diff --git a/.github/workflows/coverity.yml b/.github/workflows/coverity.yml
index d5d1a4bf33fec..8a269431a8edd 100644
--- a/.github/workflows/coverity.yml
+++ b/.github/workflows/coverity.yml
@@ -45,7 +45,7 @@ jobs:
         cd $GITHUB_WORKSPACE/build
         python3 $GITHUB_WORKSPACE/src/buildbot/configure.py -w $GITHUB_WORKSPACE \
           -s $GITHUB_WORKSPACE/src -o $GITHUB_WORKSPACE/build -t Release \
-          --ci-defaults --hip --cuda \
+          --ci-defaults --use-zstd --hip --cuda \
           -DNATIVECPU_USE_OCK=Off
 
     - name: Build with coverity
diff --git a/.github/workflows/sycl-linux-build.yml b/.github/workflows/sycl-linux-build.yml
index 923cf43da194f..0bbd666633169 100644
--- a/.github/workflows/sycl-linux-build.yml
+++ b/.github/workflows/sycl-linux-build.yml
@@ -201,7 +201,7 @@ jobs:
           -s $GITHUB_WORKSPACE/src -o $GITHUB_WORKSPACE/build \
           -DCMAKE_INSTALL_PREFIX=$GITHUB_WORKSPACE/toolchain \
           -t Release \
-          --ci-defaults ${{ inputs.build_configure_extra_args }} \
+          --ci-defaults --use-zstd ${{ inputs.build_configure_extra_args }} \
           -DCMAKE_C_COMPILER_LAUNCHER=ccache \
           -DCMAKE_CXX_COMPILER_LAUNCHER=ccache \
           -DLLVM_INSTALL_UTILS=ON
diff --git a/.github/workflows/sycl-macos-build-and-test.yml b/.github/workflows/sycl-macos-build-and-test.yml
index 60c0a70a08c76..479a9a0e4d5fb 100644
--- a/.github/workflows/sycl-macos-build-and-test.yml
+++ b/.github/workflows/sycl-macos-build-and-test.yml
@@ -49,7 +49,7 @@ jobs:
         cd $GITHUB_WORKSPACE/build
         python3 $GITHUB_WORKSPACE/src/buildbot/configure.py -w $GITHUB_WORKSPACE \
           -s $GITHUB_WORKSPACE/src -o $GITHUB_WORKSPACE/build -t Release \
-          --ci-defaults $ARGS \
+          --ci-defaults --use-zstd $ARGS \
           -DCMAKE_C_COMPILER_LAUNCHER=ccache \
           -DCMAKE_CXX_COMPILER_LAUNCHER=ccache \
           -DLLVM_INSTALL_UTILS=ON
diff --git a/.github/workflows/sycl-windows-build.yml b/.github/workflows/sycl-windows-build.yml
index 5a193b0cfecf1..8772fac8318f0 100644
--- a/.github/workflows/sycl-windows-build.yml
+++ b/.github/workflows/sycl-windows-build.yml
@@ -147,7 +147,7 @@ jobs:
         IF NOT EXIST D:\github\_work\cache MKDIR D:\github\_work\cache
         IF NOT EXIST D:\github\_work\cache\${{inputs.build_cache_suffix}} MKDIR D:\github\_work\cache\${{inputs.build_cache_suffix}}
         python.exe src/buildbot/configure.py -o build ^
-          --ci-defaults %ARGS% ^
+          --ci-defaults --use-zstd %ARGS% ^
           "-DCMAKE_C_COMPILER=${{inputs.cxx}}" ^
           "-DCMAKE_CXX_COMPILER=${{inputs.cxx}}" ^
           "-DCMAKE_INSTALL_PREFIX=%GITHUB_WORKSPACE%\install" ^
diff --git a/buildbot/configure.py b/buildbot/configure.py
index b2f9a9805976f..3e9d45fbfe2ad 100644
--- a/buildbot/configure.py
+++ b/buildbot/configure.py
@@ -64,7 +64,7 @@ def do_configure(args, passthrough_args):
 
     sycl_enable_xpti_tracing = "ON"
     xpti_enable_werror = "OFF"
-    llvm_enable_zstd = "OFF"
+    llvm_enable_zstd = "ON"
     spirv_enable_dis = "OFF"
 
     if sys.platform != "darwin":
diff --git a/sycl/test-e2e/Compression/compression_aot.cpp b/sycl/test-e2e/Compression/compression_aot.cpp
index 115458559678e..c88416cf31b8a 100644
--- a/sycl/test-e2e/Compression/compression_aot.cpp
+++ b/sycl/test-e2e/Compression/compression_aot.cpp
@@ -1,6 +1,9 @@
 // End-to-End test for testing device image compression in AOT.
 // REQUIRES: zstd, opencl-aot, cpu
 
+// XFAIL: target-native_cpu
+// XFAIL-TRACKER: https://github.com/intel/llvm/issues/20397
+
 // CPU AOT targets host isa, so we compile on the run system instead.
 // RUN: %{run-aux} %clangxx -fsycl -fsycl-targets=spir64_x86_64 %O0 --offload-compress --offload-compression-level=3 %S/Inputs/single_kernel.cpp -o %t_compress.out
 // RUN: %{run} %t_compress.out
diff --git a/sycl/test-e2e/Compression/compression_separate_compile.cpp b/sycl/test-e2e/Compression/compression_separate_compile.cpp
index db268153d21e2..210d0372b41e0 100644
--- a/sycl/test-e2e/Compression/compression_separate_compile.cpp
+++ b/sycl/test-e2e/Compression/compression_separate_compile.cpp
@@ -3,6 +3,12 @@
 
 // REQUIRES: zstd, opencl-aot, cpu, linux
 
+// XFAIL: run-mode && preview-mode
+// XFAIL-TRACKER: https://github.com/intel/llvm/issues/20397
+
+// XFAIL: target-native_cpu
+// XFAIL-TRACKER: https://github.com/intel/llvm/issues/20397
+
 // CPU AOT targets host isa, so we compile everything on the run system instead.
 //////////////////////  Compile device images
 // RUN: %{run-aux} %clangxx -fsycl -fsycl-targets=spir64_x86_64 -fsycl-host-compiler=clang++ -fsycl-host-compiler-options='-std=c++17 -Wno-attributes -Wno-deprecated-declarations -fPIC -DENABLE_KERNEL1' -DENABLE_KERNEL1 -c %s -o %t_kernel1_aot.o
diff --git a/sycl/test-e2e/DeviceImageDependencies/dynamic_compress.cpp b/sycl/test-e2e/DeviceImageDependencies/dynamic_compress.cpp
index e4efcee778496..59b96af74322b 100644
--- a/sycl/test-e2e/DeviceImageDependencies/dynamic_compress.cpp
+++ b/sycl/test-e2e/DeviceImageDependencies/dynamic_compress.cpp
@@ -3,6 +3,9 @@
 
 // REQUIRES: zstd
 
+// XFAIL: (windows && run-mode) || target-native_cpu
+// XFAIL-TRACKER: https://github.com/intel/llvm/issues/20397
+
 // DEFINE: %{dynamic_lib_options} = -fsycl %fPIC %shared_lib -fsycl-allow-device-image-dependencies -I %S/Inputs %if windows %{-DMAKE_DLL %}
 // DEFINE: %{dynamic_lib_suffix} = %if windows %{dll%} %else %{so%}
 
diff --git a/sycl/test-e2e/DeviceLib/bfloat16_conversion_dlopen_test_compress.cpp b/sycl/test-e2e/DeviceLib/bfloat16_conversion_dlopen_test_compress.cpp
index fda61125c933f..a0c33004935a0 100644
--- a/sycl/test-e2e/DeviceLib/bfloat16_conversion_dlopen_test_compress.cpp
+++ b/sycl/test-e2e/DeviceLib/bfloat16_conversion_dlopen_test_compress.cpp
@@ -8,6 +8,9 @@
 
 // Check bfloat16 devicelib device image compression.
 
+// XFAIL: target-native_cpu
+// XFAIL-TRACKER: https://github.com/intel/llvm/issues/20397
+
 // REQUIRES: linux, zstd
 // RUN: rm -rf %t.dir; mkdir -p %t.dir
 // RUN: %{build} --offload-compress -DBUILD_LIB -fPIC -shared -o %t.dir/lib%basename_t_compress.so
diff --git a/sycl/test-e2e/DeviceLib/bfloat16_conversion_test_compress.cpp b/sycl/test-e2e/DeviceLib/bfloat16_conversion_test_compress.cpp
index ff7d764992ed7..4f30386d39f6d 100644
--- a/sycl/test-e2e/DeviceLib/bfloat16_conversion_test_compress.cpp
+++ b/sycl/test-e2e/DeviceLib/bfloat16_conversion_test_compress.cpp
@@ -8,6 +8,9 @@
 
 // Check bfloat16 devicelib device image compression.
 
+// XFAIL: target-native_cpu
+// XFAIL-TRACKER: https://github.com/intel/llvm/issues/20397
+
 // REQUIRES: linux, zstd
 // RUN: rm -rf %t.dir; mkdir -p %t.dir
 // RUN: %{build} --offload-compress -DBUILD_LIB -fPIC -shared -o %t.dir/lib%basename_t_compress.so