diff --git a/.ci/azure/linux.yml b/.ci/azure/linux.yml
index 683515e8b29..d48aa25f5bb 100644
--- a/.ci/azure/linux.yml
+++ b/.ci/azure/linux.yml
@@ -232,7 +232,7 @@ jobs:
   - script: |
       export DATA_PATH=$(MODELS_PATH)
       export MODELS_PATH=$(MODELS_PATH)
-      . $(SETUPVARS) -pyver 3.8 && python3 -m pytest -s $(INSTALL_TEST_DIR)/pyngraph $(PYTHON_STATIC_ARGS) --junitxml=TEST-Pyngraph.xml --ignore=$(INSTALL_TEST_DIR)/pyngraph/tests/test_onnx/test_zoo_models.py --ignore=$(INSTALL_TEST_DIR)/pyngraph/tests/test_onnx/test_backend.py
+      . $(SETUPVARS) -pyver 3.8 && python3 -m pytest -s $(INSTALL_TEST_DIR)/pyngraph $(PYTHON_STATIC_ARGS) --junitxml=TEST-Pyngraph.xml --ignore=$(INSTALL_TEST_DIR)/pyngraph/tests/test_utils/test_utils.py --ignore=$(INSTALL_TEST_DIR)/pyngraph/tests/test_onnx/test_zoo_models.py --ignore=$(INSTALL_TEST_DIR)/pyngraph/tests/test_onnx/test_backend.py
     displayName: 'nGraph Python Bindings Tests'
     continueOnError: false
 
diff --git a/inference-engine/ie_bridges/python/CMakeLists.txt b/inference-engine/ie_bridges/python/CMakeLists.txt
index ac9a310c721..df85a0897f0 100644
--- a/inference-engine/ie_bridges/python/CMakeLists.txt
+++ b/inference-engine/ie_bridges/python/CMakeLists.txt
@@ -66,10 +66,6 @@ set (PYTHON_BRIDGE_SRC_ROOT ${CMAKE_CURRENT_SOURCE_DIR})
 add_subdirectory (src/openvino/inference_engine)
 add_subdirectory (src/openvino/offline_transformations)
 
-if (ENABLE_TESTS)
-    add_subdirectory(src/openvino/test_utils)
-endif()
-
 if(ENABLE_WHEEL)
     add_subdirectory(wheel)
 endif()
@@ -86,7 +82,7 @@ install(FILES requirements.txt
         DESTINATION ${PYTHON_BRIDGE_CPACK_PATH}/${PYTHON_VERSION}
         COMPONENT ${PYTHON_COMPONENT})
 
-install(PROGRAMS ${PYTHON_BRIDGE_OUTPUT_DIRECTORY}/__init__.py
+install(PROGRAMS ${PYTHON_BRIDGE_SRC_ROOT}/src/openvino/__init__.py
         DESTINATION ${PYTHON_BRIDGE_CPACK_PATH}/${PYTHON_VERSION}/openvino
         COMPONENT ${PYTHON_COMPONENT})
 
diff --git a/inference-engine/ie_bridges/python/cmake/utils/merge_init_files.py b/inference-engine/ie_bridges/python/cmake/utils/merge_init_files.py
deleted file mode 100755
index 2e1b3914b44..00000000000
--- a/inference-engine/ie_bridges/python/cmake/utils/merge_init_files.py
+++ /dev/null
@@ -1,26 +0,0 @@
-#!/usr/bin/env python3
-# Copyright (C) 2021 Intel Corporation
-# SPDX-License-Identifier: Apache-2.0
-
-import argparse
-import os
-
-
-parser = argparse.ArgumentParser()
-
-parser.add_argument('-i', '--input_file', type=str, required=True)
-parser.add_argument('-o', '--output_file', type=str, required=True)
-
-args = parser.parse_args()
-
-mode = 'a' if os.path.exists(args.output_file) else 'w'
-with open(args.input_file) as input_file, open(args.output_file, mode) as output_file:
-    lines = input_file.readlines()
-    count = 0
-    copied_lines = ["\n"]
-    for idx, line in enumerate(lines):
-        if line[0] == '#' and idx <= 2:
-            count += 1
-        if idx > 2 and count == 3:
-            copied_lines.append(line)
-    output_file.writelines(copied_lines)
diff --git a/inference-engine/ie_bridges/python/src/openvino/inference_engine/CMakeLists.txt b/inference-engine/ie_bridges/python/src/openvino/inference_engine/CMakeLists.txt
index bd90ae05f42..e58827b11c2 100644
--- a/inference-engine/ie_bridges/python/src/openvino/inference_engine/CMakeLists.txt
+++ b/inference-engine/ie_bridges/python/src/openvino/inference_engine/CMakeLists.txt
@@ -63,15 +63,12 @@ endif()
 find_package(Python COMPONENTS Interpreter Development)
 
 # perform copy
-# merge __init__.py files of new and old python api
 add_custom_command(TARGET ${TARGET_NAME}
     POST_BUILD
     COMMAND ${CMAKE_COMMAND} -E copy ${CMAKE_CURRENT_SOURCE_DIR}/__init__.py ${CMAKE_LIBRARY_OUTPUT_DIRECTORY}/__init__.py
+    COMMAND ${CMAKE_COMMAND} -E copy ${CMAKE_CURRENT_SOURCE_DIR}/../__init__.py ${CMAKE_LIBRARY_OUTPUT_DIRECTORY}/../__init__.py
     COMMAND ${CMAKE_COMMAND} -E copy ${PYTHON_BRIDGE_SRC_ROOT}/requirements.txt ${CMAKE_LIBRARY_OUTPUT_DIRECTORY}/../../requirements.txt
     COMMAND ${CMAKE_COMMAND} -E copy ${PYTHON_BRIDGE_SRC_ROOT}/requirements.txt ${PYTHON_BRIDGE_OUTPUT_DIRECTORY}/../../requirements.txt
-    COMMAND ${Python_EXECUTABLE} ${PYTHON_BRIDGE_SRC_ROOT}/cmake/utils/merge_init_files.py
-        -i ${PYTHON_BRIDGE_SRC_ROOT}/src/openvino/__init__.py
-        -o ${CMAKE_LIBRARY_OUTPUT_DIRECTORY}/../__init__.py
 )
 
 # install
diff --git a/inference-engine/ie_bridges/python/src/openvino/test_utils/__init__.py b/inference-engine/ie_bridges/python/src/openvino/test_utils/__init__.py
deleted file mode 100644
index 66e65f9a057..00000000000
--- a/inference-engine/ie_bridges/python/src/openvino/test_utils/__init__.py
+++ /dev/null
@@ -1,7 +0,0 @@
-# -*- coding: utf-8 -*-
-# Copyright (C) 2018-2021 Intel Corporation
-# SPDX-License-Identifier: Apache-2.0
-
-from .test_utils_api import *
-
-__all__ = ['CompareNetworks']
diff --git a/inference-engine/ie_bridges/python/src/openvino/test_utils/test_utils_api.pyx b/inference-engine/ie_bridges/python/src/openvino/test_utils/test_utils_api.pyx
deleted file mode 100644
index 63cf6529f1a..00000000000
--- a/inference-engine/ie_bridges/python/src/openvino/test_utils/test_utils_api.pyx
+++ /dev/null
@@ -1,15 +0,0 @@
-# Copyright (C) 2018-2021 Intel Corporation
-# SPDX-License-Identifier: Apache-2.0
-
-from .cimport test_utils_api_impl_defs as C
-from ..inference_engine.ie_api cimport IENetwork
-
-from libcpp cimport bool
-from libcpp.string cimport string
-from libcpp.pair cimport pair
-
-
-def CompareNetworks(IENetwork lhs, IENetwork rhs):
-    cdef pair[bool, string] c_pair
-    c_pair = C.CompareNetworks(lhs.impl, rhs.impl)
-    return c_pair
diff --git a/inference-engine/ie_bridges/python/src/openvino/test_utils/test_utils_api_impl.cpp b/inference-engine/ie_bridges/python/src/openvino/test_utils/test_utils_api_impl.cpp
deleted file mode 100644
index f30a3e74d9c..00000000000
--- a/inference-engine/ie_bridges/python/src/openvino/test_utils/test_utils_api_impl.cpp
+++ /dev/null
@@ -1,13 +0,0 @@
-// Copyright (C) 2018-2021 Intel Corporation
-// SPDX-License-Identifier: Apache-2.0
-//
-
-#include "test_utils_api_impl.hpp"
-
-#include <common_test_utils/ngraph_test_utils.hpp>
-#include <string>
-
-std::pair<bool, std::string> InferenceEnginePython::CompareNetworks(InferenceEnginePython::IENetwork lhs,
-                                                                    InferenceEnginePython::IENetwork rhs) {
-    return compare_functions(lhs.actual->getFunction(), rhs.actual->getFunction(), true, true, false, true, true);
-}
diff --git a/inference-engine/ie_bridges/python/src/openvino/test_utils/test_utils_api_impl.hpp b/inference-engine/ie_bridges/python/src/openvino/test_utils/test_utils_api_impl.hpp
deleted file mode 100644
index bce3c2d00ae..00000000000
--- a/inference-engine/ie_bridges/python/src/openvino/test_utils/test_utils_api_impl.hpp
+++ /dev/null
@@ -1,14 +0,0 @@
-// Copyright (C) 2018-2021 Intel Corporation
-// SPDX-License-Identifier: Apache-2.0
-//
-
-#pragma once
-
-#include "Python.h"
-#include "ie_api_impl.hpp"
-
-namespace InferenceEnginePython {
-
-std::pair<bool, std::string> CompareNetworks(InferenceEnginePython::IENetwork, InferenceEnginePython::IENetwork);
-
-};  // namespace InferenceEnginePython
diff --git a/inference-engine/ie_bridges/python/src/openvino/test_utils/test_utils_api_impl_defs.pxd b/inference-engine/ie_bridges/python/src/openvino/test_utils/test_utils_api_impl_defs.pxd
deleted file mode 100644
index cb3d7704482..00000000000
--- a/inference-engine/ie_bridges/python/src/openvino/test_utils/test_utils_api_impl_defs.pxd
+++ /dev/null
@@ -1,11 +0,0 @@
-# Copyright (C) 2018-2021 Intel Corporation
-# SPDX-License-Identifier: Apache-2.0
-
-from libcpp cimport bool
-from libcpp.string cimport string
-from libcpp.pair cimport pair
-
-from ..inference_engine.ie_api_impl_defs cimport IENetwork
-
-cdef extern from "test_utils_api_impl.hpp" namespace "InferenceEnginePython":
-    cdef pair[bool, string] CompareNetworks(IENetwork lhs, IENetwork rhs)
diff --git a/inference-engine/ie_bridges/python/tests/test_utils.py b/inference-engine/ie_bridges/python/tests/test_utils.py
deleted file mode 100644
index e54648ecd73..00000000000
--- a/inference-engine/ie_bridges/python/tests/test_utils.py
+++ /dev/null
@@ -1,29 +0,0 @@
-# Copyright (C) 2018-2021 Intel Corporation
-# SPDX-License-Identifier: Apache-2.0
-
-from openvino.inference_engine import IECore, IENetwork
-
-import ngraph as ng
-from ngraph.impl.op import Parameter
-from ngraph.impl import Function, Shape, Type
-
-def get_test_cnnnetwork():
-    element_type = Type.f32
-    param = Parameter(element_type, Shape([1, 3, 22, 22]))
-    relu = ng.relu(param)
-    func = Function([relu], [param], 'test')
-    caps = Function.to_capsule(func)
-
-    cnnNetwork = IENetwork(caps)
-    assert cnnNetwork != None
-    return cnnNetwork
-
-
-def test_compare_networks():
-    try:
-        from openvino.test_utils import CompareNetworks
-        net = get_test_cnnnetwork()
-        status, msg = CompareNetworks(net, net)
-        assert status
-    except:
-        print("openvino.test_utils.CompareNetworks is not available")
diff --git a/src/bindings/python/src/CMakeLists.txt b/src/bindings/python/src/CMakeLists.txt
index c7e71113d99..fa365348a89 100644
--- a/src/bindings/python/src/CMakeLists.txt
+++ b/src/bindings/python/src/CMakeLists.txt
@@ -2,5 +2,7 @@
 # SPDX-License-Identifier: Apache-2.0
 #
 
+set(PYTHON_SOURCE_DIR ${CMAKE_CURRENT_SOURCE_DIR})
+
 add_subdirectory(compatibility)
 add_subdirectory(pyopenvino)
diff --git a/src/bindings/python/src/openvino/test_utils/__init__.py b/src/bindings/python/src/openvino/test_utils/__init__.py
new file mode 100644
index 00000000000..c6b385899bd
--- /dev/null
+++ b/src/bindings/python/src/openvino/test_utils/__init__.py
@@ -0,0 +1,5 @@
+# -*- coding: utf-8 -*-
+# Copyright (C) 2021 Intel Corporation
+# SPDX-License-Identifier: Apache-2.0
+
+from .test_utils_api import compare_functions
diff --git a/src/bindings/python/src/pyopenvino/CMakeLists.txt b/src/bindings/python/src/pyopenvino/CMakeLists.txt
index 36bf8300152..73142ab988f 100644
--- a/src/bindings/python/src/pyopenvino/CMakeLists.txt
+++ b/src/bindings/python/src/pyopenvino/CMakeLists.txt
@@ -44,9 +44,13 @@ if(NOT CMAKE_CXX_COMPILER_ID STREQUAL "MSVC")
     add_compile_options(-Wno-deprecated-declarations -Wno-undef)
 endif()
 
+if(ENABLE_TESTS)
+    add_subdirectory(test_utils)
+endif()
+
 # create target
 
-file(GLOB_RECURSE SOURCES *.cpp)
+file(GLOB_RECURSE SOURCES core/*.cpp graph/*.cpp frontend/*.cpp pyopenvino.cpp)
 
 pybind11_add_module(${PROJECT_NAME} MODULE ${SOURCES})
 
diff --git a/inference-engine/ie_bridges/python/src/openvino/test_utils/CMakeLists.txt b/src/bindings/python/src/pyopenvino/test_utils/CMakeLists.txt
similarity index 60%
rename from inference-engine/ie_bridges/python/src/openvino/test_utils/CMakeLists.txt
rename to src/bindings/python/src/pyopenvino/test_utils/CMakeLists.txt
index 86dd25996b9..ff1d701e619 100644
--- a/inference-engine/ie_bridges/python/src/openvino/test_utils/CMakeLists.txt
+++ b/src/bindings/python/src/pyopenvino/test_utils/CMakeLists.txt
@@ -1,4 +1,4 @@
-# Copyright (C) 2018-2021 Intel Corporation
+# Copyright (C) 2021 Intel Corporation
 # SPDX-License-Identifier: Apache-2.0
 #
 
@@ -8,25 +8,23 @@ set(CMAKE_LIBRARY_OUTPUT_DIRECTORY ${PYTHON_BRIDGE_OUTPUT_DIRECTORY}/test_utils)
 set(CMAKE_ARCHIVE_OUTPUT_DIRECTORY ${PYTHON_BRIDGE_OUTPUT_DIRECTORY}/test_utils)
 set(CMAKE_COMPILE_PDB_OUTPUT_DIRECTORY ${PYTHON_BRIDGE_OUTPUT_DIRECTORY}/test_utils)
 set(CMAKE_PDB_OUTPUT_DIRECTORY ${PYTHON_BRIDGE_OUTPUT_DIRECTORY}/test_utils)
+set(PYTHON_BRIDGE_CPACK_PATH "python")
 
-file(GLOB SOURCES ${CMAKE_CURRENT_SOURCE_DIR}/test_utils_api.pyx
-                  ${CMAKE_CURRENT_SOURCE_DIR}/test_utils_api_impl.cpp
-                  ${CMAKE_CURRENT_SOURCE_DIR}/test_utils_api_impl.hpp
-                  ${CMAKE_CURRENT_SOURCE_DIR}/test_utils_api_impl_defs.pxd)
+file(GLOB SOURCES ${CMAKE_CURRENT_SOURCE_DIR}/test_utils.cpp)
 
-set_source_files_properties(${CMAKE_CURRENT_SOURCE_DIR}/test_utils_api.pyx
-                            PROPERTIES CYTHON_IS_CXX ON)
+if(NOT DEFINED OpenVINO_SOURCE_DIR)
+    find_package(InferenceEngineDeveloperPackage REQUIRED)
+endif()
 
 # create target
 
-cython_add_module(${TARGET_NAME} ${SOURCES})
+pybind11_add_module(${TARGET_NAME} MODULE ${SOURCES})
 
-add_dependencies(${TARGET_NAME} ie_api)
-ov_python_disable_intel_warnings(${TARGET_NAME})
+add_dependencies(${TARGET_NAME} pyopenvino)
 
 if(COMMAND ie_add_vs_version_file)
     ie_add_vs_version_file(NAME ${TARGET_NAME}
-                           FILEDESCRIPTION "Test Utils Python library")
+            FILEDESCRIPTION "Test Utils Python library")
 endif()
 
 if(InferenceEngineDeveloperPackage_FOUND)
@@ -36,7 +34,6 @@ else()
 endif()
 
 target_include_directories(${TARGET_NAME} PRIVATE "${CMAKE_CURRENT_SOURCE_DIR}")
-target_include_directories(${TARGET_NAME} SYSTEM PRIVATE "${CMAKE_CURRENT_SOURCE_DIR}/../inference_engine")
 target_link_libraries(${TARGET_NAME} PRIVATE ${link_libraries})
 
 # Compatibility with python 2.7 which has deprecated "register" specifier
@@ -46,12 +43,12 @@ endif()
 
 # perform copy
 add_custom_command(TARGET ${TARGET_NAME}
-    POST_BUILD
-    COMMAND ${CMAKE_COMMAND} -E copy ${PYTHON_BRIDGE_SRC_ROOT}/src/openvino/test_utils/__init__.py ${CMAKE_LIBRARY_OUTPUT_DIRECTORY}/__init__.py
-)
+        POST_BUILD
+        COMMAND ${CMAKE_COMMAND} -E copy  ${PYTHON_SOURCE_DIR}/openvino/test_utils/__init__.py ${CMAKE_LIBRARY_OUTPUT_DIRECTORY}/__init__.py
+        )
 
 add_clang_format_target(${TARGET_NAME}_clang FOR_TARGETS ${TARGET_NAME}
-                        EXCLUDE_PATTERNS ".*\\.cxx;.*\\.pxd;.*\\.pyx")
+        EXCLUDE_PATTERNS ".*\\.cxx")
 
 # install
 
@@ -61,7 +58,7 @@ install(TARGETS ${TARGET_NAME}
         LIBRARY DESTINATION ${PYTHON_BRIDGE_CPACK_PATH}/${PYTHON_VERSION}/openvino/test_utils
         COMPONENT tests EXCLUDE_FROM_ALL)
 
-install(PROGRAMS __init__.py
+install(PROGRAMS  ${PYTHON_SOURCE_DIR}/openvino/test_utils/__init__.py
         DESTINATION ${PYTHON_BRIDGE_CPACK_PATH}/${PYTHON_VERSION}/openvino/test_utils
         COMPONENT tests
         EXCLUDE_FROM_ALL)
diff --git a/src/bindings/python/src/pyopenvino/test_utils/test_utils.cpp b/src/bindings/python/src/pyopenvino/test_utils/test_utils.cpp
new file mode 100644
index 00000000000..7a232b1e0a4
--- /dev/null
+++ b/src/bindings/python/src/pyopenvino/test_utils/test_utils.cpp
@@ -0,0 +1,28 @@
+// Copyright (C) 2021 Intel Corporation
+// SPDX-License-Identifier: Apache-2.0
+//
+
+#include <pybind11/pybind11.h>
+
+#include <string>
+
+#include "common_test_utils/ngraph_test_utils.hpp"
+
+namespace py = pybind11;
+
+PYBIND11_MODULE(test_utils_api, m) {
+    m.def(
+        "compare_functions",
+        [](const ov::Function& lhs, const ov::Function& rhs) {
+            const auto lhs_ptr = std::const_pointer_cast<ov::Function>(lhs.shared_from_this());
+            const auto rhs_ptr = std::const_pointer_cast<ov::Function>(rhs.shared_from_this());
+
+            const auto fc = FunctionsComparator::with_default()
+                                .enable(FunctionsComparator::ATTRIBUTES)
+                                .enable(FunctionsComparator::CONST_VALUES);
+            const auto results = fc.compare(lhs_ptr, rhs_ptr);
+            return std::make_pair(results.valid, results.message);
+        },
+        py::arg("lhs"),
+        py::arg("rhs"));
+}
diff --git a/src/bindings/python/tests/test_utils/test_utils.py b/src/bindings/python/tests/test_utils/test_utils.py
new file mode 100644
index 00000000000..b312689aaa7
--- /dev/null
+++ b/src/bindings/python/tests/test_utils/test_utils.py
@@ -0,0 +1,26 @@
+# Copyright (C) 2021 Intel Corporation
+# SPDX-License-Identifier: Apache-2.0
+
+from openvino.runtime import Function
+from openvino.runtime.impl import Shape, Type
+from openvino.runtime.impl.op import Parameter
+import openvino.runtime.opset8 as ops
+
+
+def get_test_function():
+    element_type = Type.f32
+    param = Parameter(element_type, Shape([1, 3, 22, 22]))
+    relu = ops.relu(param)
+    func = Function([relu], [param], "test")
+    assert func is not None
+    return func
+
+
+def test_compare_functions():
+    try:
+        from openvino.test_utils import compare_functions
+        func = get_test_function()
+        status, msg = compare_functions(func, func)
+        assert status
+    except RuntimeError:
+        print("openvino.test_utils.compare_functions is not available")
diff --git a/src/bindings/python/tox.ini b/src/bindings/python/tox.ini
index c1a9b7eaafa..22a79879cd3 100644
--- a/src/bindings/python/tox.ini
+++ b/src/bindings/python/tox.ini
@@ -20,7 +20,7 @@ commands=
   flake8 {posargs:src/ setup.py}
   flake8 --ignore=D100,D101,D102,D103,D104,D105,D107,W503 tests/ tests_compatibility/  # ignore lack of docs in tests
   mypy --config-file=tox.ini {posargs:src/}
-  pytest --backend={env:NGRAPH_BACKEND} tests -v -k 'not _cuda' --ignore=tests/test_onnx/test_zoo_models.py --ignore=tests/test_inference_engine
+  pytest --backend={env:NGRAPH_BACKEND} tests -v -k 'not _cuda' --ignore=tests/test_onnx/test_zoo_models.py --ignore=tests/test_utils --ignore=tests/test_inference_engine
   pytest --backend={env:NGRAPH_BACKEND} tests_compatibility -v -k 'not _cuda' --ignore=tests_compatibility/test_onnx/test_zoo_models.py
 
 [testenv:zoo_models]