diff --git a/src/cpp/src/llm_pipeline_static.cpp b/src/cpp/src/llm_pipeline_static.cpp
index 10a32c4731..b29bec3b4a 100644
--- a/src/cpp/src/llm_pipeline_static.cpp
+++ b/src/cpp/src/llm_pipeline_static.cpp
@@ -475,17 +475,16 @@ std::optional<NPUDesc> extract_npu_descriptor(ov::Core& core) {
     }
     const auto arch = core.get_property("NPU", ov::device::architecture);
     const auto max_tiles = core.get_property("NPU", ov::intel_npu::max_tiles);
-
     bool compiler_dq = false;
-    const auto device_caps = core.get_property("NPU", ov::device::capabilities);
-    if (std::find(device_caps.begin(), device_caps.end(),
-                  "COMPILER_DYNAMIC_QUANTIZATION") != device_caps.end()) {
+    const auto supported_properties = core.get_property("NPU", ov::supported_properties);
+    if (std::find(supported_properties.begin(), supported_properties.end(),
+                  "NPU_COMPILER_DYNAMIC_QUANTIZATION") != supported_properties.end()) {
         compiler_dq = true;
     }
     return std::make_optional(NPUDesc{arch, max_tiles, compiler_dq});
 }
 
-ov::AnyMap get_baseline_common_config() {
+ov::AnyMap get_baseline_common_config(const std::optional<NPUDesc>& npudesc) {
     ov::AnyMap config = {
         { "NPU_COMPILATION_MODE_PARAMS", "compute-layers-with-higher-precision=Sqrt,Power,ReduceMean,Add_RMSNorm" },
         { "NPUW_DEVICES", "NPU" },
@@ -497,11 +496,20 @@ ov::AnyMap get_baseline_common_config() {
         { "NPUW_SLICE_OUT", "YES" },
         { "NPUW_FUNCALL_ASYNC", "YES" }
     };
+    // FIXME: this config logic is getting more and more complex
+    if (npudesc.has_value() && npudesc->compiler_dq) {
+        config.emplace("NPUW_DQ", "YES");
+        config.emplace("NPUW_DQ_FULL", "NO");
+        config.emplace("NPU_COMPILER_DYNAMIC_QUANTIZATION", "YES");
+        config.erase("NPUW_DCOFF_TYPE");
+        config.erase("NPUW_DCOFF_SCALE");
+    }
     return config;
 }
 
-ov::AnyMap get_default_common_config(const std::shared_ptr<ov::Model>& model) {
-    auto config = get_baseline_common_config();
+ov::AnyMap get_default_common_config(const std::shared_ptr<ov::Model>& model,
+                                     const std::optional<NPUDesc>& npudesc) {
+    auto config = get_baseline_common_config(npudesc);
     const char* npu_l0 = std::getenv("DISABLE_OPENVINO_GENAI_NPU_L0");
     if (npu_l0 && std::atoi(npu_l0) == 1) {
         config.emplace("NPUW_WEIGHTS_BANK_ALLOC", "CPU");
@@ -513,19 +521,19 @@ ov::AnyMap get_default_common_config(const std::shared_ptr<ov::Model>& model) {
 
 ov::AnyMap get_default_prefill_config(const std::shared_ptr<ov::Model>& model,
                                       const std::optional<NPUDesc>& npudesc) {
-    auto config = get_default_common_config(model);
-    if (is_cw_compressed(model)) {
-        config.emplace("NPUW_DQ", "YES");
-    } else {
-        config.emplace("NPUW_PMM", "NO");
-    }
+    auto config = get_default_common_config(model, npudesc);
     if (npudesc.has_value() &&
         npudesc->arch == "4000" &&
         npudesc->max_tiles != -1) {
         config.emplace("NPU_DPU_GROUPS", npudesc->max_tiles);
     }
-    if (npudesc.has_value() && npudesc->compiler_dq) {
-        config.emplace("NPUW_DQ_FULL", "NO");
+    // Specify NPUW DQ if Compiler DQ is not enabled
+    if (!npudesc.has_value() || !npudesc->compiler_dq) {
+        if (is_cw_compressed(model)) {
+            config.emplace("NPUW_DQ", "YES");
+        } else {
+            config.emplace("NPUW_PMM", "NO");
+        }
     }
     return config;
 }
@@ -533,20 +541,19 @@ ov::AnyMap get_default_prefill_config(const std::shared_ptr<ov::Model>& model,
 ov::AnyMap get_default_generate_config(const std::shared_ptr<ov::Model>& model,
                                        const std::optional<NPUDesc>& npudesc,
                                        const GenerateHint hint) {
-    auto config = get_default_common_config(model);
+    auto config = get_default_common_config(model, npudesc);
     if (hint == GenerateHint::BEST_PERF) {
         config.emplace("NPUW_ONLINE_PIPELINE", "NONE");
     }
-    // NB: Unconditionally set for generation model
-    config.emplace("NPUW_DQ", "YES");
     if (npudesc.has_value() && npudesc->arch == "4000") {
         config.emplace("NPU_DPU_GROUPS", 4);
     }
     if (hint == GenerateHint::FAST_COMPILE) {
         config.emplace("NPUW_UNFOLD_IREQS", "YES");
     }
-    if (npudesc.has_value() && npudesc->compiler_dq) {
-        config.emplace("NPUW_DQ_FULL", "NO");
+    // Specify NPUW DQ if Compiler DQ is not enabled
+    if (!npudesc.has_value() || !npudesc->compiler_dq) {
+        config.emplace("NPUW_DQ", "YES");
     }
     return config;
 }