diff --git a/packages/cheqd/src/anoncreds/utils/identifiers.ts b/packages/cheqd/src/anoncreds/utils/identifiers.ts
index 5368e6b9ee..ac4b58170c 100644
--- a/packages/cheqd/src/anoncreds/utils/identifiers.ts
+++ b/packages/cheqd/src/anoncreds/utils/identifiers.ts
@@ -1,3 +1,4 @@
+import type { CheqdNetwork } from '@cheqd/sdk'
 import type { ParsedDid } from '@credo-ts/core'
 
 import { TypedArrayEncoder, utils } from '@credo-ts/core'
@@ -28,7 +29,7 @@ export const cheqdResourceMetadataRegex = new RegExp(
   `^did:cheqd:${NETWORK}:${IDENTIFIER}/resources/${IDENTIFIER}/metadata${QUERY}${FRAGMENT}`
 )
 
-export type ParsedCheqdDid = ParsedDid & { network: string }
+export type ParsedCheqdDid = ParsedDid & { network: `${CheqdNetwork}` }
 export function parseCheqdDid(didUrl: string): ParsedCheqdDid | null {
   if (didUrl === '' || !didUrl) return null
   const sections = didUrl.match(cheqdSdkAnonCredsRegistryIdentifierRegex)
@@ -44,7 +45,7 @@ export function parseCheqdDid(didUrl: string): ParsedCheqdDid | null {
     const parts: ParsedCheqdDid = {
       did: `did:cheqd:${sections[1]}:${sections[2]}`,
       method: 'cheqd',
-      network: sections[1],
+      network: sections[1] as `${CheqdNetwork}`,
       id: sections[2],
       didUrl,
     }
diff --git a/packages/cheqd/src/dids/CheqdDidRegistrar.ts b/packages/cheqd/src/dids/CheqdDidRegistrar.ts
index 53df226a42..8c0afd5c12 100644
--- a/packages/cheqd/src/dids/CheqdDidRegistrar.ts
+++ b/packages/cheqd/src/dids/CheqdDidRegistrar.ts
@@ -7,6 +7,7 @@ import type {
   DidCreateResult,
   DidDeactivateResult,
   DidUpdateResult,
+  DidUpdateOptions,
 } from '@credo-ts/core'
 
 import { MethodSpecificIdAlgo, createDidVerificationMethod } from '@cheqd/sdk'
@@ -26,6 +27,7 @@ import {
   VerificationMethod,
 } from '@credo-ts/core'
 
+import { parseCheqdDid } from '../anoncreds/utils/identifiers'
 import { CheqdLedgerService } from '../ledger'
 
 import {
@@ -42,14 +44,28 @@ export class CheqdDidRegistrar implements DidRegistrar {
     const didRepository = agentContext.dependencyManager.resolve(DidRepository)
     const cheqdLedgerService = agentContext.dependencyManager.resolve(CheqdLedgerService)
 
-    const { methodSpecificIdAlgo, network, versionId = utils.uuid() } = options.options
-    const verificationMethod = options.secret?.verificationMethod
     let didDocument: DidDocument
+    const versionId = options.options?.versionId ?? utils.uuid()
 
     try {
       if (options.didDocument && validateSpecCompliantPayload(options.didDocument)) {
         didDocument = options.didDocument
-      } else if (verificationMethod) {
+
+        const cheqdDid = parseCheqdDid(options.didDocument.id)
+        if (!cheqdDid) {
+          return {
+            didDocumentMetadata: {},
+            didRegistrationMetadata: {},
+            didState: {
+              state: 'failed',
+              reason: `Unable to parse cheqd did ${options.didDocument.id}`,
+            },
+          }
+        }
+      } else if (options.secret?.verificationMethod) {
+        const withoutDidDocumentOptions = options as CheqdDidCreateWithoutDidDocumentOptions
+        const verificationMethod = withoutDidDocumentOptions.secret.verificationMethod
+        const methodSpecificIdAlgo = withoutDidDocumentOptions.options.methodSpecificIdAlgo
         const privateKey = verificationMethod.privateKey
         if (privateKey && !isValidPrivateKey(privateKey, KeyType.Ed25519)) {
           return {
@@ -71,7 +87,7 @@ export class CheqdDidRegistrar implements DidRegistrar {
           verificationMethod: verificationMethod.type as VerificationMethods,
           verificationMethodId: verificationMethod.id || 'key-1',
           methodSpecificIdAlgo: (methodSpecificIdAlgo as MethodSpecificIdAlgo) || MethodSpecificIdAlgo.Uuid,
-          network: network as CheqdNetwork,
+          network: withoutDidDocumentOptions.options.network as CheqdNetwork,
           publicKey: TypedArrayEncoder.toHex(key.publicKey),
         })
 
@@ -383,8 +399,10 @@ export class CheqdDidRegistrar implements DidRegistrar {
   }
 }
 
-export interface CheqdDidCreateOptions extends DidCreateOptions {
+export interface CheqdDidCreateWithoutDidDocumentOptions extends DidCreateOptions {
   method: 'cheqd'
+  did?: undefined
+  didDocument?: undefined
   options: {
     network: `${CheqdNetwork}`
     fee?: DidStdFee
@@ -392,12 +410,23 @@ export interface CheqdDidCreateOptions extends DidCreateOptions {
     methodSpecificIdAlgo?: `${MethodSpecificIdAlgo}`
   }
   secret: {
-    verificationMethod?: IVerificationMethod
+    verificationMethod: IVerificationMethod
   }
 }
 
-export interface CheqdDidUpdateOptions extends DidCreateOptions {
+export interface CheqdDidCreateFromDidDocumentOptions extends DidCreateOptions {
   method: 'cheqd'
+  did?: undefined
+  didDocument: DidDocument
+  options?: {
+    fee?: DidStdFee
+    versionId?: string
+  }
+}
+
+export type CheqdDidCreateOptions = CheqdDidCreateFromDidDocumentOptions | CheqdDidCreateWithoutDidDocumentOptions
+
+export interface CheqdDidUpdateOptions extends DidUpdateOptions {
   did: string
   didDocument: DidDocument
   options: {
diff --git a/packages/cheqd/tests/cheqd-did-registrar.e2e.test.ts b/packages/cheqd/tests/cheqd-did-registrar.e2e.test.ts
index 4e59151298..47454dd326 100644
--- a/packages/cheqd/tests/cheqd-did-registrar.e2e.test.ts
+++ b/packages/cheqd/tests/cheqd-did-registrar.e2e.test.ts
@@ -1,7 +1,16 @@
 import type { CheqdDidCreateOptions } from '../src'
 import type { DidDocument } from '@credo-ts/core'
 
-import { Agent, TypedArrayEncoder } from '@credo-ts/core'
+import {
+  SECURITY_JWS_CONTEXT_URL,
+  DidDocumentBuilder,
+  getEd25519VerificationKey2018,
+  getJsonWebKey2020,
+  KeyType,
+  utils,
+  Agent,
+  TypedArrayEncoder,
+} from '@credo-ts/core'
 import { generateKeyPairFromSeed } from '@stablelib/ed25519'
 
 import { getInMemoryAgentOptions } from '../../core/tests/helpers'
@@ -126,4 +135,73 @@ describe('Cheqd DID registrar', () => {
     const resolvedDocument = await agent.dids.resolve(did)
     expect(resolvedDocument.didDocumentMetadata.deactivated).toBe(true)
   })
+
+  it('should create a did:cheqd did using custom did document containing Ed25519 key', async () => {
+    const did = `did:cheqd:testnet:${utils.uuid()}`
+
+    const ed25519Key = await agent.wallet.createKey({
+      keyType: KeyType.Ed25519,
+    })
+
+    const createResult = await agent.dids.create<CheqdDidCreateOptions>({
+      method: 'cheqd',
+      didDocument: new DidDocumentBuilder(did)
+        .addContext(SECURITY_JWS_CONTEXT_URL)
+        .addVerificationMethod(
+          getEd25519VerificationKey2018({
+            key: ed25519Key,
+            controller: did,
+            id: `${did}#${ed25519Key.fingerprint}`,
+          })
+        )
+        .build(),
+    })
+
+    expect(createResult).toMatchObject({
+      didState: {
+        state: 'finished',
+      },
+    })
+
+    expect(createResult.didState.didDocument?.toJSON()).toMatchObject({
+      '@context': ['https://w3id.org/did/v1', 'https://w3id.org/security/suites/jws-2020/v1'],
+      verificationMethod: [
+        {
+          controller: did,
+          type: 'Ed25519VerificationKey2018',
+          publicKeyBase58: ed25519Key.publicKeyBase58,
+        },
+      ],
+    })
+  })
+
+  it('should create a did:cheqd did using custom did document containing P256 key', async () => {
+    const did = `did:cheqd:testnet:${utils.uuid()}`
+
+    const p256Key = await agent.wallet.createKey({
+      keyType: KeyType.P256,
+    })
+
+    const createResult = await agent.dids.create<CheqdDidCreateOptions>({
+      method: 'cheqd',
+      didDocument: new DidDocumentBuilder(did)
+        .addContext(SECURITY_JWS_CONTEXT_URL)
+        .addVerificationMethod(
+          getJsonWebKey2020({
+            did,
+            key: p256Key,
+            verificationMethodId: `${did}#${p256Key.fingerprint}`,
+          })
+        )
+        .build(),
+    })
+
+    // FIXME: the ES256 signature generated by Credo is invalid for Cheqd
+    // need to dive deeper into it, but for now adding a failing test so we can fix it in the future
+    expect(createResult).toMatchObject({
+      didState: {
+        state: 'failed',
+      },
+    })
+  })
 })