diff --git a/apps/remix-ide/src/app/files/fileManager.js b/apps/remix-ide/src/app/files/fileManager.js
index 10f89a4759..0ba692c32e 100644
--- a/apps/remix-ide/src/app/files/fileManager.js
+++ b/apps/remix-ide/src/app/files/fileManager.js
@@ -57,9 +57,10 @@ class FileManager extends Plugin {
     this.mode = mode
   }
 
-  async compileWithHardhat (cmd) {
-    console.log('Inside compileWithHardhat, calling hardhat compile using appManager')
-    return await this.appManager.call('hardhat', 'compile', cmd)
+  async compileWithHardhat (fileContent) {
+    const configFilePath = 'remixCompiler.config.js'
+    this.setFileContent(configFilePath, fileContent)
+    return await this.appManager.call('hardhat', 'compile', configFilePath)
   }
 
   limitPluginScope (path) {
diff --git a/apps/remix-ide/src/app/tabs/compileTab/compileTab.js b/apps/remix-ide/src/app/tabs/compileTab/compileTab.js
index 87cdc1b9a1..b4367cbb70 100644
--- a/apps/remix-ide/src/app/tabs/compileTab/compileTab.js
+++ b/apps/remix-ide/src/app/tabs/compileTab/compileTab.js
@@ -83,7 +83,18 @@ class CompileTab {
       console.log('mode is - ', this.fileManager.mode)
       if (this.fileManager.mode === 'localhost') {
         console.log('calling compilehardhat')
-        this.fileManager.compileWithHardhat('npx hardhat compile').then(console.log)
+        const { currentVersion, optimize, runs } = this.compiler.state
+        const fileContent = `module.exports = {
+          solidity: '${currentVersion.substring(0, currentVersion.indexOf('+commit'))}',
+          settings: {
+            optimizer: {
+              enabled: ${optimize},
+              runs: ${runs}
+            }
+          }
+        }
+        `
+        this.fileManager.compileWithHardhat(fileContent).then(console.log)
       }
       this.fileManager.saveCurrentFile()
       this.miscApi.clearAnnotations()
diff --git a/libs/remixd/src/services/hardhatClient.ts b/libs/remixd/src/services/hardhatClient.ts
index e2f58ee624..b03fa19cab 100644
--- a/libs/remixd/src/services/hardhatClient.ts
+++ b/libs/remixd/src/services/hardhatClient.ts
@@ -21,7 +21,8 @@ export class HardhatClient extends PluginClient {
     this.currentSharedFolder = currentSharedFolder
   }
 
-  compile (cmd: string) {
+  compile (configPath: string) {
+    const cmd = `npx hardhat compile --config ${configPath}`
     const options = { cwd: this.currentSharedFolder, shell: true }
     const child = spawn(cmd, options)
     let result = ''