Organizations: 1Microsoft Research · University of Amsterdam
Abstract
We study on-policy distillation (OPD) for agentic tasks, where an LLM agent interacts with an environment over multiple turns and a student imitates a teacher over these multi-turn interaction histories. Fully online OPD is costly because each update requires fresh student rollouts through the environment and teacher queries at visited histories. We propose Replayed-Prefix On-Policy Distillation (ReOPD), an off-environment alternative that reuses pre-collected teacher trajectories as replayed prefixes: the student acts at selected steps, while the teacher provides dense per-step supervision without executing new environment interactions. We show that multi-turn OPD introduces a prefix trap: making histories more student-on-policy improves relevance to the student, but can query the teacher on histories where its target is unreliable. This creates a two-sided distribution shift between student occupancy and teacher reliability. ReOPD addresses this by treating multi-turn OPD as a reliability-aware prefix distribution design and implements it with a simple step-decaying sampling schedule that emphasizes early, lower-shift prefixes. Across mathematical reasoning with Python and search environments over multiple teacher and student model scales, ReOPD preserves or improves OPD-level accuracy, uses zero tool calls during student training, and is at least 4× faster per rollout than OPD. ReOPD therefore turns expensive agent-environment interaction into a reusable offline resource, enabling scalable distillation across tools, tasks, and environments.
On-policy distillation (OPD) improves student models by training them on trajectories induced by their own policy, making it a promising approach for mitigating exposure bias in agent training. However, most OPD studies focus on single-turn settings, while realistic LLM agents interact with environments over multiple turns. In this regime, early errors can alter future observations and compound across the trajectory, and standard dense token-level OPD becomes brittle, as it may over-penalize semantically valid alternatives, reinforce local degeneracies such as repeated actions, and propagate unreliable teacher supervision on off-distribution histories. We propose SAGE-OPD, a verifier-free selective intervention framework specifically designed for multi-turn OPD. Instead of applying teacher supervision uniformly across all turns, SAGE-OPD first observes environment feedback and uses teacher judgment to decide whether each student response should be skipped or intervened on. To further address compounding errors, SAGE-OPD weights token-level distillation by teacher confidence, reducing the influence of uncertain teacher distributions on corrupted or ambiguous histories. Finally, SAGE-OPD applies loss normalization to preserve the overall loss scale of standard OPD while retaining selective turn-level weighting. Experiments on agent tasks show that SAGE-OPD consistently improves over baselines, achieving up to a 13.3% relative improvement in ALFWorld unseen success rate over standard OPD. Ablation studies further demonstrate that turn-level intervention, teacher confidence weighting, and loss normalization provide complementary benefits. Our results suggest that effective multi-turn OPD should remain on-policy, but teacher supervision should be selectively allocated to turns where intervention is necessary and reliable.
On-policy distillation (OPD) has shown strong potential for transferring reasoning ability from frontier or domain-specific models to smaller students. While effective on static single-turn tasks, its behavior in multi-turn agent settings remains underexplored. In this work, we identify a key limitation of vanilla OPD in such settings, which we term Trajectory-Level KL Instability. Specifically, we observe that KL divergence increases together with a drop in success rate, and even after convergence, the KL remains high, leading to unstable training. This instability arises from inter-turn error compounding: as errors accumulate, the student is driven beyond the teacher's effective support, rendering the supervision signal unreliable. To address this, we propose TCOD (Temporal Curriculum On-Policy Distillation), a simple yet effective framework that controls the trajectory depth exposed to the student and progressively expands it from short to long with a curriculum schedule. Experimental results across four student-teacher pairs on three multi-turn agent benchmarks (ALFWorld, WebShop, ScienceWorld) show that TCOD mitigates KL escalation and enhances KL stability throughout training, improving agent performance by up to 18 points over vanilla OPD. Further evaluations show that TCOD can even surpass the teacher's performance and generalize to tasks on which the teacher fails. Our code is available at https://github.com/kokolerk/TCOD.
Multi-turn agents that plan, invoke tools, and interact with environments offer a promising paradigm for solving complex tasks, yet their capabilities typically rely on very large models whose inference cost is prohibitive in practice.On-Policy Distillation (OPD) is a natural recipe for transferring such capabilities to smaller students, but we find that it suffers a characteristic failure mode in this setting: small student errors compound across turns and push the trajectory out of the teacher's familiar state distribution, so the teacher's supervision becomes least reliable precisely where the student needs it most.We propose Guided On-Policy Distillation (Guided-OPD), a simple yet effective algorithm that mixes teacher- and student-generated turns within each rollout and schedules the teacher's intervention probability along a curriculum that decays to zero.Strong guidance keeps early trajectories close to the teacher distribution and is then gradually withdrawn to recover the purely on-policy regime used at inference.On ALFWorld, ScienceWorld, and WebShop, distilling Qwen3 students from a Qwen3-30B-A3B teacher, Guided-OPD improves Score by 21.1% and Success Rate by 25.5% over vanilla OPD on average, with larger gains on smaller students.