinotoolkit/openvino_contrib/tree/master/modules/openvino_code",
+  "license": "https://github.com/openvinotoolkit/openvino_contrib/blob/master/LICENSE",
   "homepage": "https://docs.openvino.ai/",
   "repository": {
     "type": "git",
@@ -51,6 +51,7 @@
     "lint": "eslint . --max-warnings 0",
     "lint:fix": "eslint . --fix",
     "lint:side-panel": "npm run lint -w side-panel-ui",
+    "lint:all": "npm run lint && npm run lint --workspaces",
     "test": "node ./out/test/runTest.js",
     "vsce:package": "vsce package",
     "vsce:publish": "vsce publish",
@@ -164,6 +165,16 @@
       {
         "title": "OpenVINO Code",
         "properties": {
+          "openvinoCode.model": {
+            "order": 0,
+            "type": "string",
+            "default": "codet5p-220m-py",
+            "enum": [
+              "codet5p-220m-py",
+              "decicoder-1b-openvino-int8"
+            ],
+            "description": "Which model to use for code generation."
+          },
           "openvinoCode.serverUrl": {
             "order": 1,
             "type": "string",
@@ -238,6 +249,7 @@
             "description": "(Optional) Stop token."
           },
           "openvinoCode.quoteStyle": {
+            "order": 11,
             "type": "string",
             "default": "\"\"\"",
             "enum": [
@@ -247,6 +259,7 @@
             "description": "Style of quote used with generate docstring command"
           },
           "openvinoCode.docstringFormat": {
+            "order": 12,
             "type": "string",
             "default": "google_summary_only",
             "enum": [
diff --git a/modules/openvino_code/server/main.py b/modules/openvino_code/server/main.py
index a1e9de1e3..3d86194e6 100644
--- a/modules/openvino_code/server/main.py
+++ b/modules/openvino_code/server/main.py
@@ -1,11 +1,13 @@
-import uvicorn
+from src.utils import get_parser, setup_logger
 
-from src.app import app, get_generator_dummy
-from src.generators import get_generator_dependency
-from src.utils import get_logger, get_parser
 
+# Logger should be set up before other imports to propagate logging config to other packages
+setup_logger()
 
-logger = get_logger(__name__)
+import uvicorn  # noqa: E402
+
+from src.app import app, get_generator_dummy  # noqa: E402
+from src.generators import get_generator_dependency  # noqa: E402
 
 
 def main():
diff --git a/modules/openvino_code/server/pyproject.toml b/modules/openvino_code/server/pyproject.toml
index c2bf3b68e..54d7a726b 100644
--- a/modules/openvino_code/server/pyproject.toml
+++ b/modules/openvino_code/server/pyproject.toml
@@ -12,7 +12,7 @@ dependencies = [
     'torch @ https://download.pytorch.org/whl/cpu-cxx11-abi/torch-2.0.1%2Bcpu.cxx11.abi-cp311-cp311-linux_x86_64.whl ; sys_platform=="linux" and python_version == "3.11"',
     'torch ; sys_platform != "linux"',
     'openvino==2023.1.0.dev20230811',
-    'optimum-intel[openvino]==1.10.1',
+    'optimum-intel[openvino]==1.11.0',
 ]
 
 [project.optional-dependencies]
diff --git a/modules/openvino_code/server/src/app.py b/modules/openvino_code/server/src/app.py
index e824eac7c..2fb061a1a 100644
--- a/modules/openvino_code/server/src/app.py
+++ b/modules/openvino_code/server/src/app.py
@@ -3,7 +3,7 @@
 
 from fastapi import Depends, FastAPI
 from fastapi.responses import RedirectResponse, StreamingResponse
-from pydantic import BaseModel
+from pydantic import BaseModel, Field
 
 from src.generators import GeneratorFunctor
 from src.utils import get_logger
@@ -26,6 +26,35 @@ class GenerationRequest(BaseModel):
     parameters: GenerationParameters
 
 
+class GenerationDocStringRequest(BaseModel):
+    inputs: str = Field(
+        ...,
+        description="Function or Class body",
+        example=(
+            "def fibonacci(n):\n    if n == 0:\n        return 0\n    elif n == 1:\n"
+            "        return 1\n    else:\n        return fibonacci(n-1) + fibonacci(n-2)"
+        ),
+    )
+    template: str = Field(
+        ...,
+        description=(
+            "Doc string template with tab stops in format ${tab_stop_number:value[type | int | str | description]}"
+        ),
+        example=(
+            '    """\n    ${1:}\n\n    Parameters\n    ----------\n    n : ${2:int}\n'
+            "        ${3:[description]}\n\n    Returns\n    -------\n    ${4:[type]}\n"
+            '        ${5:[description]}\n    """'
+        ),
+    )
+    format: str = Field(
+        ...,
+        description="Doc string format passed from extension settings [google | numpy | sphinx | dockblockr | ...]",
+        example="numpy",
+    )
+    definition: str = Field("", description="Function signature", example="def fibonacci(n):")
+    parameters: GenerationParameters
+
+
 class GenerationResponse(BaseModel):
     generated_text: str
 
@@ -40,7 +69,7 @@ def get_generator_dummy():
 @app.on_event("startup")
 async def startup_event():
     # This print is a anchor for vs code extension to track that server is started
-    SERVER_STARTED_STDOUT_ANCHOR = 'OpenVINO Code Server started'
+    SERVER_STARTED_STDOUT_ANCHOR = "OpenVINO Code Server started"
     logger.info(SERVER_STARTED_STDOUT_ANCHOR)
 
 
@@ -59,7 +88,7 @@ async def generate(
     request: GenerationRequest,
     generator: GeneratorFunctor = Depends(get_generator_dummy),
 ) -> Dict[str, Union[int, str]]:
-    logger.info(request)
+    logger.info(f"Request:\n{request}")
 
     start = perf_counter()
     generated_text: str = generator(request.inputs, request.parameters.model_dump())
@@ -70,7 +99,7 @@ async def generate(
     else:
         logger.info(f"Elapsed: {elapsed:.3f}s")
 
-    logger.info(f"Response: {generated_text}")
+    logger.info(f"Response:\n{generated_text}")
     return {"generated_text": generated_text}
 
 
@@ -85,16 +114,15 @@ async def generate_stream(
 
 @app.post("/api/summarize", status_code=200, response_model=GenerationResponse)
 async def summarize(
-    request: GenerationRequest,
+    request: GenerationDocStringRequest,
     generator: GeneratorFunctor = Depends(get_generator_dummy),
 ):
     logger.info(request)
 
-    generation_params = request.parameters.model_dump()
-    generation_params["repetition_penalty"] = 1.15
-
     start = perf_counter()
-    generated_text: str = generator.summarize(request.inputs, generation_params)
+    generated_text: str = generator.summarize(
+        request.inputs, request.template, request.definition, request.format, request.parameters.model_dump()
+    )
     stop = perf_counter()
 
     if (elapsed := stop - start) > 1.5:
@@ -108,12 +136,12 @@ async def summarize(
 
 @app.post("/api/summarize_stream", status_code=200)
 async def summarize_stream(
-    request: GenerationRequest,
+    request: GenerationDocStringRequest,
     generator: GeneratorFunctor = Depends(get_generator_dummy),
 ) -> StreamingResponse:
     logger.info(request)
-
-    generation_params = request.parameters.model_dump()
-    generation_params["repetition_penalty"] = 1.15
-
-    return StreamingResponse(generator.summarize_stream(request.inputs, generation_params))
+    return StreamingResponse(
+        generator.summarize_stream(
+            request.inputs, request.template, request.definition, request.format, request.parameters.model_dump()
+        )
+    )
diff --git a/modules/openvino_code/server/src/generators.py b/modules/openvino_code/server/src/generators.py
index b15c9066b..ee1ef6b2c 100644
--- a/modules/openvino_code/server/src/generators.py
+++ b/modules/openvino_code/server/src/generators.py
@@ -1,7 +1,9 @@
+import re
 from functools import lru_cache
+from io import StringIO
 from pathlib import Path
 from threading import Thread
-from typing import Any, Callable, Container, Dict, List, Optional, Type, Union
+from typing import Any, Callable, Container, Dict, Generator, List, Optional, Type, Union
 
 import torch
 from huggingface_hub.utils import EntryNotFoundError
@@ -9,7 +11,6 @@
 from transformers import (
     AutoConfig,
     AutoTokenizer,
-    AutoModelForCausalLM,
     GenerationConfig,
     StoppingCriteria,
     StoppingCriteriaList,
@@ -26,13 +27,8 @@
 model_dir = Path("models")
 model_dir.mkdir(exist_ok=True)
 
-INSTRUCTION_WITH_INPUT = (
-    "Below is an instruction that describes a task, paired with an input that provides further context. "
-    "Write a response that appropriately completes the request.\n\n"
-    "### Instruction:\n{instruction}\n\n### Input:\n{input}\n\n### Response:\n"
-)
-SUMMARIZE_INSTRUCTION = "The function description in numpy style"
-SUMMARIZE_STOP_TOKENS = ("\n", ".\n")
+SUMMARIZE_INSTRUCTION = "{function}\n\n# The function with {style} style docstring\n\n{signature}\n"
+SUMMARIZE_STOP_TOKENS = ("\r\n", "\n")
 
 
 def get_model_class(checkpoint: Union[str, Path]) -> Type[OVModel]:
@@ -53,7 +49,9 @@ def get_model(checkpoint: str, device: str = "CPU") -> OVModel:
     else:
         model_class = get_model_class(checkpoint)
         try:
-            model = model_class.from_pretrained(checkpoint, ov_config=ov_config, compile=False, device=device, trust_remote_code=True)
+            model = model_class.from_pretrained(
+                checkpoint, ov_config=ov_config, compile=False, device=device, trust_remote_code=True
+            )
         except EntryNotFoundError:
             model = model_class.from_pretrained(
                 checkpoint, ov_config=ov_config, export=True, compile=False, device=device, trust_remote_code=True
@@ -70,6 +68,12 @@ def __call__(self, input_text: str, parameters: Dict[str, Any]) -> str:
     async def generate_stream(self, input_text: str, parameters: Dict[str, Any]):
         raise NotImplementedError
 
+    def summarize(self, input_text: str, template: str, signature: str, style: str, parameters: Dict[str, Any]):
+        raise NotImplementedError
+
+    def summarize_stream(self, input_text: str, template: str, signature: str, style: str, parameters: Dict[str, Any]):
+        raise NotImplementedError
+
 
 class OVGenerator(GeneratorFunctor):
     def __init__(
@@ -82,7 +86,6 @@ def __init__(
     ) -> None:
         self.device = device
         self.model = get_model(checkpoint, device)
-        # self.model = AutoModelForCausalLM.from_pretrained(checkpoint, trust_remote_code=True)
 
         self.tokenizer: AutoTokenizer = AutoTokenizer.from_pretrained(
             tokenizer_checkpoint if tokenizer_checkpoint is not None else checkpoint,
@@ -97,13 +100,15 @@ def __init__(
         self.assistant_model_config = {}
         if assistant_checkpoint is not None:
             self.assistant_model = get_model(assistant_checkpoint, device)
-            # self.assistant_model = AutoModelForSeq2SeqLM.from_pretrained(assistant_checkpoint)
             self.assistant_model_config["assistant_model"] = self.assistant_model
 
         self.summarize_stopping_criteria = None
         if summarize_stop_tokens:
-            stop_tokens_ids = self.tokenizer(summarize_stop_tokens).input_ids
-            self.summarize_stopping_criteria = StoppingCriteriaList([StopOnTokens(stop_tokens_ids)])
+            stop_tokens = []
+            for token_id in self.tokenizer.vocab.values():
+                if any(stop_word in self.tokenizer.decode(token_id) for stop_word in summarize_stop_tokens):
+                    stop_tokens.append(token_id)
+            self.summarize_stopping_criteria = StoppingCriteriaList([StopOnTokens(stop_tokens)])
 
     def __call__(
         self, input_text: str, parameters: Dict[str, Any], stopping_criteria: Optional[StoppingCriteriaList] = None
@@ -135,20 +140,88 @@ async def generate_stream(
         for token in streamer:
             yield token
 
-    def summarization_input(self, input_text: str) -> str:
-        return INSTRUCTION_WITH_INPUT.format(
-            instruction=SUMMARIZE_INSTRUCTION,
-            input=input_text,
-        )
+    def generate_between(
+        self,
+        input_parts: List[str],
+        parameters: Dict[str, Any],
+        stopping_criteria: Optional[StoppingCriteriaList] = None,
+    ) -> str:
+        config = GenerationConfig.from_dict({**self.generation_config.to_dict(), **parameters})
+
+        prompt = torch.tensor([[]], dtype=torch.int64)
+        buffer = StringIO()
+        for text_input in input_parts[:-1]:
+            buffer.write(text_input)
+
+            tokenized_input = self.tokenizer.encode(text_input, return_tensors="pt")
+            prompt = torch.concat((prompt, tokenized_input), dim=1)
+            prev_len = prompt.shape[-1]
+
+            prompt = self.model.generate(
+                prompt, generation_config=config, stopping_criteria=stopping_criteria, **self.assistant_model_config
+            )[
+                :, :-1
+            ]  # skip the last token - stop token
+
+            decoded = self.tokenizer.decode(prompt[0, prev_len:], skip_special_tokens=True)
+            buffer.write(decoded.lstrip(" "))  # hack to delete leadding spaces if there are any
 
-    def summarize(self, input_text: str, parameters: Dict[str, Any]) -> str:
-        return self(
-            self.summarization_input(input_text), parameters, stopping_criteria=self.summarize_stopping_criteria
+        buffer.write(input_parts[-1])
+        return buffer.getvalue()
+
+    async def generate_between_stream(
+        self,
+        input_parts: List[str],
+        parameters: Dict[str, Any],
+        stopping_criteria: Optional[StoppingCriteriaList] = None,
+    ) -> Generator[str, None, None]:
+        config = GenerationConfig.from_dict({**self.generation_config.to_dict(), **parameters})
+
+        prompt = self.tokenizer.encode(input_parts[0], return_tensors="pt")
+        for text_input in input_parts[1:-1]:
+            yield text_input
+
+            tokenized_input = self.tokenizer.encode(text_input, return_tensors="pt")
+            prompt = torch.concat((prompt, tokenized_input), dim=1)
+            prev_len = prompt.shape[-1]
+
+            prompt = self.model.generate(
+                prompt, generation_config=config, stopping_criteria=stopping_criteria, **self.assistant_model_config
+            )[
+                :, :-1
+            ]  # skip the last token - stop token
+
+            decoded = self.tokenizer.decode(prompt[0, prev_len:], skip_special_tokens=True)
+            yield decoded.lstrip(" ")  # hack to delete leadding spaces if there are any
+
+        yield input_parts[-1]
+
+    @staticmethod
+    def summarization_input(function: str, signature: str, style: str) -> str:
+        return SUMMARIZE_INSTRUCTION.format(
+            function=function,
+            style=style,
+            signature=signature,
         )
 
-    async def summarize_stream(self, input_text: str, parameters: Dict[str, Any]):
-        async for token in self.generate_stream(
-            self.summarization_input(input_text), parameters, stopping_criteria=self.summarize_stopping_criteria
+    def summarize(self, input_text: str, template: str, signature: str, style: str, parameters: Dict[str, Any]) -> str:
+        prompt = self.summarization_input(input_text, signature, style)
+        splited_template = re.split(r"\$\{.*\}", template)
+        splited_template[0] = prompt + splited_template[0]
+
+        return self.generate_between(splited_template, parameters, stopping_criteria=self.summarize_stopping_criteria)[
+            len(prompt) :
+        ]
+
+    async def summarize_stream(
+        self, input_text: str, template: str, signature: str, style: str, parameters: Dict[str, Any]
+    ):
+        prompt = self.summarization_input(input_text, signature, style)
+        splited_template = re.split(r"\$\{.*\}", template)
+        splited_template = [prompt] + splited_template
+
+        async for token in self.generate_between_stream(
+            splited_template, parameters, stopping_criteria=self.summarize_stopping_criteria
         ):
             yield token
 
@@ -169,11 +242,8 @@ def inner() -> GeneratorFunctor:
 
 
 class StopOnTokens(StoppingCriteria):
-    def __init__(self, token_ids: List[List[int]]) -> None:
-        self.token_ids = [torch.tensor(ids, requires_grad=False) for ids in token_ids]
+    def __init__(self, token_ids: List[int]) -> None:
+        self.token_ids = torch.tensor(token_ids, requires_grad=False)
 
     def __call__(self, input_ids: torch.LongTensor, scores: torch.FloatTensor, **kwargs) -> bool:
-        return any(
-            torch.all(input_ids[0][-len(stopping_token_ids) :] == stopping_token_ids)
-            for stopping_token_ids in self.token_ids
-        )
+        return torch.any(torch.eq(input_ids[0, -1], self.token_ids)).item()
diff --git a/modules/openvino_code/server/src/utils.py b/modules/openvino_code/server/src/utils.py
index f7e9694ac..c119b4a91 100644
--- a/modules/openvino_code/server/src/utils.py
+++ b/modules/openvino_code/server/src/utils.py
@@ -17,26 +17,44 @@ def get_parser() -> argparse.ArgumentParser:
     return parser
 
 
-default_formatter = logging.Formatter("%(asctime)s %(levelname)s %(message)s")
+def setup_logger():
+    logging.setLoggerClass(ServerLogger)
+    _set_uvicorn_log_format(ServerLogger.default_formatter._fmt)
 
 
 def get_logger(
     name: str,
     level: int = logging.DEBUG,
-    formatter: logging.Formatter = default_formatter,
 ) -> logging.Logger:
     logger = logging.getLogger(name)
     logger.setLevel(level)
+    return logger
 
-    stdout_handler = logging.StreamHandler(sys.stdout)
-    stdout_handler.addFilter(lambda record: record.levelno <= logging.WARNING)
-    stdout_handler.setFormatter(formatter)
 
-    stderr_handler = logging.StreamHandler(sys.stderr)
-    stderr_handler.setLevel(logging.ERROR)
-    stderr_handler.setFormatter(formatter)
+class ServerLogger(logging.Logger):
+    _server_log_prefix = "[OpenVINO Code Server Log]"
 
-    logger.addHandler(stdout_handler)
-    logger.addHandler(stderr_handler)
+    default_formatter = logging.Formatter(f"{_server_log_prefix} %(asctime)s %(levelname)s %(message)s")
 
-    return logger
+    def __init__(self, name):
+        super(ServerLogger, self).__init__(name)
+
+        self.propagate = False
+
+        stdout_handler = logging.StreamHandler(sys.stdout)
+        stdout_handler.addFilter(lambda record: record.levelno <= logging.WARNING)
+        stdout_handler.setFormatter(self.default_formatter)
+
+        stderr_handler = logging.StreamHandler(sys.stderr)
+        stderr_handler.setLevel(logging.ERROR)
+        stderr_handler.setFormatter(self.default_formatter)
+
+        self.addHandler(stdout_handler)
+        self.addHandler(stderr_handler)
+
+
+def _set_uvicorn_log_format(format: str):
+    from uvicorn.config import LOGGING_CONFIG
+
+    LOGGING_CONFIG["formatters"]["access"]["fmt"] = format
+    LOGGING_CONFIG["formatters"]["default"]["fmt"] = format
diff --git a/modules/openvino_code/shared/extension-state.ts b/modules/openvino_code/shared/extension-state.ts
index 8ff106473..545e3a0ea 100644
--- a/modules/openvino_code/shared/extension-state.ts
+++ b/modules/openvino_code/shared/extension-state.ts
@@ -1,4 +1,5 @@
 import { ExtensionConfiguration } from '../src/configuration';
+import { Features } from './features';
 import { ServerState } from './server-state';
 
 export enum ConnectionStatus {
@@ -7,10 +8,16 @@ export enum ConnectionStatus {
   PENDING = 'PENDING',
 }
 
+interface IStateFeatures {
+  get supportedList(): Features[];
+  get isSummarizationSupported(): boolean;
+}
+
 export interface IExtensionState {
   isLoading: boolean;
   connectionStatus: ConnectionStatus;
   server: ServerState;
   get isServerAvailable(): boolean;
   get config(): ExtensionConfiguration;
+  features: IStateFeatures;
 }
diff --git a/modules/openvino_code/shared/features.ts b/modules/openvino_code/shared/features.ts
new file mode 100644
index 000000000..d376256b2
--- /dev/null
+++ b/modules/openvino_code/shared/features.ts
@@ -0,0 +1,4 @@
+export enum Features {
+  CODE_COMPLETION = 'Code Completion',
+  SUMMARIZATION = 'Summarization',
+}
diff --git a/modules/openvino_code/shared/model.ts b/modules/openvino_code/shared/model.ts
new file mode 100644
index 000000000..660cb383b
--- /dev/null
+++ b/modules/openvino_code/shared/model.ts
@@ -0,0 +1,21 @@
+import { Features } from './features';
+
+enum ModelId {
+  CODE_T5_220M = 'Salesforce/codet5p-220m-py',
+  DECICODER_1B_OPENVINO_INT8 = 'chgk13/decicoder-1b-openvino-int8',
+}
+
+export enum ModelName {
+  CODE_T5_220M = 'codet5p-220m-py',
+  DECICODER_1B_OPENVINO_INT8 = 'decicoder-1b-openvino-int8',
+}
+
+export const MODEL_NAME_TO_ID_MAP: Record<ModelName, ModelId> = {
+  [ModelName.CODE_T5_220M]: ModelId.CODE_T5_220M,
+  [ModelName.DECICODER_1B_OPENVINO_INT8]: ModelId.DECICODER_1B_OPENVINO_INT8,
+};
+
+export const MODEL_SUPPORTED_FEATURES: Record<ModelName, Features[]> = {
+  [ModelName.CODE_T5_220M]: [Features.CODE_COMPLETION],
+  [ModelName.DECICODER_1B_OPENVINO_INT8]: [Features.CODE_COMPLETION, Features.SUMMARIZATION],
+};
diff --git a/modules/openvino_code/shared/side-panel-message.ts b/modules/openvino_code/shared/side-panel-message.ts
index dccf8920e..0c0720d6d 100644
--- a/modules/openvino_code/shared/side-panel-message.ts
+++ b/modules/openvino_code/shared/side-panel-message.ts
@@ -9,6 +9,7 @@ export enum SidePanelMessageTypes {
   CHECK_CONNECTION_CLICK = `${sidePanelMessagePrefix}.checkConnectionClick`,
   GENERATE_COMPLETION_CLICK = `${sidePanelMessagePrefix}.generateCompletionClick`,
   SETTINGS_CLICK = `${sidePanelMessagePrefix}.settingsClick`,
+  MODEL_CHANGE = `${sidePanelMessagePrefix}.modelChange`,
 }
 
 export interface ISidePanelMessage<P = unknown> {
diff --git a/modules/openvino_code/side-panel-ui/src/App.tsx b/modules/openvino_code/side-panel-ui/src/App.tsx
index b548cbd7a..52c32bddb 100644
--- a/modules/openvino_code/side-panel-ui/src/App.tsx
+++ b/modules/openvino_code/side-panel-ui/src/App.tsx
@@ -16,9 +16,11 @@ initApp();
 
 function App(): JSX.Element {
   const [state] = useExtensionState();
+  // TODO Check if state is defined to prevent nested optional chaining
 
   const isServerStopped = state?.server.status === ServerStatus.STOPPED;
   const isServerStarted = state?.server.status === ServerStatus.STARTED;
+  const isSummarizationSupported = state?.features.isSummarizationSupported;
 
   return (
     <>
@@ -28,7 +30,7 @@ function App(): JSX.Element {
       {isServerStarted && (
         <>
           <CompletionSection isLoading={state?.isLoading}></CompletionSection>
-          <SummarizationSection></SummarizationSection>
+          {isSummarizationSupported && <SummarizationSection></SummarizationSection>}
         </>
       )}
       <ActionsSection></ActionsSection>
diff --git a/modules/openvino_code/side-panel-ui/src/components/sections/OverviewSection/OverviewSection.css b/modules/openvino_code/side-panel-ui/src/components/sections/OverviewSection/OverviewSection.css
new file mode 100644
index 000000000..544e82c48
--- /dev/null
+++ b/modules/openvino_code/side-panel-ui/src/components/sections/OverviewSection/OverviewSection.css
@@ -0,0 +1,3 @@
+.checkbox {
+  margin-top: 0.4rem
+}
diff --git a/modules/openvino_code/side-panel-ui/src/components/sections/OverviewSection/OverviewSection.tsx b/modules/openvino_code/side-panel-ui/src/components/sections/OverviewSection/OverviewSection.tsx
index c1200b790..cf699f713 100644
--- a/modules/openvino_code/side-panel-ui/src/components/sections/OverviewSection/OverviewSection.tsx
+++ b/modules/openvino_code/side-panel-ui/src/components/sections/OverviewSection/OverviewSection.tsx
@@ -1,3 +1,5 @@
+import './OverviewSection.css';
+
 export function OverviewSection(): JSX.Element {
   return (
     <section className="overview-section">
@@ -7,7 +9,7 @@ export function OverviewSection(): JSX.Element {
           <li>Inline Code Completion</li>
           <li>Summarization via docstring</li>
         </ul>
-        To use OpenVINO Code please start the server
+        To use OpenVINO Code please start the server.
       </span>
     </section>
   );
diff --git a/modules/openvino_code/side-panel-ui/src/components/sections/ServerSection/ModelSelect/ModelSelect.tsx b/modules/openvino_code/side-panel-ui/src/components/sections/ServerSection/ModelSelect/ModelSelect.tsx
new file mode 100644
index 000000000..c77b74d1f
--- /dev/null
+++ b/modules/openvino_code/side-panel-ui/src/components/sections/ServerSection/ModelSelect/ModelSelect.tsx
@@ -0,0 +1,39 @@
+import { ModelName } from '@shared/model';
+import { Select, SelectOptionProps } from '../../../shared/Select/Select';
+import { ServerStatus } from '@shared/server-state';
+import { Features } from '@shared/features';
+
+const options: SelectOptionProps<ModelName>[] = [
+  { value: ModelName.CODE_T5_220M },
+  { value: ModelName.DECICODER_1B_OPENVINO_INT8 },
+];
+
+interface ModelSelectProps {
+  disabled: boolean;
+  selectedModelName: ModelName;
+  onChange: (modelName: ModelName) => void;
+  supportedFeatures: Features[];
+  serverStatus: ServerStatus;
+}
+
+export const ModelSelect = ({
+  disabled,
+  selectedModelName,
+  onChange,
+  supportedFeatures,
+  serverStatus,
+}: ModelSelectProps): JSX.Element => {
+  const isServerStopped = serverStatus === ServerStatus.STOPPED;
+  return (
+    <>
+      <Select
+        label="Model"
+        options={options}
+        selectedValue={selectedModelName}
+        disabled={disabled}
+        onChange={(value) => onChange(value)}
+      ></Select>
+      {isServerStopped && <span>Supported Featues: {supportedFeatures.join(', ')}</span>}
+    </>
+  );
+};
diff --git a/modules/openvino_code/side-panel-ui/src/components/sections/ServerSection/ServerSection.css b/modules/openvino_code/side-panel-ui/src/components/sections/ServerSection/ServerSection.css
index 660332b00..0459349c8 100644
--- a/modules/openvino_code/side-panel-ui/src/components/sections/ServerSection/ServerSection.css
+++ b/modules/openvino_code/side-panel-ui/src/components/sections/ServerSection/ServerSection.css
@@ -4,3 +4,7 @@
   gap: 1rem;
   margin: 1rem 0;
 }
+
+.server-section .select-container {
+  margin: 0.8rem 0;
+}
diff --git a/modules/openvino_code/side-panel-ui/src/components/sections/ServerSection/ServerSection.tsx b/modules/openvino_code/side-panel-ui/src/components/sections/ServerSection/ServerSection.tsx
index 384b9c6cb..68ed0ea33 100644
--- a/modules/openvino_code/side-panel-ui/src/components/sections/ServerSection/ServerSection.tsx
+++ b/modules/openvino_code/side-panel-ui/src/components/sections/ServerSection/ServerSection.tsx
@@ -5,6 +5,8 @@ import { ServerStatus as ServerStatusEnum } from '@shared/server-state';
 import { StartingStages } from './StartingStages/StartingStages';
 import { ServerStatus } from './ServerStatus/ServerStatus';
 import './ServerSection.css';
+import { ModelSelect } from './ModelSelect/ModelSelect';
+import { ModelName } from '@shared/model';
 
 interface ServerSectionProps {
   state: IExtensionState | null;
@@ -35,14 +37,34 @@ export function ServerSection({ state }: ServerSectionProps): JSX.Element {
     });
   };
 
-  const isServerStopped = state?.server.status === ServerStatusEnum.STOPPED;
-  const isServerStarting = state?.server.status === ServerStatusEnum.STARTING;
+  const handleModelChange = (modelName: ModelName) => {
+    vscode.postMessage({
+      type: SidePanelMessageTypes.MODEL_CHANGE,
+      payload: {
+        modelName,
+      },
+    });
+  };
+
+  if (!state) {
+    return <>Extension state is not available</>;
+  }
+
+  const isServerStopped = state.server.status === ServerStatusEnum.STOPPED;
+  const isServerStarting = state.server.status === ServerStatusEnum.STARTING;
 
   return (
     <section className="server-section">
       <h3>OpenVINO Code Server</h3>
-      {state && <ServerStatus status={state.server.status} connectionStatus={state.connectionStatus}></ServerStatus>}
-      {isServerStarting && state && <StartingStages currentStage={state.server.stage}></StartingStages>}
+      <ServerStatus status={state.server.status} connectionStatus={state.connectionStatus}></ServerStatus>
+      <ModelSelect
+        disabled={!isServerStopped}
+        onChange={handleModelChange}
+        selectedModelName={state.config.model}
+        supportedFeatures={state.features.supportedList}
+        serverStatus={state.server.status}
+      ></ModelSelect>
+      {isServerStarting && <StartingStages currentStage={state.server.stage}></StartingStages>}
       <div className="button-group">
         {isServerStopped && <button onClick={handleStartServerClick}>Start Server</button>}
         {!isServerStopped && (
diff --git a/modules/openvino_code/side-panel-ui/src/components/shared/Checkbox/Checkbox.css b/modules/openvino_code/side-panel-ui/src/components/shared/Checkbox/Checkbox.css
new file mode 100644
index 000000000..962b94c56
--- /dev/null
+++ b/modules/openvino_code/side-panel-ui/src/components/shared/Checkbox/Checkbox.css
@@ -0,0 +1,28 @@
+.checkbox {
+  display: flex;
+  padding: 0.2rem 0;
+}
+
+.vscode-checkbox {
+  height: 18px;
+  width: 18px;
+  border: 1px solid transparent;
+  border-radius: 3px;
+  margin-right: 9px;
+  margin-left: 0;
+  padding: 0;
+
+  background-color: var(--vscode-settings-checkboxBackground);
+  color: var(--vscode-settings-checkboxForeground);
+  border-color: var(--vscode-settings-checkboxBorder);
+
+  cursor: pointer;
+  overflow: hidden;
+  box-sizing: border-box;
+}
+
+.checkbox-label {
+  margin-top: -1px;
+  color: var(--vscode-foreground);
+  opacity: .9;
+}
diff --git a/modules/openvino_code/side-panel-ui/src/components/shared/Checkbox/Checkbox.tsx b/modules/openvino_code/side-panel-ui/src/components/shared/Checkbox/Checkbox.tsx
new file mode 100644
index 000000000..8daad1be2
--- /dev/null
+++ b/modules/openvino_code/side-panel-ui/src/components/shared/Checkbox/Checkbox.tsx
@@ -0,0 +1,21 @@
+import { ReactNode } from 'react';
+import './Checkbox.css';
+
+interface CheckboxProps {
+  checked?: boolean;
+  children: ReactNode;
+  onChange: (isChecked: boolean) => void;
+}
+
+export const Checkbox = ({ checked, children, onChange }: CheckboxProps): JSX.Element => {
+  const classNames = ['vscode-checkbox', 'codicon'];
+  if (checked) {
+    classNames.push('codicon-check');
+  }
+  return (
+    <div className="checkbox">
+      <div className={classNames.join(' ')} onClick={() => onChange(!checked)}></div>
+      <span className="checkbox-label">{children}</span>
+    </div>
+  );
+};
diff --git a/modules/openvino_code/side-panel-ui/src/components/shared/Select/Select.css b/modules/openvino_code/side-panel-ui/src/components/shared/Select/Select.css
new file mode 100644
index 000000000..ccb5383b2
--- /dev/null
+++ b/modules/openvino_code/side-panel-ui/src/components/shared/Select/Select.css
@@ -0,0 +1,30 @@
+.select-container {
+  display: flex;
+  align-items: center;
+  gap: 0.5rem;
+}
+
+.select-container .select {
+  background-color: var(--vscode-settings-dropdownBackground);
+  color: var(--vscode-settings-dropdownForeground);
+  border-color: var(--vscode-settings-dropdownBorder);
+
+  flex-grow: 1;
+  font: inherit;
+  height: 26px;
+  padding: 2px;
+
+  cursor: pointer;
+  border-radius: 2px;
+
+  box-sizing: border-box;
+}
+
+.select-container[aria-disabled="true"] {
+  cursor: not-allowed;
+  opacity: 0.6;
+}
+
+.select-container[aria-disabled="true"] * {
+  cursor: not-allowed;
+}
diff --git a/modules/openvino_code/side-panel-ui/src/components/shared/Select/Select.tsx b/modules/openvino_code/side-panel-ui/src/components/shared/Select/Select.tsx
new file mode 100644
index 000000000..695e364e2
--- /dev/null
+++ b/modules/openvino_code/side-panel-ui/src/components/shared/Select/Select.tsx
@@ -0,0 +1,42 @@
+import './Select.css';
+
+export interface SelectOptionProps<V extends string = string, L extends string = string> {
+  value: V;
+  label?: L;
+}
+
+const SelectOption = ({ value, label }: SelectOptionProps): JSX.Element => (
+  <option value={value}>{label || value}</option>
+);
+
+interface SelectProps<V extends string, L extends string> {
+  label: string;
+  options: SelectOptionProps<V, L>[];
+  selectedValue: V;
+  disabled?: boolean;
+  onChange?: (value: V) => void;
+}
+
+export const Select = <V extends string, L extends string>({
+  label,
+  options,
+  disabled,
+  onChange,
+  selectedValue,
+}: SelectProps<V, L>): JSX.Element => {
+  return (
+    <div className="select-container" aria-disabled={disabled}>
+      <label>{label}:</label>
+      <select
+        className="select"
+        onChange={(event) => onChange?.(event.target.value as V)}
+        disabled={disabled}
+        value={selectedValue}
+      >
+        {options.map(({ value, label: optionLabel }) => (
+          <SelectOption key={value} value={value} label={optionLabel}></SelectOption>
+        ))}
+      </select>
+    </div>
+  );
+};
diff --git a/modules/openvino_code/src/configuration.ts b/modules/openvino_code/src/configuration.ts
index 4d2967e18..ea7a77a6f 100644
--- a/modules/openvino_code/src/configuration.ts
+++ b/modules/openvino_code/src/configuration.ts
@@ -1,9 +1,11 @@
+import { ModelName } from '@shared/model';
 import { WorkspaceConfiguration } from 'vscode';
 
 /**
  * Extension configuration should match `contributes.configuration` properties in package.json
  */
 export type CustomConfiguration = {
+  model: ModelName;
   serverUrl: string;
   serverRequestTimeout: number;
   fillInTheMiddleMode: boolean;
diff --git a/modules/openvino_code/src/docstring/completion-item-provider.ts b/modules/openvino_code/src/docstring/completion-item-provider.ts
index a8050bad7..c00999156 100644
--- a/modules/openvino_code/src/docstring/completion-item-provider.ts
+++ b/modules/openvino_code/src/docstring/completion-item-provider.ts
@@ -1,11 +1,12 @@
-import { CompletionItemProvider, CompletionItem, TextDocument, Position, CompletionItemKind, Range } from "vscode";
-import { validDocstringPrefix, docstringIsClosed } from "./parse";
-import { extensionState } from "../state";
-import { COMMANDS } from "../constants";
+import { CompletionItemProvider, CompletionItem, TextDocument, Position, CompletionItemKind, Range } from 'vscode';
+import { validDocstringPrefix, docstringIsClosed } from './parse';
+import { extensionState } from '../state';
+import { COMMANDS } from '../constants';
 
 export const completionItemProvider: CompletionItemProvider = {
   provideCompletionItems: (document: TextDocument, position: Position) => {
-    if (validEnterActivation(document, position)) {
+    const { isSummarizationSupported } = extensionState.state.features;
+    if (isSummarizationSupported && validEnterActivation(document, position)) {
       return [new AutoDocstringCompletionItem(document, position)];
     }
     return;
@@ -30,16 +31,16 @@ function validEnterActivation(document: TextDocument, position: Position): boole
  */
 class AutoDocstringCompletionItem extends CompletionItem {
   constructor(_: TextDocument, position: Position) {
-    super("Generate Docstring", CompletionItemKind.Snippet);
-    this.insertText = "";
+    super('Generate Docstring', CompletionItemKind.Snippet);
+    this.insertText = '';
     this.filterText = getQuoteStyle();
-    this.sortText = "\0";
+    this.sortText = '\0';
 
     this.range = new Range(new Position(position.line, 0), position);
 
     this.command = {
       command: COMMANDS.GENERATE_DOC_STRING,
-      title: "Generate Docstring",
+      title: 'Generate Docstring',
     };
   }
 }
diff --git a/modules/openvino_code/src/docstring/docstring-template/template-data.ts b/modules/openvino_code/src/docstring/docstring-template/template-data.ts
index 8c67fe021..ad3f33c5f 100644
--- a/modules/openvino_code/src/docstring/docstring-template/template-data.ts
+++ b/modules/openvino_code/src/docstring/docstring-template/template-data.ts
@@ -1,8 +1,8 @@
-import { Argument, Decorator, DocstringParts, Exception, KeywordArgument, Returns, Yields } from "./docstring-parts";
+import { Argument, Decorator, DocstringParts, Exception, KeywordArgument, Returns, Yields } from './docstring-parts';
 
 export class TemplateData {
   public name: string;
-  public summary?: string;
+  public summary: string;
   public decorators: Decorator[];
   public args: Argument[];
   public kwargs: KeywordArgument[];
@@ -14,6 +14,7 @@ export class TemplateData {
   private includeName: boolean;
   private includeExtendedSummary: boolean;
   type: string | undefined = undefined;
+  private static DEFAULT_TYPE_PLACEHOLDER = '[type]';
 
   constructor(
     docstringParts: DocstringParts,
@@ -22,7 +23,7 @@ export class TemplateData {
     includeExtendedSummary: boolean
   ) {
     this.name = docstringParts.name;
-    this.summary = docstringParts.summary;
+    this.summary = docstringParts.summary || '';
     this.decorators = docstringParts.decorators;
     this.args = docstringParts.args;
     this.kwargs = docstringParts.kwargs;
@@ -38,37 +39,41 @@ export class TemplateData {
       this.removeTypes();
     }
 
-    this.addDefaultTypePlaceholders("[type]");
+    this.addDefaultTypePlaceholders(TemplateData.DEFAULT_TYPE_PLACEHOLDER);
   }
 
   public placeholder() {
     return (text: string, render: (text: string) => string) => {
-      return "${@@@:" + render(text) + "}";
+      return '${@@@:' + render(text) + '}';
     };
   }
 
   public summaryPlaceholder(): string {
     if (this.includeName) {
-      return this.name + " ${@@@:" + this.summary + "}";
+      return this.name + ' ${@@@:' + this.summary + '}';
     }
 
-    return "${@@@:" + this.summary + "}";
+    return '${@@@:' + this.summary + '}';
   }
 
   public extendedSummaryPlaceholder(): string {
     if (this.includeExtendedSummary) {
-      return "${@@@:[extended_summary]}";
+      return '${@@@:[extended_summary]}';
     }
 
-    return "";
+    return '';
   }
 
   public typePlaceholder(): string {
-    return "${@@@:" + this.type + "}";
+    // skip tabstop for guessed types
+    if (this.type === TemplateData.DEFAULT_TYPE_PLACEHOLDER) {
+      return '${@@@:' + this.type + '}';
+    }
+    return `${this.type}`;
   }
 
   public descriptionPlaceholder(): string {
-    return "${@@@:[description]}";
+    return '${@@@:[description]}';
   }
 
   public argsExist(): boolean {
diff --git a/modules/openvino_code/src/docstring/generate-command.ts b/modules/openvino_code/src/docstring/generate-command.ts
index c27453fa9..b7e612b3e 100644
--- a/modules/openvino_code/src/docstring/generate-command.ts
+++ b/modules/openvino_code/src/docstring/generate-command.ts
@@ -1,9 +1,11 @@
-import { window } from "vscode";
-import { AutoDocstring } from "./generate-docstring";
+import { window } from 'vscode';
+import { AutoDocstring } from './generate-docstring';
+import { extensionState } from '../state';
 
 export function generateCommandHandler() {
+  const { isSummarizationSupported } = extensionState.state.features;
   const editor = window.activeTextEditor;
-  if (!editor) {
+  if (!isSummarizationSupported || !editor) {
     return;
   }
 
diff --git a/modules/openvino_code/src/docstring/generate-docstring.ts b/modules/openvino_code/src/docstring/generate-docstring.ts
index fa7c08fd6..5771d5911 100644
--- a/modules/openvino_code/src/docstring/generate-docstring.ts
+++ b/modules/openvino_code/src/docstring/generate-docstring.ts
@@ -19,16 +19,15 @@ export class AutoDocstring {
     const position = this.editor.selection.active;
     const document = this.editor.document.getText();
 
-    // fixme: docstring parts doesn't includes decorators
-    const docstringParts = parse(document, position.line);
-    const indentation = getDocstringIndentation(
-      document,
-      position.line,
-      getDefaultIndentation(this.editor.options.insertSpaces as boolean, this.editor.options.tabSize as number)
+    const defaultIndentation = getDefaultIndentation(
+      this.editor.options.insertSpaces as boolean,
+      this.editor.options.tabSize as number
     );
+    const { docstringParts, definition } = parse(document, position.line, defaultIndentation.length);
+    const indentation = getDocstringIndentation(document, position.line, defaultIndentation);
 
     return this._insertGenerationPlaceholder(indentation)
-      .then(() => this._insertDocstring(docstringParts, indentation, position))
+      .then(() => this._generateDocstring(docstringParts, definition, indentation, position))
       .then(
         () => extensionState.set('isLoading', false),
         () => extensionState.set('isLoading', false)
@@ -46,15 +45,26 @@ export class AutoDocstring {
     return this.editor.insertSnippet(generationPlaceholderSnippet, insertPosition);
   }
 
-  private _insertDocstring(docstringParts: DocstringParts, indentation: string, position: vs.Position) {
-    const removeGenerationPlaceholder = () =>
-      this.editor.edit((builder) => {
-        builder.delete(this.editor.document.lineAt(position).range);
-      });
+  private _removeGenerationPlaceholder(position: vs.Position) {
+    return this.editor.edit((builder) => {
+      builder.delete(this.editor.document.lineAt(position).range);
+    });
+  }
+
+  private _generateDocstring(
+    docstringParts: DocstringParts,
+    definition: string,
+    indentation: string,
+    position: vs.Position
+  ) {
+    const template = this.generateTemplate(docstringParts, indentation);
 
     return backendService
       .generateSummarization({
-        inputs: docstringParts.code.join(' '),
+        inputs: docstringParts.code.join('\n'),
+        template: template,
+        definition: definition,
+        format: extensionState.config.docstringFormat,
         parameters: {
           temperature: extensionState.config.temperature,
           top_k: extensionState.config.topK,
@@ -64,29 +74,19 @@ export class AutoDocstring {
         },
       })
       .then((response) => {
-        docstringParts.summary = response?.generated_text || '';
-        const docstringSnippet = this.generateDocstringSnippet(docstringParts, indentation);
+        const docstringSnippet = new vs.SnippetString(response?.generated_text);
 
-        return removeGenerationPlaceholder().then(() =>
+        return this._removeGenerationPlaceholder(position).then(() =>
           this.editor.insertSnippet(docstringSnippet, position.with(position.line, 0))
         );
       });
   }
 
-  private generateDocstringSnippet(docstringParts: DocstringParts, indentation: string): vs.SnippetString {
-    const config = extensionState.config;
-
-    const docstringFactory = new DocstringFactory(
-      getTemplate(extensionState.config.docstringFormat),
-      config.quoteStyle,
-      true,
-      false,
-      false,
-      true
-    );
+  private generateTemplate(docstringParts: DocstringParts, indentation: string): string {
+    const { quoteStyle, docstringFormat } = extensionState.config;
 
-    const docstring = docstringFactory.generateDocstring(docstringParts, indentation);
+    const docstringFactory = new DocstringFactory(getTemplate(docstringFormat), quoteStyle, true, false, false, true);
 
-    return new vs.SnippetString(docstring);
+    return docstringFactory.generateDocstring(docstringParts, indentation);
   }
 }
diff --git a/modules/openvino_code/src/docstring/index.ts b/modules/openvino_code/src/docstring/index.ts
index 59dc15231..44e740863 100644
--- a/modules/openvino_code/src/docstring/index.ts
+++ b/modules/openvino_code/src/docstring/index.ts
@@ -7,6 +7,7 @@ import { completionItemProvider } from './completion-item-provider';
 class DocString implements IExtensionComponent {
   activate(context: ExtensionContext): void {
     const commandDisposable = commands.registerCommand(COMMANDS.GENERATE_DOC_STRING, generateCommandHandler);
+
     const providerDisposable = languages.registerCompletionItemProvider(
       'python',
       completionItemProvider,
@@ -14,6 +15,7 @@ class DocString implements IExtensionComponent {
       "'",
       '#'
     );
+
     context.subscriptions.push(commandDisposable, providerDisposable);
   }
   deactivate(): void {}
diff --git a/modules/openvino_code/src/docstring/parse/get-body.ts b/modules/openvino_code/src/docstring/parse/get-body.ts
index f3ad89a72..ef265dcaa 100644
--- a/modules/openvino_code/src/docstring/parse/get-body.ts
+++ b/modules/openvino_code/src/docstring/parse/get-body.ts
@@ -1,11 +1,11 @@
-import { blankLine, indentationOf, preprocessLines } from "./utilities";
+import { blankLine, filterComments, indentationOf } from './utilities';
 
-export function getBody(document: string, linePosition: number): string[] {
-  const lines = document.split("\n");
+export function getBody(document: string, linePosition: number, defaultIndentation: number): string[] {
+  const lines = document.split('\n');
   const body = [];
 
   let currentLineNum = linePosition;
-  const originalIndentation = getBodyBaseIndentation(lines, linePosition);
+  const bodyBaseIndentation = getBodyBaseIndentation(lines, linePosition);
 
   while (currentLineNum < lines.length) {
     const line = lines[currentLineNum];
@@ -15,15 +15,15 @@ export function getBody(document: string, linePosition: number): string[] {
       continue;
     }
 
-    if (indentationOf(line) < originalIndentation) {
+    if (indentationOf(line) < bodyBaseIndentation) {
       break;
     }
 
-    body.push(line);
+    body.push(line.slice(bodyBaseIndentation - defaultIndentation));
     currentLineNum++;
   }
 
-  return preprocessLines(body);
+  return filterComments(body);
 }
 
 function getBodyBaseIndentation(lines: string[], linePosition: number): number {
diff --git a/modules/openvino_code/src/docstring/parse/guess-type.ts b/modules/openvino_code/src/docstring/parse/guess-type.ts
index d995474f8..29cb5922c 100644
--- a/modules/openvino_code/src/docstring/parse/guess-type.ts
+++ b/modules/openvino_code/src/docstring/parse/guess-type.ts
@@ -21,7 +21,7 @@ function getTypeFromTyping(parameter: string): string | undefined {
     return undefined;
   }
 
-  return typeHint[1].replace(/['"]+/g, "").trim();
+  return typeHint[1].replace(/['"]+/g, '').trim();
 }
 
 function guessTypeFromDefaultValue(parameter: string): string | undefined {
@@ -35,63 +35,63 @@ function guessTypeFromDefaultValue(parameter: string): string | undefined {
   const defaultValue = defaultValueMatch[1];
 
   if (isInteger(defaultValue)) {
-    return "int";
+    return 'int';
   }
 
   if (isFloat(defaultValue)) {
-    return "float";
+    return 'float';
   }
 
   if (isHexadecimal(defaultValue)) {
-    return "hexadecimal";
+    return 'hexadecimal';
   }
 
   if (isString(defaultValue)) {
-    return "str";
+    return 'str';
   }
 
   if (isBool(defaultValue)) {
-    return "bool";
+    return 'bool';
   }
 
   if (isList(defaultValue)) {
-    return "list";
+    return 'list';
   }
 
   if (isTuple(defaultValue)) {
-    return "tuple";
+    return 'tuple';
   }
 
   if (isDict(defaultValue)) {
-    return "dict";
+    return 'dict';
   }
 
   if (isRegexp(defaultValue)) {
-    return "regexp";
+    return 'regexp';
   }
 
   if (isUnicode(defaultValue)) {
-    return "unicode";
+    return 'unicode';
   }
 
   if (isBytes(defaultValue)) {
-    return "bytes";
+    return 'bytes';
   }
 
   if (isFunction(defaultValue)) {
-    return "function";
+    return 'function';
   }
 
   return undefined;
 }
 
 function guessTypeFromName(parameter: string): string | undefined {
-  if (parameter.startsWith("is") || parameter.startsWith("has")) {
-    return "bool";
+  if (parameter.startsWith('is') || parameter.startsWith('has')) {
+    return 'bool';
   }
 
-  if (inArray(parameter, ["cb", "callback", "done", "next", "fn"])) {
-    return "function";
+  if (inArray(parameter, ['cb', 'callback', 'done', 'next', 'fn'])) {
+    return 'function';
   }
 
   return undefined;
@@ -103,7 +103,7 @@ function hasTypeHint(parameter: string): boolean {
 }
 
 function isKwarg(parameter: string): boolean {
-  return parameter.includes("=");
+  return parameter.includes('=');
 }
 
 function isInteger(value: string): boolean {
@@ -166,6 +166,6 @@ function isFunction(value: string): boolean {
   return pattern.test(value);
 }
 
-export function inArray<type>(item: type, array: type[]) {
+export function inArray<T>(item: T, array: T[]) {
   return array.some((x) => item === x);
 }
diff --git a/modules/openvino_code/src/docstring/parse/parse-parameters.ts b/modules/openvino_code/src/docstring/parse/parse-parameters.ts
index de40d3c07..01d22d234 100644
--- a/modules/openvino_code/src/docstring/parse/parse-parameters.ts
+++ b/modules/openvino_code/src/docstring/parse/parse-parameters.ts
@@ -1,5 +1,5 @@
 /* eslint-disable no-useless-escape */
-import { guessType } from ".";
+import { guessType } from '.';
 import {
   Argument,
   Decorator,
@@ -8,7 +8,8 @@ import {
   KeywordArgument,
   Returns,
   Yields,
-} from "../docstring-template/docstring-parts";
+} from '../docstring-template/docstring-parts';
+import { preprocessLines } from './utilities';
 
 export function parseParameters(
   parameterTokens: string[],
@@ -16,14 +17,15 @@ export function parseParameters(
   functionName: string,
   code: string[] = []
 ): DocstringParts {
+  const bodyWithoutIndentation = preprocessLines(body);
   return {
     name: functionName,
     decorators: parseDecorators(parameterTokens),
     args: parseArguments(parameterTokens),
     kwargs: parseKeywordArguments(parameterTokens),
-    returns: parseReturn(parameterTokens, body),
-    yields: parseYields(parameterTokens, body),
-    exceptions: parseExceptions(body),
+    returns: parseReturn(parameterTokens, bodyWithoutIndentation),
+    yields: parseYields(parameterTokens, bodyWithoutIndentation),
+    exceptions: parseExceptions(bodyWithoutIndentation),
     code: code,
   };
 }
@@ -49,13 +51,13 @@ function parseDecorators(parameters: string[]): Decorator[] {
 
 function parseArguments(parameters: string[]): Argument[] {
   const args: Argument[] = [];
-  const excludedArgs = ["self", "cls"];
+  const excludedArgs = ['self', 'cls'];
   const pattern = /^(\w+)/;
 
   for (const param of parameters) {
     const match = param.trim().match(pattern);
 
-    if (match == null || param.includes("=") || inArray(param, excludedArgs)) {
+    if (match == null || param.includes('=') || inArray(param, excludedArgs)) {
       continue;
     }
 
@@ -128,7 +130,7 @@ function parseReturnFromDefinition(parameters: string[]): Returns | null {
     }
 
     // Skip "-> None" annotations
-    return match[1] === "None" ? null : { type: match[1] };
+    return match[1] === 'None' ? null : { type: match[1] };
   }
 
   return null;
@@ -151,7 +153,7 @@ function parseExceptions(body: string[]): Exception[] {
   return exceptions;
 }
 
-export function inArray<type>(item: type, array: type[]) {
+export function inArray<T>(item: T, array: T[]) {
   return array.some((x) => item === x);
 }
 
@@ -174,5 +176,5 @@ function parseFromBody(body: string[], pattern: RegExp): Returns | Yields | unde
  * @param type The annotated type
  */
 function isIterator(type: string): boolean {
-  return type.startsWith("Generator") || type.startsWith("Iterator");
+  return type.startsWith('Generator') || type.startsWith('Iterator');
 }
diff --git a/modules/openvino_code/src/docstring/parse/parse.ts b/modules/openvino_code/src/docstring/parse/parse.ts
index d8cd681c3..b16f68d0d 100644
--- a/modules/openvino_code/src/docstring/parse/parse.ts
+++ b/modules/openvino_code/src/docstring/parse/parse.ts
@@ -1,13 +1,17 @@
-import { getBody, getDefinition, getFunctionName, parseParameters, tokenizeDefinition } from ".";
-import { DocstringParts } from "../docstring-template/docstring-parts";
+import { getBody, getDefinition, getFunctionName, parseParameters, tokenizeDefinition } from '.';
+import { DocstringParts } from '../docstring-template/docstring-parts';
 
-export function parse(document: string, positionLine: number): DocstringParts {
+export function parse(
+  document: string,
+  positionLine: number,
+  defaultIndentation: number
+): { docstringParts: DocstringParts; definition: string } {
   const definition = getDefinition(document, positionLine);
-  const body = getBody(document, positionLine);
+  const body = getBody(document, positionLine, defaultIndentation);
 
   const parameterTokens = tokenizeDefinition(definition);
   const functionName = getFunctionName(definition);
-  const code = [definition].concat(body);
+  const code = [definition, ...body];
 
-  return parseParameters(parameterTokens, body, functionName, code);
+  return { docstringParts: parseParameters(parameterTokens, body, functionName, code), definition };
 }
diff --git a/modules/openvino_code/src/docstring/parse/utilities.ts b/modules/openvino_code/src/docstring/parse/utilities.ts
index f216b3383..b2eb4c93a 100644
--- a/modules/openvino_code/src/docstring/parse/utilities.ts
+++ b/modules/openvino_code/src/docstring/parse/utilities.ts
@@ -18,6 +18,10 @@ export function preprocessLines(lines: string[]): string[] {
   return lines.map((line) => line.trim()).filter((line) => !line.startsWith("#"));
 }
 
+export function filterComments(lines: string[]): string[] {
+  return lines.filter((line) => !line.startsWith("#"));
+}
+
 export function indentationOf(line: string): number {
   return getIndentation(line).length;
 }
diff --git a/modules/openvino_code/src/python-server/commands-runner.ts b/modules/openvino_code/src/python-server/commands-runner.ts
index 988252a3a..4ee10fa6b 100644
--- a/modules/openvino_code/src/python-server/commands-runner.ts
+++ b/modules/openvino_code/src/python-server/commands-runner.ts
@@ -1,12 +1,12 @@
 import { ChildProcess, spawn, exec } from 'child_process';
-import { StopSignal } from './stop-controller';
 import { LogOutputChannel } from 'vscode';
+import { logServerMessage } from './server-log';
 
 export interface RunCommandOptions {
   cwd?: string;
   env?: NodeJS.ProcessEnv;
-  stopSignal?: StopSignal;
-  logger: LogOutputChannel;
+  abortSignal?: AbortSignal;
+  logger: LogOutputChannel | null;
   listeners?: Listeners;
 }
 
@@ -14,48 +14,52 @@ interface Listeners {
   stdout: (data: string) => void;
 }
 
+export const isAbortError = (error: Error): boolean => error.name === 'AbortError';
+
 const pidMessagePrefixer = (pid?: number) => (message: string) => `[Process: ${pid}] ${message}`;
 
 export function spawnCommand(command: string, args: string[], options: RunCommandOptions) {
-  const { env, cwd, stopSignal, logger, listeners } = options;
+  const { env, cwd, abortSignal, logger, listeners } = options;
 
-  if (stopSignal?.stopped) {
-    logger.debug(`running command: ${command} ${args ? args?.join(' ') : ''} is skipped. Received stop signal`);
+  if (abortSignal?.aborted) {
+    logger?.debug(`running command: ${command} ${args ? args?.join(' ') : ''} is skipped. Received stop signal`);
     return;
   }
 
-  logger.debug(`running command: ${command} ${args ? args?.join(' ') : ''}`);
+  logger?.debug(`running command: ${command} ${args ? args?.join(' ') : ''}`);
 
   const process = spawn(command, args, {
     cwd,
     env,
+    signal: abortSignal,
   });
 
-  return waitForChildProcess(process, logger, stopSignal, listeners);
+  return waitForChildProcess(process, logger, abortSignal, listeners);
 }
 
 export function execCommand(command: string, options: RunCommandOptions) {
-  const { env, cwd, stopSignal, logger, listeners } = options;
+  const { env, cwd, abortSignal, logger, listeners } = options;
 
-  if (stopSignal?.stopped) {
-    logger.debug(`running command: ${command} is skipped. Received stop signal`);
+  if (abortSignal?.aborted) {
+    logger?.debug(`running command: ${command} is skipped. Received stop signal`);
     return;
   }
 
-  logger.debug(`running command: ${command}`);
+  logger?.debug(`running command: ${command}`);
 
   const process = exec(command, {
     cwd,
     env,
+    signal: abortSignal,
   });
 
-  return waitForChildProcess(process, logger, stopSignal, listeners);
+  return waitForChildProcess(process, logger, abortSignal, listeners);
 }
 
 async function waitForChildProcess(
   process: ChildProcess,
-  logger: LogOutputChannel,
-  stopSignal?: StopSignal,
+  logger: RunCommandOptions['logger'],
+  abortSignal?: AbortSignal,
   listeners?: Listeners
 ) {
   let result: string = '';
@@ -63,16 +67,20 @@ async function waitForChildProcess(
   const prefixMessage = pidMessagePrefixer(process.pid);
 
   const stopSignalHandler = () => {
-    logger.debug(prefixMessage('killing process'));
+    logger?.debug(prefixMessage('killing process'));
+    // TODO Consider removing explicit process kill and rely on AbortSignal only
     process.kill();
   };
-  stopSignal?.once(stopSignalHandler);
+
+  abortSignal?.addEventListener('abort', stopSignalHandler, { once: true });
 
   return new Promise<string | null>((resolve, reject) => {
     process.stdout?.on('data', (data) => {
       const textData = String(data).trim();
 
-      logger.debug(prefixMessage(textData));
+      if (logger) {
+        logServerMessage(logger, textData, prefixMessage);
+      }
 
       if (listeners?.stdout) {
         listeners?.stdout(textData);
@@ -84,20 +92,25 @@ async function waitForChildProcess(
 
     process.stderr?.on('data', (data) => {
       const textData = String(data).trim();
-      logger.error(prefixMessage(textData));
+      logger?.error(prefixMessage(textData));
       if (!error) {
         error = new Error(textData);
       }
     });
 
     process.on('error', (err) => {
-      logger.error(prefixMessage(err.message));
+      if (isAbortError(err)) {
+        logger?.debug(prefixMessage(err.message));
+      } else {
+        logger?.error(prefixMessage(err.message));
+      }
       error = err;
     });
 
     process.on('close', (code, signal) => {
-      logger.debug(prefixMessage(`exited with code: ${code} and signal: ${signal}`));
-      stopSignal?.removeListener(stopSignalHandler);
+      logger?.debug(prefixMessage(`exited with code: ${code} and signal: ${signal}`));
+
+      abortSignal?.removeEventListener('abort', stopSignalHandler);
 
       if (code === 0) {
         resolve(result);
diff --git a/modules/openvino_code/src/python-server/detect-python.ts b/modules/openvino_code/src/python-server/detect-python.ts
index 5fc1beb63..584f50a91 100644
--- a/modules/openvino_code/src/python-server/detect-python.ts
+++ b/modules/openvino_code/src/python-server/detect-python.ts
@@ -16,7 +16,7 @@ export async function getPythonExecutable(
 
   for (const executable of executables) {
     try {
-      await verifyPythonVersion(executable, requriedVersion, logger);
+      await verifyPythonVersion(executable, requriedVersion);
       result = executable;
     } catch (e) {
       errors.push(e);
@@ -31,24 +31,19 @@ export async function getPythonExecutable(
   const errorMessage = ['Cannot find python executable.'];
   if (errors.length) {
     errorMessage.push(' Next error(s) occured:\n');
-    errorMessage.push(`${String(errors[0])}\n`);
-  }
-
-  if (errors[1]) {
-    errorMessage.push(`${String(errors[1])}\n`);
+    for (const error of errors) {
+      errorMessage.push(`${String(error)}\n`);
+    }
   }
 
   throw new Error(errorMessage.join(''));
 }
 
-async function verifyPythonVersion(
-  executable: PythonExecutable,
-  requriedVersion: Version,
-  logger: LogOutputChannel
-): Promise<void> {
+async function verifyPythonVersion(executable: PythonExecutable, requriedVersion: Version): Promise<void> {
   const command = `${executable} --version`;
+
   const commandResult = await execCommand(command, {
-    logger,
+    logger: null, // Prevent showing stderr output for `python --version` command (e.g. "/bin/sh: 1: python: not found")
   });
 
   if (!commandResult) {
diff --git a/modules/openvino_code/src/python-server/pip.ts b/modules/openvino_code/src/python-server/pip.ts
index 65ab96db5..2769729b4 100644
--- a/modules/openvino_code/src/python-server/pip.ts
+++ b/modules/openvino_code/src/python-server/pip.ts
@@ -2,11 +2,8 @@ import { execCommand } from './commands-runner';
 import type { PythonServerConfiguration } from './python-server-runner';
 import { getVenvActivateCommand } from './virtual-environment';
 
-// fixme: 'pip install --upgrade pip' doesn't fail on bad proxy settings. The command 'pip install --upgrade pip' exit with code 0 even there is a ProxyError in stderr.
-// The plain 'pip install .' doesn't have such issue.
-// fixme: 'pip install --upgrade pip' doesn't exit on stop signal. The plain 'pip install .' doesn't have such issue.
 export async function upgradePip(config: PythonServerConfiguration) {
-  const { python, serverDir, proxyEnv, stopSignal, logger } = config;
+  const { python, serverDir, proxyEnv, abortSignal, logger } = config;
   logger.info('Upgrading pip version...');
 
   const activateCommand = getVenvActivateCommand(config);
@@ -15,7 +12,7 @@ export async function upgradePip(config: PythonServerConfiguration) {
   await execCommand(command, {
     logger,
     cwd: serverDir,
-    stopSignal,
+    abortSignal,
     env: { ...proxyEnv },
   });
 
@@ -23,7 +20,7 @@ export async function upgradePip(config: PythonServerConfiguration) {
 }
 
 export async function installRequirements(config: PythonServerConfiguration) {
-  const { serverDir, proxyEnv, stopSignal, logger } = config;
+  const { serverDir, proxyEnv, abortSignal, logger } = config;
   logger.info('Installing python requirements...');
 
   const activateCommand = getVenvActivateCommand(config);
@@ -32,7 +29,7 @@ export async function installRequirements(config: PythonServerConfiguration) {
   await execCommand(command, {
     logger,
     cwd: serverDir,
-    stopSignal,
+    abortSignal,
     env: { ...proxyEnv },
   });
 
diff --git a/modules/openvino_code/src/python-server/python-server-runner.ts b/modules/openvino_code/src/python-server/python-server-runner.ts
index c4a9dd9d9..82140a3cd 100644
--- a/modules/openvino_code/src/python-server/python-server-runner.ts
+++ b/modules/openvino_code/src/python-server/python-server-runner.ts
@@ -1,16 +1,17 @@
-import { spawnCommand } from './commands-runner';
+import { isAbortError, spawnCommand } from './commands-runner';
 import { getVenvPythonPath } from './virtual-environment';
 import { PythonExecutable, Version, getPythonExecutable } from './detect-python';
 import { OS, detectOs } from './detect-os';
 import { createVenv, checkActivatedVenv } from './virtual-environment';
 import { upgradePip, installRequirements } from './pip';
-import { StopSignal, StopController } from './stop-controller';
 import { ProxyEnv, getProxyEnv } from './proxy';
 import { ServerStateController } from './server-state-controller';
 import { ServerStatus, ServerStartingStage } from '@shared/server-state';
 import { EXTENSION_SERVER_DISPLAY_NAME } from '../constants';
 import { LogOutputChannel, window } from 'vscode';
 import { join } from 'path';
+import { MODEL_NAME_TO_ID_MAP, ModelName } from '@shared/model';
+import { extensionState } from '../state';
 
 const SERVER_STARTED_STDOUT_ANCHOR = 'OpenVINO Code Server started';
 
@@ -18,8 +19,8 @@ interface ServerHooks {
   onStarted: () => void;
 }
 
-async function runServer(config: PythonServerConfiguration, hooks?: ServerHooks) {
-  const { serverDir, proxyEnv, stopSignal, logger } = config;
+async function runServer(modelName: ModelName, config: PythonServerConfiguration, hooks?: ServerHooks) {
+  const { serverDir, proxyEnv, abortSignal, logger } = config;
   logger.info('Starting server...');
 
   const venvPython = await getVenvPythonPath(config);
@@ -33,13 +34,16 @@ async function runServer(config: PythonServerConfiguration, hooks?: ServerHooks)
     if (data.includes(SERVER_STARTED_STDOUT_ANCHOR)) {
       hooks?.onStarted();
       started = true;
+      logger.info('Server started');
     }
   }
 
-  await spawnCommand(venvPython, ['main.py', '--model', 'chgk13/decicoder-1b-openvino-int8'], {
+  const model = MODEL_NAME_TO_ID_MAP[modelName];
+
+  await spawnCommand(venvPython, ['main.py', '--model', model], {
     logger,
     cwd: serverDir,
-    stopSignal,
+    abortSignal,
     env: { ...proxyEnv },
     listeners: { stdout: stdoutListener },
   });
@@ -55,7 +59,7 @@ export interface PythonServerConfiguration {
   venvDirName: string;
   serverDir: string;
   proxyEnv?: ProxyEnv;
-  stopSignal: StopSignal;
+  abortSignal: AbortSignal;
   logger: LogOutputChannel;
 }
 
@@ -63,7 +67,7 @@ export class NativePythonServerRunner {
   static readonly REQUIRED_PYTHON_VERSION: Version = [3, 8];
   static readonly VENV_DIR_NAME = '.venv';
 
-  private _stopController = new StopController();
+  private _abortController = new AbortController();
 
   private readonly _stateController = new ServerStateController();
   get stateReporter() {
@@ -79,16 +83,20 @@ export class NativePythonServerRunner {
     this._stateController.setStatus(ServerStatus.STARTING);
 
     try {
-      logger.info('Strating Server using python vitual environment...');
+      logger.info('Starting Server using python virtual environment...');
       await this._start();
-      logger.info('Server stopped');
     } catch (e) {
-      const error = e instanceof Error ? e : String(e);
+      const error = e instanceof Error ? e : new Error(String(e));
+      if (isAbortError(error)) {
+        logger.debug('Server launch was aborted');
+        return;
+      }
       logger.error(`Server stopped with error:`);
       logger.error(error);
     } finally {
       this._stateController.setStage(null);
       this._stateController.setStatus(ServerStatus.STOPPED);
+      logger.info('Server stopped');
     }
   }
 
@@ -103,10 +111,6 @@ export class NativePythonServerRunner {
       logger
     );
 
-    this._stateController.setStage(ServerStartingStage.CREATE_VENV);
-
-    await createVenv(python, SERVER_DIR, NativePythonServerRunner.VENV_DIR_NAME, logger);
-
     const proxyEnv = getProxyEnv();
     if (proxyEnv) {
       logger.info('Applying proxy settings:');
@@ -116,13 +120,17 @@ export class NativePythonServerRunner {
     const config: PythonServerConfiguration = {
       python,
       os,
-      proxyEnv: getProxyEnv(),
+      proxyEnv,
       serverDir: SERVER_DIR,
       venvDirName: NativePythonServerRunner.VENV_DIR_NAME,
-      stopSignal: this._stopController.signal,
+      abortSignal: this._abortController.signal,
       logger,
     };
 
+    this._stateController.setStage(ServerStartingStage.CREATE_VENV);
+
+    await createVenv(config);
+
     this._stateController.setStage(ServerStartingStage.CHECK_VENV_ACTIVATION);
 
     await checkActivatedVenv(config);
@@ -137,7 +145,9 @@ export class NativePythonServerRunner {
 
     this._stateController.setStage(ServerStartingStage.START_SERVER);
 
-    await runServer(config, {
+    const modelName = extensionState.config.model;
+
+    await runServer(modelName, config, {
       onStarted: () => {
         this._stateController.setStatus(ServerStatus.STARTED);
         this._stateController.setStage(null);
@@ -147,7 +157,7 @@ export class NativePythonServerRunner {
 
   stop() {
     logger.info('Stopping...');
-    this._stopController.stop();
-    this._stopController = new StopController();
+    this._abortController.abort();
+    this._abortController = new AbortController();
   }
 }
diff --git a/modules/openvino_code/src/python-server/server-log.ts b/modules/openvino_code/src/python-server/server-log.ts
new file mode 100644
index 000000000..37d6c694d
--- /dev/null
+++ b/modules/openvino_code/src/python-server/server-log.ts
@@ -0,0 +1,68 @@
+import { LogOutputChannel } from 'vscode';
+
+enum LogLevel {
+  TRACE = 'TRACE',
+  DEBUG = 'DEBUG',
+  INFO = 'INFO',
+  WARNING = 'WARNING',
+  ERROR = 'ERROR',
+  CRITICAL = 'CRITICAL',
+}
+
+const serverLogPrefix = '[OpenVINO Code Server Log] ';
+const timestampPattern = '\\d{4}-\\d{2}-\\d{2} \\d{2}:\\d{2}:\\d{2},\\d{3}';
+const logLevelPattern = Object.values(LogLevel).join('|');
+
+const serverLogRegExp = new RegExp(`^${timestampPattern} (?<level>${logLevelPattern}) (?<message>(?:.|\\n|\\r)+)`);
+
+interface IServerLog {
+  level: LogLevel;
+  message: string;
+}
+
+const parseServerLogs = (output: string): (IServerLog | null)[] => {
+  const serverLogs = output.split(serverLogPrefix).filter(Boolean);
+
+  return serverLogs.map((log) => {
+    const match = serverLogRegExp.exec(log);
+
+    const level = match?.groups?.level as LogLevel | undefined;
+    const message = match?.groups?.message;
+
+    if (!level || !message) {
+      return null;
+    }
+
+    return {
+      level,
+      message,
+    };
+  });
+};
+
+export const logServerMessage = (
+  logger: LogOutputChannel,
+  message: string,
+  prefixer: (message: string) => string
+): void => {
+  const logLevelToMethodMap: Record<LogLevel, LogOutputChannel['trace' | 'debug' | 'info' | 'warn' | 'error']> = {
+    [LogLevel.TRACE]: logger.trace.bind(logger),
+    [LogLevel.DEBUG]: logger.debug.bind(logger),
+    [LogLevel.INFO]: logger.info.bind(logger),
+    [LogLevel.WARNING]: logger.warn.bind(logger),
+    [LogLevel.ERROR]: logger.error.bind(logger),
+    [LogLevel.CRITICAL]: logger.error.bind(logger),
+  };
+
+  const serverLogs = parseServerLogs(message);
+
+  for (const serverLog of serverLogs) {
+    if (!serverLog) {
+      logger.debug(message);
+    } else {
+      const loggerMethod = logLevelToMethodMap[serverLog.level];
+
+      loggerMethod(prefixer(serverLog.message));
+    }
+  }
+};
diff --git a/modules/openvino_code/src/python-server/stop-controller.ts b/modules/openvino_code/src/python-server/stop-controller.ts
deleted file mode 100644
index fe58595e7..000000000
--- a/modules/openvino_code/src/python-server/stop-controller.ts
+++ /dev/null
@@ -1,40 +0,0 @@
-import { EventEmitter } from 'node:events';
-
-interface Listener {
-  (...args: unknown[]): unknown;
-}
-
-export class StopSignal {
-  stopped = false;
-  once: (fn: Listener) => void;
-  removeListener: (fn: Listener) => void;
-
-  constructor(once: (fn: Listener) => void, removeListener: (fn: Listener) => void) {
-    this.once = once;
-    this.removeListener = removeListener;
-  }
-}
-
-export class StopController {
-  readonly signal: StopSignal;
-
-  private readonly _emmiter = new EventEmitter();
-  private static _stopEventName = 'stop';
-
-  constructor() {
-    this.signal = new StopSignal(this.once.bind(this), this.removeListener.bind(this));
-  }
-
-  private once(fn: Listener) {
-    this._emmiter.addListener(StopController._stopEventName, fn);
-  }
-
-  private removeListener(fn: Listener) {
-    this._emmiter.removeListener(StopController._stopEventName, fn);
-  }
-
-  stop() {
-    this._emmiter.emit(StopController._stopEventName);
-    this.signal.stopped = true;
-  }
-}
diff --git a/modules/openvino_code/src/python-server/virtual-environment.ts b/modules/openvino_code/src/python-server/virtual-environment.ts
index b8cf4c291..466f83e25 100644
--- a/modules/openvino_code/src/python-server/virtual-environment.ts
+++ b/modules/openvino_code/src/python-server/virtual-environment.ts
@@ -1,23 +1,18 @@
 import { join } from 'path';
 import { execCommand } from './commands-runner';
 import { OS } from './detect-os';
-import { PythonExecutable } from './detect-python';
 import type { PythonServerConfiguration } from './python-server-runner';
-import { LogOutputChannel } from 'vscode';
 import { stat } from 'fs/promises';
 
-export async function createVenv(
-  python: PythonExecutable,
-  directory: string,
-  venvName: string,
-  logger: LogOutputChannel
-) {
+export async function createVenv(config: PythonServerConfiguration) {
+  const { logger, python, serverDir, venvDirName, abortSignal } = config;
   logger.info('Creating virtual environment...');
 
-  const command = `${python} -m venv ${venvName}`;
+  const command = `${python} -m venv ${venvDirName}`;
   await execCommand(command, {
-    cwd: directory,
+    cwd: serverDir,
     logger,
+    abortSignal,
   });
 
   logger.info('Virtual environment created');
@@ -28,6 +23,7 @@ export async function checkActivatedVenv(config: PythonServerConfiguration) {
   await execCommand(activateCommand, {
     cwd: config.serverDir,
     logger: config.logger,
+    abortSignal: config.abortSignal,
   });
 }
 
diff --git a/modules/openvino_code/src/services/backend.service.ts b/modules/openvino_code/src/services/backend.service.ts
index 78faa0d17..5c251a845 100644
--- a/modules/openvino_code/src/services/backend.service.ts
+++ b/modules/openvino_code/src/services/backend.service.ts
@@ -15,6 +15,20 @@ interface IGenerateRequest {
   };
 }
 
+interface IGenerateDocStringRequest {
+  inputs: string;
+  template: string;
+  definition: string;
+  format?: string;
+  parameters: {
+    temperature: number;
+    top_k: number;
+    top_p: number;
+    min_new_tokens: number;
+    max_new_tokens: number;
+  };
+}
+
 interface IGenerateResponse {
   generated_text: string;
 }
@@ -25,7 +39,7 @@ interface RequestOptions {
   timeout: number;
 }
 
-class ServerError extends Error {}
+class ServerError extends Error { }
 
 const skipEmptyGeneratedText = (response: IGenerateResponse | null) => !response?.generated_text.trim();
 
@@ -62,7 +76,7 @@ class BackendService {
     return this._sendRequest<IGenerateRequest, IGenerateResponse>(this._endpoints.generate, 'POST', data);
   }
 
-  async generateSummarization(data: IGenerateRequest): Promise<IGenerateResponse | null> {
+  async generateSummarization(data: IGenerateDocStringRequest): Promise<IGenerateResponse | null> {
     return this._sendRequest<IGenerateRequest, IGenerateResponse>(this._endpoints.summarize, 'POST', data);
   }
 
diff --git a/modules/openvino_code/src/settings/settings.service.ts b/modules/openvino_code/src/settings/settings.service.ts
index f9a3a4e3a..0583119c5 100644
--- a/modules/openvino_code/src/settings/settings.service.ts
+++ b/modules/openvino_code/src/settings/settings.service.ts
@@ -1,7 +1,8 @@
-import { ExtensionContext, commands } from 'vscode';
+import { ConfigurationTarget, ExtensionContext, commands } from 'vscode';
 import { COMMANDS, CONFIG_KEY, EXTENSION_PACKAGE, EXTENSION_DISPLAY_NAME } from '../constants';
 import { CustomConfiguration } from '../configuration';
 import { IExtensionComponent } from '../extension-component.interface';
+import { extensionState } from '../state';
 
 class SettingsService implements IExtensionComponent {
   activate(context: ExtensionContext): void {
@@ -27,6 +28,10 @@ class SettingsService implements IExtensionComponent {
     const configKey = key ? [CONFIG_KEY, key].join('.') : CONFIG_KEY;
     void commands.executeCommand('workbench.action.openSettings', configKey);
   }
+
+  updateSetting<K extends keyof CustomConfiguration>(key: K, value: CustomConfiguration[K]): void {
+    void extensionState.config.update(key, value, ConfigurationTarget.Global);
+  }
 }
 
 export const settingsService = new SettingsService();
diff --git a/modules/openvino_code/src/side-panel/side-panel-message-handler.ts b/modules/openvino_code/src/side-panel/side-panel-message-handler.ts
new file mode 100644
index 000000000..35f42032b
--- /dev/null
+++ b/modules/openvino_code/src/side-panel/side-panel-message-handler.ts
@@ -0,0 +1,28 @@
+import { ISidePanelMessage, SidePanelMessageTypes } from '@shared/side-panel-message';
+import { extensionState } from '../state';
+import { Webview, commands } from 'vscode';
+import { settingsService } from '../settings/settings.service';
+import { COMMANDS } from '../constants';
+import { ModelName } from '@shared/model';
+
+type SidePanelMessageHandlerType = (webview: Webview, payload?: ISidePanelMessage['payload']) => void;
+
+const sidePanelMessageHandlers: Record<SidePanelMessageTypes, SidePanelMessageHandlerType> = {
+  [SidePanelMessageTypes.GET_EXTENSION_STATE]: (webview) => void webview.postMessage(extensionState.state),
+  [SidePanelMessageTypes.SETTINGS_CLICK]: () => settingsService.openSettings(),
+  [SidePanelMessageTypes.MODEL_CHANGE]: (_, payload) =>
+    settingsService.updateSetting('model', (payload as { modelName: ModelName }).modelName),
+  [SidePanelMessageTypes.START_SERVER_CLICK]: () => void commands.executeCommand(COMMANDS.START_SERVER_NATIVE),
+  [SidePanelMessageTypes.STOP_SERVER_CLICK]: () => void commands.executeCommand(COMMANDS.STOP_SERVER_NATIVE),
+  [SidePanelMessageTypes.SHOW_SERVER_LOG_CLICK]: () => void commands.executeCommand(COMMANDS.SHOW_SERVER_LOG),
+  [SidePanelMessageTypes.SHOW_EXTENSION_LOG_CLICK]: () => void commands.executeCommand(COMMANDS.SHOW_EXTENSION_LOG),
+  [SidePanelMessageTypes.CHECK_CONNECTION_CLICK]: () => void commands.executeCommand(COMMANDS.CHECK_CONNECTION),
+  [SidePanelMessageTypes.GENERATE_COMPLETION_CLICK]: () =>
+    void commands.executeCommand(COMMANDS.GENERATE_INLINE_COPMLETION),
+};
+
+export function handleSidePanelMessage<M extends ISidePanelMessage>(message: M, webview: Webview): void {
+  const { type, payload } = message;
+  const handler = sidePanelMessageHandlers[type];
+  handler(webview, payload);
+}
diff --git a/modules/openvino_code/src/side-panel/side-panel-message.ts b/modules/openvino_code/src/side-panel/side-panel-message.ts
deleted file mode 100644
index d9a551e3a..000000000
--- a/modules/openvino_code/src/side-panel/side-panel-message.ts
+++ /dev/null
@@ -1,15 +0,0 @@
-const sidePanelMessagePrefix = 'side-panel.message';
-
-export enum SidePanelMessageTypes {
-  GET_EXTENSION_STATE = `${sidePanelMessagePrefix}.getExtensionState`,
-  START_SERVER_CLICK = `${sidePanelMessagePrefix}.startServerClick`,
-  STOP_SERVER_CLICK = `${sidePanelMessagePrefix}.stopServerClick`,
-  SHOW_SERVER_LOG_CLICK = `${sidePanelMessagePrefix}.showServerLogClick`,
-  GENERATE_COMPLETION_CLICK = `${sidePanelMessagePrefix}.generateCompletionClick`,
-  SETTINGS_CLICK = `${sidePanelMessagePrefix}.settingsClick`,
-}
-
-export interface ISidePanelMessage<P = unknown> {
-  type: SidePanelMessageTypes;
-  payload?: P;
-}
diff --git a/modules/openvino_code/src/side-panel/side-panel-view-provider.ts b/modules/openvino_code/src/side-panel/side-panel-view-provider.ts
index 4873d424a..b27063a7e 100644
--- a/modules/openvino_code/src/side-panel/side-panel-view-provider.ts
+++ b/modules/openvino_code/src/side-panel/side-panel-view-provider.ts
@@ -6,13 +6,12 @@ import {
   WebviewView,
   WebviewViewProvider,
   WebviewViewResolveContext,
-  commands,
 } from 'vscode';
-import { COMMANDS, SIDE_PANEL_VIEW_ID } from '../constants';
-import { ISidePanelMessage, SidePanelMessageTypes } from '@shared/side-panel-message';
-import { settingsService } from '../settings/settings.service';
+import { SIDE_PANEL_VIEW_ID } from '../constants';
+import { ISidePanelMessage } from '@shared/side-panel-message';
 import { extensionState } from '../state';
 import { IExtensionState } from '@shared/extension-state';
+import { handleSidePanelMessage } from './side-panel-message-handler';
 
 export class SidePanelViewProvider implements WebviewViewProvider {
   static viewId = SIDE_PANEL_VIEW_ID;
@@ -78,41 +77,9 @@ export class SidePanelViewProvider implements WebviewViewProvider {
   }
 
   private _subscribeToWebviewMessages<M extends ISidePanelMessage>(webview: Webview): void {
-    // TODO Consider moving outside of provider
     webview.onDidReceiveMessage(
-      ({ type }: M) => {
-        if (type === SidePanelMessageTypes.GET_EXTENSION_STATE) {
-          void webview.postMessage(extensionState.state);
-          return;
-        }
-        if (type === SidePanelMessageTypes.SETTINGS_CLICK) {
-          settingsService.openSettings();
-          return;
-        }
-        if (type === SidePanelMessageTypes.START_SERVER_CLICK) {
-          void commands.executeCommand(COMMANDS.START_SERVER_NATIVE);
-          return;
-        }
-        if (type === SidePanelMessageTypes.STOP_SERVER_CLICK) {
-          void commands.executeCommand(COMMANDS.STOP_SERVER_NATIVE);
-          return;
-        }
-        if (type === SidePanelMessageTypes.SHOW_SERVER_LOG_CLICK) {
-          void commands.executeCommand(COMMANDS.SHOW_SERVER_LOG);
-          return;
-        }
-        if (type === SidePanelMessageTypes.SHOW_EXTENSION_LOG_CLICK) {
-          void commands.executeCommand(COMMANDS.SHOW_EXTENSION_LOG);
-          return;
-        }
-        if (type === SidePanelMessageTypes.CHECK_CONNECTION_CLICK) {
-          void commands.executeCommand(COMMANDS.CHECK_CONNECTION);
-          return;
-        }
-        if (type === SidePanelMessageTypes.GENERATE_COMPLETION_CLICK) {
-          void commands.executeCommand(COMMANDS.GENERATE_INLINE_COPMLETION);
-          return;
-        }
+      (message: M) => {
+        handleSidePanelMessage(message, webview);
       },
       null,
       this._disposables
diff --git a/modules/openvino_code/src/state.ts b/modules/openvino_code/src/state.ts
index 1655db84b..2e8315485 100644
--- a/modules/openvino_code/src/state.ts
+++ b/modules/openvino_code/src/state.ts
@@ -5,6 +5,10 @@ import { CONFIG_KEY } from './constants';
 import { IExtensionComponent } from './extension-component.interface';
 import { IExtensionState, ConnectionStatus } from '@shared/extension-state';
 import { INITIAL_SERVER_STATE, ServerStatus } from '@shared/server-state';
+import { MODEL_SUPPORTED_FEATURES } from '@shared/model';
+import { Features } from '@shared/features';
+
+const getConfig = () => workspace.getConfiguration(CONFIG_KEY) as ExtensionConfiguration;
 
 class ExtensionState implements IExtensionComponent {
   private readonly _state: IExtensionState = {
@@ -15,7 +19,16 @@ class ExtensionState implements IExtensionComponent {
       return this.server.status === ServerStatus.STARTED && this.connectionStatus === ConnectionStatus.AVAILABLE;
     },
     get config(): ExtensionConfiguration {
-      return workspace.getConfiguration(CONFIG_KEY) as ExtensionConfiguration;
+      return getConfig();
+    },
+    features: {
+      get supportedList(): Features[] {
+        const config = getConfig();
+        return MODEL_SUPPORTED_FEATURES[config.model];
+      },
+      get isSummarizationSupported(): boolean {
+        return this.supportedList.includes(Features.SUMMARIZATION);
+      },
     },
   };
 
@@ -36,11 +49,25 @@ class ExtensionState implements IExtensionComponent {
   activate(extensionContext: ExtensionContext): void {
     // Might be used to store configuration in `extensionContext.globalState`
     this._extensionContext = extensionContext;
+
+    workspace.onDidChangeConfiguration(
+      (event) => {
+        if (event.affectsConfiguration(CONFIG_KEY)) {
+          this._emitCurrentState();
+        }
+      },
+      null,
+      extensionContext.subscriptions
+    );
+  }
+
+  private _emitCurrentState(): void {
+    this._emitter.emit(ExtensionState._stateChangedEvent, this._state);
   }
 
   set<K extends keyof IExtensionState>(key: K, value: IExtensionState[K]): void {
     this._state[key] = value;
-    this._emitter.emit(ExtensionState._stateChangedEvent, this._state);
+    this._emitCurrentState();
   }
 
   get<K extends keyof IExtensionState>(key: K): IExtensionState[K] {
diff --git a/modules/openvino_code/tsconfig.json b/modules/openvino_code/tsconfig.json
index 589e7b168..60f58bd71 100644
--- a/modules/openvino_code/tsconfig.json
+++ b/modules/openvino_code/tsconfig.json
@@ -2,7 +2,7 @@
   "compilerOptions": {
     "module": "commonjs",
     "target": "es2018",
-    "lib": ["es2018"],
+    "lib": ["es2018", "WebWorker"],
     "outDir": "out",
     "sourceMap": true,
     "strict": true,