The INFN PixFEL project is developing the fundamental building blocks for a large area X-ray imaging camera to be deployed at next generation free electron laser (FEL) facilities with unprecedented intensity. Improvement in performance beyond the state of art in imaging instrumentation will be explored adopting advanced technologies like active edge sensors, a 65 nm node CMOS process and vertical integration. These are the key ingredients of the PixFEL project to realize a seamless large area focal plane instrument composed by a matrix of multilayer four-side buttable tiles. In order to minimize the dead area and reduce ambiguities in image reconstruction, a fine pitch active edge thick sensor is being optimized to cope with very high intensity photon flux, up to 104 photons per pixel, in the range from 1 to 10 keV. A low noise analog front-end channel with this wide dynamic range and a novel dynamic compression feature, together with a low power 10 bit analog to digital conversion up to 5 MHz, has been realized in a 110 μm pitch with a 65 nm CMOS process. Vertical interconnection of two CMOS tiers will be also explored in the future to build a four-side buttable readout chip with high density memories. In the long run the objective of the PixFEL project is to build a flexible X-ray imaging camera for operation both in burst mode, like at the European X-FEL, or in continuous mode with the high frame rates anticipated for future FEL facilities.