diff --git a/go.mod b/go.mod
index b680b8742..f0b8884c3 100644
--- a/go.mod
+++ b/go.mod
@@ -4,6 +4,7 @@ go 1.16
 
 require (
 	github.com/HdrHistogram/hdrhistogram-go v1.0.1 // indirect
+	github.com/RoaringBitmap/roaring v0.9.4
 	github.com/benbjohnson/clock v1.1.0
 	github.com/edwarnicke/exechelper v1.0.2
 	github.com/edwarnicke/grpcfd v0.1.0
diff --git a/go.sum b/go.sum
index fdcdb64cc..dd2c657e9 100644
--- a/go.sum
+++ b/go.sum
@@ -6,12 +6,16 @@ github.com/HdrHistogram/hdrhistogram-go v1.0.1/go.mod h1:BWJ+nMSHY3L41Zj7CA3uXnl
 github.com/OneOfOne/xxhash v1.2.2/go.mod h1:HSdplMjZKSmBqAxg5vPj2TmRDmfkzw+cTzAElWljhcU=
 github.com/OneOfOne/xxhash v1.2.3 h1:wS8NNaIgtzapuArKIAjsyXtEN/IUjQkbw90xszUdS40=
 github.com/OneOfOne/xxhash v1.2.3/go.mod h1:HSdplMjZKSmBqAxg5vPj2TmRDmfkzw+cTzAElWljhcU=
+github.com/RoaringBitmap/roaring v0.9.4 h1:ckvZSX5gwCRaJYBNe7syNawCU5oruY9gQmjXlp4riwo=
+github.com/RoaringBitmap/roaring v0.9.4/go.mod h1:icnadbWcNyfEHlYdr+tDlOTih1Bf/h+rzPpv4sbomAA=
 github.com/ajstarks/svgo v0.0.0-20180226025133-644b8db467af/go.mod h1:K08gAheRH3/J6wwsYMMT4xOr94bZjxIelGM0+d/wbFw=
 github.com/armon/go-metrics v0.0.0-20190430140413-ec5e00d3c878 h1:EFSB7Zo9Eg91v7MJPVsifUysc/wPdN+NOnVe6bWbdBM=
 github.com/armon/go-metrics v0.0.0-20190430140413-ec5e00d3c878/go.mod h1:3AMJUQhVx52RsWOnlkpikZr01T/yAVN2gn0861vByNg=
 github.com/benbjohnson/clock v1.1.0 h1:Q92kusRqC1XV2MjkWETPvjJVqKetz1OzxZB7mHJLju8=
 github.com/benbjohnson/clock v1.1.0/go.mod h1:J11/hYXuz8f4ySSvYwY0FKfm+ezbsZBKZxNJlLklBHA=
 github.com/beorn7/perks v0.0.0-20180321164747-3a771d992973/go.mod h1:Dwedo/Wpr24TaqPxmxbtue+5NUziq4I4S80YR8gNf3Q=
+github.com/bits-and-blooms/bitset v1.2.0 h1:Kn4yilvwNtMACtf1eYDlG8H77R07mZSPbMjLyS07ChA=
+github.com/bits-and-blooms/bitset v1.2.0/go.mod h1:gIdJ4wp64HaoK2YrL1Q5/N7Y16edYb8uY+O0FJTyyDA=
 github.com/boltdb/bolt v1.3.1/go.mod h1:clJnj/oiGkjum5o1McbSZDSLxVThjynRyGBgiAx27Ps=
 github.com/census-instrumentation/opencensus-proto v0.2.1/go.mod h1:f6KPmirojxKA12rnyqOA5BBL4O983OfeGPqjHWSTneU=
 github.com/cespare/xxhash v1.1.0 h1:a6HrQnmkObjyL+Gs60czilIUGqrzKutQD6XZog3p+ko=
@@ -116,6 +120,8 @@ github.com/lib/pq v1.3.0/go.mod h1:5WUZQaWbwv1U+lTReE5YruASi9Al49XbQIvNi/34Woo=
 github.com/mattn/go-runewidth v0.0.0-20181025052659-b20a3daf6a39/go.mod h1:LwmH8dsx7+W8Uxz3IHJYH5QSwggIsqBzpuz5H//U1FU=
 github.com/matttproud/golang_protobuf_extensions v1.0.1/go.mod h1:D8He9yQNgCq6Z5Ld7szi9bcBfOoFv/3dc6xSMkL2PC0=
 github.com/mna/pigeon v0.0.0-20180808201053-bb0192cfc2ae/go.mod h1:Iym28+kJVnC1hfQvv5MUtI6AiFFzvQjHcvI4RFTG/04=
+github.com/mschoch/smat v0.2.0 h1:8imxQsjDm8yFEAVBe7azKmKSgzSkZXDuKkSq9374khM=
+github.com/mschoch/smat v0.2.0/go.mod h1:kc9mz7DoBKqDyiRL7VZN8KvXQMWeTaVnttLRXOlotKw=
 github.com/nats-io/jwt v0.3.0/go.mod h1:fRYCDE99xlTsqUzISS1Bi75UBJ6ljOJQOAAu5VglpSg=
 github.com/nats-io/jwt v0.3.2 h1:+RB5hMpXUUA2dfxuhBTEkMOrYmM+gKIZYS1KjSostMI=
 github.com/nats-io/jwt v0.3.2/go.mod h1:/euKqTS1ZD+zzjYrY7pseZrTtWQSjujC7xjPc8wL6eU=
diff --git a/pkg/networkservice/common/mechanisms/kernel/vlan/server.go b/pkg/networkservice/common/mechanisms/kernel/vlan/server.go
new file mode 100644
index 000000000..94f5f4328
--- /dev/null
+++ b/pkg/networkservice/common/mechanisms/kernel/vlan/server.go
@@ -0,0 +1,85 @@
+// Copyright (c) 2021 Nordix Foundation.
+//
+// SPDX-License-Identifier: Apache-2.0
+//
+// Licensed under the Apache License, Version 2.0 (the "License");
+// you may not use this file except in compliance with the License.
+// You may obtain a copy of the License at:
+//
+//     http://www.apache.org/licenses/LICENSE-2.0
+//
+// Unless required by applicable law or agreed to in writing, software
+// distributed under the License is distributed on an "AS IS" BASIS,
+// WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+// See the License for the specific language governing permissions and
+// limitations under the License.
+
+// +build linux
+
+// Package vlan provides server chain element setting vlan id on the kernel mechanism
+package vlan
+
+import (
+	"context"
+	"errors"
+	"sync"
+
+	"github.com/RoaringBitmap/roaring"
+	"github.com/golang/protobuf/ptypes/empty"
+
+	"github.com/networkservicemesh/api/pkg/api/networkservice"
+	kernelmech "github.com/networkservicemesh/api/pkg/api/networkservice/mechanisms/kernel"
+
+	"github.com/networkservicemesh/sdk/pkg/networkservice/core/next"
+)
+
+type vlanServer struct {
+	freeVLANs *roaring.Bitmap
+	lock      sync.Mutex
+}
+
+// NewServer - creates a NetworkServiceServer that requests a kernel interface with vlan parameter
+func NewServer() networkservice.NetworkServiceServer {
+	vlans := roaring.New()
+	vlans.AddRange(1, 4095)
+	return &vlanServer{
+		freeVLANs: vlans,
+	}
+}
+
+func (m *vlanServer) Request(ctx context.Context, request *networkservice.NetworkServiceRequest) (*networkservice.Connection, error) {
+	mechanism := kernelmech.ToMechanism(request.GetConnection().GetMechanism())
+	isEstablished := true
+	if mechanism != nil && mechanism.SupportsVLAN() && mechanism.GetVLAN() == 0 {
+		m.lock.Lock()
+		if m.freeVLANs.IsEmpty() {
+			m.lock.Unlock()
+			return nil, errors.New("vlan id not available for allocation")
+		}
+		vlanID := m.freeVLANs.Minimum()
+		m.freeVLANs.Remove(vlanID)
+		m.lock.Unlock()
+
+		mechanism.SetVLAN(vlanID)
+		isEstablished = false
+	}
+	conn, err := next.Server(ctx).Request(ctx, request)
+	if err != nil && mechanism != nil && !isEstablished {
+		m.releaseVLANID(mechanism)
+	}
+	return conn, err
+}
+
+func (m *vlanServer) Close(ctx context.Context, conn *networkservice.Connection) (*empty.Empty, error) {
+	mechanism := kernelmech.ToMechanism(conn.GetMechanism())
+	if mechanism != nil && mechanism.SupportsVLAN() && mechanism.GetVLAN() > 0 {
+		m.releaseVLANID(mechanism)
+	}
+	return next.Server(ctx).Close(ctx, conn)
+}
+
+func (m *vlanServer) releaseVLANID(mechanism *kernelmech.Mechanism) {
+	m.lock.Lock()
+	defer m.lock.Unlock()
+	m.freeVLANs.Add(mechanism.GetVLAN())
+}