Methods and systems for providing IP services in an integrated fashion are provided. According to one embodiment, a flow cache is established having multiple entries each identifying one of multiple VR flows through a VR-based network device and corresponding forwarding state information. A packet is received at an input port of a line interface module of the network device and forwarded to a VRE. Flow-based packet classification is performed by the VRE. An attempt is made to retrieve an entry of the flow cache based on a result of the flow-based packet classification. On a flow cache hit, one or more appropriate packet transformations are identified for application to the packet and it is determined whether to process the packet with a VSE based on the corresponding forwarding state information. On a flow cache miss, the new VR flow is added to the flow cache by performing flow learning.