diff --git a/subsys/net/lib/dhcpv4/dhcpv4.c b/subsys/net/lib/dhcpv4/dhcpv4.c
index b12f24bbb8bf3..7b34177fdb868 100644
--- a/subsys/net/lib/dhcpv4/dhcpv4.c
+++ b/subsys/net/lib/dhcpv4/dhcpv4.c
@@ -544,8 +544,6 @@ static uint32_t dhcpv4_send_request(struct net_if *iface)
 	struct net_pkt *pkt = NULL;
 	uint32_t timeout = UINT32_MAX;
 
-	iface->config.dhcpv4.xid++;
-
 	switch (iface->config.dhcpv4.state) {
 	case NET_DHCPV4_DISABLED:
 	case NET_DHCPV4_INIT:
@@ -978,6 +976,13 @@ static bool dhcpv4_parse_options(struct net_pkt *pkt,
 			goto end;
 		}
 
+		if (type == DHCPV4_OPTIONS_PAD) {
+			/* Pad option has a fixed 1-byte length and should be
+			 * ignored.
+			 */
+			continue;
+		}
+
 		if (net_pkt_read_u8(pkt, &length)) {
 			NET_ERR("option parsing, bad length");
 			return false;
@@ -1652,8 +1657,11 @@ const char *net_dhcpv4_msg_type_name(enum net_dhcpv4_msg_type msg_type)
 		"inform"
 	};
 
-	__ASSERT_NO_MSG(msg_type >= 1 && msg_type <= sizeof(name));
-	return name[msg_type - 1];
+	if (msg_type >= 1 && msg_type <= sizeof(name)) {
+		return name[msg_type - 1];
+	}
+
+	return "invalid";
 }
 
 static void dhcpv4_start_internal(struct net_if *iface, bool first_start)
diff --git a/subsys/net/lib/dhcpv4/dhcpv4_internal.h b/subsys/net/lib/dhcpv4/dhcpv4_internal.h
index 350e16946bebe..baf8a1aa7772e 100644
--- a/subsys/net/lib/dhcpv4/dhcpv4_internal.h
+++ b/subsys/net/lib/dhcpv4/dhcpv4_internal.h
@@ -51,6 +51,7 @@ struct dhcp_msg {
 #define DHCPV4_SERVER_PORT	67
 #define DHCPV4_CLIENT_PORT	68
 
+#define DHCPV4_OPTIONS_PAD		0
 #define DHCPV4_OPTIONS_SUBNET_MASK	1
 #define DHCPV4_OPTIONS_ROUTER		3
 #define DHCPV4_OPTIONS_DNS_SERVER	6
diff --git a/tests/net/dhcpv4/client/src/main.c b/tests/net/dhcpv4/client/src/main.c
index ceddbbe9e6982..1c9cfda3bb283 100644
--- a/tests/net/dhcpv4/client/src/main.c
+++ b/tests/net/dhcpv4/client/src/main.c
@@ -37,7 +37,7 @@ LOG_MODULE_REGISTER(net_test, CONFIG_NET_DHCPV4_LOG_LEVEL);
 #include "net_private.h"
 
 /* Sample DHCP offer (420 bytes) */
-static const unsigned char offer[420] = {
+static const unsigned char offer[] = {
 0x02, 0x01, 0x06, 0x00, 0x00, 0x00,
 0x00, 0x00, 0x00, 0x00, 0x00, 0x00, 0x00, 0x00,
 0x00, 0x00, 0x0a, 0xed, 0x48, 0x9e, 0x0a, 0xb8,
@@ -70,6 +70,8 @@ static const unsigned char offer[420] = {
 0x00, 0x00, 0x00, 0x00, 0x00, 0x00,
 /* Magic cookie: DHCP */
 0x63, 0x82, 0x53, 0x63,
+/* [0] Pad option */
+0x00,
 /* [53] DHCP Message Type: OFFER */
 0x35, 0x01, 0x02,
 /* [1] Subnet Mask: 255.255.255.0 */
@@ -124,7 +126,7 @@ static const unsigned char offer[420] = {
 };
 
 /* Sample DHCPv4 ACK */
-static const unsigned char ack[420] = {
+static const unsigned char ack[] = {
 0x02, 0x01, 0x06, 0x00, 0x00, 0x00, 0x00, 0x00,
 0x00, 0x00, 0x00, 0x00, 0x00, 0x00, 0x00, 0x00,
 0x0a, 0xed, 0x48, 0x9e, 0x00, 0x00, 0x00, 0x00,
@@ -157,6 +159,8 @@ static const unsigned char ack[420] = {
 0x00, 0x00, 0x00, 0x00,
 /* Magic cookie: DHCP */
 0x63, 0x82, 0x53, 0x63,
+/* [0] Pad option */
+0x00,
 /* [53] DHCP Message Type: ACK */
 0x35, 0x01, 0x05,
 /* [58] Renewal Time Value: (21600s) 6 hours */
@@ -230,6 +234,9 @@ struct dhcp_msg {
 	uint8_t type;
 };
 
+static uint32_t offer_xid;
+static uint32_t request_xid;
+
 static struct k_sem test_lock;
 
 #define WAIT_TIME K_SECONDS(CONFIG_NET_DHCPV4_INITIAL_DELAY_MAX + 1)
@@ -306,6 +313,8 @@ struct net_pkt *prepare_dhcp_offer(struct net_if *iface, uint32_t xid)
 
 	net_ipv4_finalize(pkt, IPPROTO_UDP);
 
+	offer_xid = xid;
+
 	return pkt;
 
 fail:
@@ -392,6 +401,10 @@ static int parse_dhcp_message(struct net_pkt *pkt, struct dhcp_msg *msg)
 				return 0;
 			}
 
+			if (msg->type == NET_DHCPV4_MSG_TYPE_REQUEST) {
+				request_xid = msg->xid;
+			}
+
 			return 1;
 		}
 
@@ -687,6 +700,10 @@ ZTEST(dhcpv4_tests, test_dhcp)
 			zassert_true(false, "Timeout while waiting");
 		}
 	}
+
+	/* Verify that Request xid matched Offer xid. */
+	zassert_equal(offer_xid, request_xid, "Offer/Request xid mismatch, "
+		      "Offer 0x%08x, Request 0x%08x", offer_xid, request_xid);
 }
 
 /**test case main entry */