diff --git a/CHANGELOG.md b/CHANGELOG.md
index 4a16017d4a..d21298bab8 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -2,6 +2,8 @@
 
 #### Upcoming Changes
 
+* feat: Add `recursive_with_poseidon` layout[#1724](https://github.com/lambdaclass/cairo-vm/pull/1724)
+
 * refactor(BREAKING): Use an enum to represent layout name[#1715](https://github.com/lambdaclass/cairo-vm/pull/1715)
   * Add enum `LayoutName` to represent cairo layout names.
   * `CairoRunConfig`, `Cairo1RunConfig` & `CairoRunner` field `layout` type changed from `String` to `LayoutName`.
diff --git a/vm/src/tests/compare_factorial_outputs_all_layouts.sh b/vm/src/tests/compare_factorial_outputs_all_layouts.sh
index 1a2067e4c8..e634fbb9d4 100755
--- a/vm/src/tests/compare_factorial_outputs_all_layouts.sh
+++ b/vm/src/tests/compare_factorial_outputs_all_layouts.sh
@@ -5,7 +5,7 @@ passed_tests=0
 failed_tests=0
 exit_code=0
 
-for layout in "plain" "small" "dex" "recursive" "starknet" "starknet_with_keccak" "recursive_large_output" "all_solidity" "starknet_with_keccak"; do
+for layout in "plain" "small" "dex" "recursive" "starknet" "starknet_with_keccak" "recursive_large_output" "recursive_with_poseidon" "all_solidity" "starknet_with_keccak"; do
     # Run cairo_vm
     echo "Running cairo-vm with layout $layout"
     cargo run -p cairo-vm-cli --release -- --layout $layout --proof_mode $factorial_compiled --trace_file factorial_rs.trace --memory_file factorial_rs.memory --air_public_input factorial_rs.air_public_input --air_private_input factorial_rs.air_private_input
diff --git a/vm/src/types/instance_definitions/builtins_instance_def.rs b/vm/src/types/instance_definitions/builtins_instance_def.rs
index a6d0bc44cc..ab13cf14fb 100644
--- a/vm/src/types/instance_definitions/builtins_instance_def.rs
+++ b/vm/src/types/instance_definitions/builtins_instance_def.rs
@@ -138,6 +138,22 @@ impl BuiltinsInstanceDef {
         }
     }
 
+    pub(crate) fn recursive_with_poseidon() -> BuiltinsInstanceDef {
+        BuiltinsInstanceDef {
+            output: true,
+            pedersen: Some(PedersenInstanceDef::new(Some(256))),
+            range_check: Some(RangeCheckInstanceDef::new(Some(16))),
+            ecdsa: None,
+            bitwise: Some(BitwiseInstanceDef::new(Some(16))),
+            ec_op: None,
+            keccak: None,
+            poseidon: Some(PoseidonInstanceDef::new(Some(64))),
+            range_check96: None,
+            add_mod: None,
+            mul_mod: None,
+        }
+    }
+
     pub(crate) fn all_cairo() -> BuiltinsInstanceDef {
         BuiltinsInstanceDef {
             output: true,
diff --git a/vm/src/types/instance_definitions/diluted_pool_instance_def.rs b/vm/src/types/instance_definitions/diluted_pool_instance_def.rs
index 24e1a51ba6..9be73a835d 100644
--- a/vm/src/types/instance_definitions/diluted_pool_instance_def.rs
+++ b/vm/src/types/instance_definitions/diluted_pool_instance_def.rs
@@ -2,7 +2,7 @@ use serde::Serialize;
 
 #[derive(Serialize, Debug, PartialEq)]
 pub(crate) struct DilutedPoolInstanceDef {
-    pub(crate) units_per_step: u32,
+    pub(crate) units_per_step: u32, // 2 ^ log_units_per_step (for cairo_lang comparison)
     pub(crate) spacing: u32,
     pub(crate) n_bits: u32,
 }
diff --git a/vm/src/types/layout.rs b/vm/src/types/layout.rs
index f7c523e5d7..ee0fae3196 100644
--- a/vm/src/types/layout.rs
+++ b/vm/src/types/layout.rs
@@ -87,6 +87,15 @@ impl CairoLayout {
             diluted_pool_instance_def: Some(DilutedPoolInstanceDef::default()),
         }
     }
+    pub(crate) fn recursive_with_poseidon() -> CairoLayout {
+        CairoLayout {
+            name: LayoutName::recursive_with_poseidon,
+            rc_units: 4,
+            builtins: BuiltinsInstanceDef::recursive_with_poseidon(),
+            public_memory_fraction: 8,
+            diluted_pool_instance_def: Some(DilutedPoolInstanceDef::new(8, 4, 16)),
+        }
+    }
 
     pub(crate) fn all_cairo_instance() -> CairoLayout {
         CairoLayout {
diff --git a/vm/src/types/layout_name.rs b/vm/src/types/layout_name.rs
index d851292a51..1c957fbf90 100644
--- a/vm/src/types/layout_name.rs
+++ b/vm/src/types/layout_name.rs
@@ -17,6 +17,7 @@ pub enum LayoutName {
     starknet,
     starknet_with_keccak,
     recursive_large_output,
+    recursive_with_poseidon,
     all_solidity,
     all_cairo,
     dynamic,
@@ -32,6 +33,7 @@ impl LayoutName {
             LayoutName::starknet => "starknet",
             LayoutName::starknet_with_keccak => "starknet_with_keccak",
             LayoutName::recursive_large_output => "recursive_large_output",
+            LayoutName::recursive_with_poseidon => "recursive_with_poseidon",
             LayoutName::all_solidity => "all_solidity",
             LayoutName::all_cairo => "all_cairo",
             LayoutName::dynamic => "all_cairo",
@@ -56,6 +58,7 @@ impl ValueEnum for LayoutName {
             Self::starknet,
             Self::starknet_with_keccak,
             Self::recursive_large_output,
+            Self::recursive_with_poseidon,
             Self::all_solidity,
             Self::all_cairo,
             Self::dynamic,
diff --git a/vm/src/vm/runners/cairo_runner.rs b/vm/src/vm/runners/cairo_runner.rs
index 02a0811d52..1040e1f52a 100644
--- a/vm/src/vm/runners/cairo_runner.rs
+++ b/vm/src/vm/runners/cairo_runner.rs
@@ -183,6 +183,7 @@ impl CairoRunner {
             LayoutName::starknet => CairoLayout::starknet_instance(),
             LayoutName::starknet_with_keccak => CairoLayout::starknet_with_keccak_instance(),
             LayoutName::recursive_large_output => CairoLayout::recursive_large_output_instance(),
+            LayoutName::recursive_with_poseidon => CairoLayout::recursive_with_poseidon(),
             LayoutName::all_cairo => CairoLayout::all_cairo_instance(),
             LayoutName::all_solidity => CairoLayout::all_solidity_instance(),
             LayoutName::dynamic => CairoLayout::dynamic_instance(),