diff --git a/drivers/timer/nrf_grtc_timer.c b/drivers/timer/nrf_grtc_timer.c
index 2874411de39..15fdb84c1b2 100644
--- a/drivers/timer/nrf_grtc_timer.c
+++ b/drivers/timer/nrf_grtc_timer.c
@@ -49,21 +49,27 @@
 #define COUNTER_SPAN (GRTC_SYSCOUNTERL_VALUE_Msk | ((uint64_t)GRTC_SYSCOUNTERH_VALUE_Msk << 32))
 #define MAX_ABS_TICKS (COUNTER_SPAN / CYC_PER_TICK)
 
-#define MAX_TICKS                                                                                  \
-	(((COUNTER_SPAN / CYC_PER_TICK) > INT_MAX) ? INT_MAX : (COUNTER_SPAN / CYC_PER_TICK))
-
-#define MAX_CYCLES (MAX_TICKS * CYC_PER_TICK)
+/* To allow use of CCADD we need to limit max cycles to 31 bits. */
+#define MAX_REL_CYCLES BIT_MASK(31)
+#define MAX_REL_TICKS (MAX_REL_CYCLES / CYC_PER_TICK)
 
 #define LFCLK_FREQUENCY_HZ DT_PROP(LFCLK_NODE, clock_frequency)
 
+/* Threshold used to determine if there is a risk of unexpected GRTC COMPARE event coming
+ * from previous CC value.
+ */
+#define LATENCY_THR_TICKS 200
+
 #if defined(CONFIG_TEST)
 const int32_t z_sys_timer_irq_for_test = DT_IRQN(GRTC_NODE);
 #endif
 
 static void sys_clock_timeout_handler(int32_t id, uint64_t cc_val, void *p_context);
 
-static struct k_spinlock lock;
 static uint64_t last_count; /* Time (SYSCOUNTER value) @last sys_clock_announce() */
+static uint32_t last_elapsed;
+static uint64_t cc_value; /* Value that is expected to be in CC register. */
+static uint64_t expired_cc; /* Value that is expected to be in CC register. */
 static atomic_t int_mask;
 static uint8_t ext_channels_allocated;
 static uint64_t grtc_start_value;
@@ -146,17 +152,13 @@ static void compare_int_unlock(int32_t chan, bool key)
 static void sys_clock_timeout_handler(int32_t id, uint64_t cc_val, void *p_context)
 {
 	ARG_UNUSED(id);
+	ARG_UNUSED(cc_val);
 	ARG_UNUSED(p_context);
-	uint64_t dticks;
-	uint64_t now = counter();
-
-	if (unlikely(now < cc_val)) {
-		return;
-	}
+	uint32_t dticks;
 
 	dticks = counter_sub(cc_val, last_count) / CYC_PER_TICK;
-
-	last_count += dticks * CYC_PER_TICK;
+	last_count += (dticks * CYC_PER_TICK);
+	expired_cc = cc_val;
 
 	if (!IS_ENABLED(CONFIG_TICKLESS_KERNEL)) {
 		/* protection is not needed because we are in the GRTC interrupt
@@ -165,6 +167,7 @@ static void sys_clock_timeout_handler(int32_t id, uint64_t cc_val, void *p_conte
 		system_timeout_set_abs(last_count + CYC_PER_TICK);
 	}
 
+	last_elapsed = 0;
 	sys_clock_announce((int32_t)dticks);
 }
 
@@ -368,6 +371,7 @@ uint64_t z_nrf_grtc_timer_startup_value_get(void)
 int z_nrf_grtc_wakeup_prepare(uint64_t wake_time_us)
 {
 	nrfx_err_t err_code;
+	static struct k_spinlock lock;
 	static uint8_t systemoff_channel;
 	uint64_t now = counter();
 	nrfx_grtc_sleep_config_t sleep_cfg;
@@ -428,22 +432,15 @@ int z_nrf_grtc_wakeup_prepare(uint64_t wake_time_us)
 }
 #endif /* CONFIG_POWEROFF */
 
+
 uint32_t sys_clock_cycle_get_32(void)
 {
-	k_spinlock_key_t key = k_spin_lock(&lock);
-	uint32_t ret = (uint32_t)counter();
-
-	k_spin_unlock(&lock, key);
-	return ret;
+	return nrf_grtc_sys_counter_low_get(NRF_GRTC);
 }
 
 uint64_t sys_clock_cycle_get_64(void)
 {
-	k_spinlock_key_t key = k_spin_lock(&lock);
-	uint64_t ret = counter();
-
-	k_spin_unlock(&lock, key);
-	return ret;
+	return counter();
 }
 
 uint32_t sys_clock_elapsed(void)
@@ -452,7 +449,9 @@ uint32_t sys_clock_elapsed(void)
 		return 0;
 	}
 
-	return (uint32_t)(counter_sub(counter(), last_count) / CYC_PER_TICK);
+	last_elapsed = (uint32_t)counter_sub(counter(), last_count);
+
+	return last_elapsed / CYC_PER_TICK;
 }
 
 static int sys_clock_driver_init(void)
@@ -491,8 +490,11 @@ static int sys_clock_driver_init(void)
 	}
 #endif /* CONFIG_NRF_GRTC_START_SYSCOUNTER */
 
-	last_count = sys_clock_tick_get() * CYC_PER_TICK;
+	last_count = (counter() / CYC_PER_TICK) * CYC_PER_TICK;
 	grtc_start_value = last_count;
+	nrfx_grtc_channel_callback_set(system_clock_channel_data.channel,
+				       sys_clock_timeout_handler, NULL);
+
 	int_mask = NRFX_GRTC_CONFIG_ALLOWED_CC_CHANNELS_MASK;
 	if (!IS_ENABLED(CONFIG_TICKLESS_KERNEL)) {
 		system_timeout_set_relative(CYC_PER_TICK);
@@ -547,22 +549,47 @@ void sys_clock_set_timeout(int32_t ticks, bool idle)
 {
 	ARG_UNUSED(idle);
 
+	if (ticks == 0) {
+		return;
+	}
+
 	if (!IS_ENABLED(CONFIG_TICKLESS_KERNEL)) {
 		return;
 	}
 
-	ticks = (ticks == K_TICKS_FOREVER) ? MAX_TICKS : MIN(MAX_TICKS, MAX(ticks, 0));
+	uint32_t ch = system_clock_channel_data.channel;
 
-	uint64_t delta_time = ticks * CYC_PER_TICK;
+	if ((cc_value == expired_cc) && (ticks < MAX_REL_TICKS)) {
+		uint32_t cyc = ticks * CYC_PER_TICK;
 
-	uint64_t target_time = counter() + delta_time;
+		/* If it's the first timeout setting after previous expiration and timeout
+		 * is short so fast method can be used which utilizes relative CC configuration.
+		 */
+		cc_value += cyc;
+		nrfx_grtc_syscounter_cc_rel_set(ch, cyc, NRFX_GRTC_CC_RELATIVE_COMPARE);
+		return;
+	}
+
+	uint64_t cyc = (uint64_t)ticks * CYC_PER_TICK;
+	bool safe_setting = false;
+	int64_t prev_cc_val = cc_value;
 
-	/* Rounded down target_time to the tick boundary
-	 * (but not less than one tick after the last)
+	cc_value = last_count + last_elapsed + cyc;
+
+	/* In case of timeout abort it may happen that CC is being set to a value
+	 * that later than previous CC. If previous CC value is not far in the
+	 * future, there is a risk that COMPARE event will be triggered for that
+	 * previous CC value. If there is such risk safe procedure must be applied
+	 * which is more time consuming but ensures that there will be no spurious
+	 * event.
 	 */
-	target_time = MAX((target_time - last_count)/CYC_PER_TICK, 1)*CYC_PER_TICK + last_count;
+	if (prev_cc_val < cc_value) {
+		int64_t now = last_count + last_elapsed;
+
+		safe_setting = (prev_cc_val - now) < LATENCY_THR_TICKS;
+	}
 
-	system_timeout_set_abs(target_time);
+	nrfx_grtc_syscounter_cc_abs_set(ch, cc_value, safe_setting);
 }
 
 #if defined(CONFIG_NRF_GRTC_TIMER_APP_DEFINED_INIT)