One direction towards compact Free Electron Laser is to replace the conventional linac by a laser plasma driven beam, provided proper electron beam manipulation to handle the large values of the energy spread and of the divergence. Applying seeding techniques enable also to reduce the required undulator length. The rapidly developing LWFA are already able to generate synchrotron radiation. With an electron divergence of typically 1 mrad and an energy spread of the order of 1 % (or few), an adequate beam manipulation through the transport to the undulator is needed for FEL amplification. Electron beam transfer follows different steps with strong focusing variable strength permanent magnet quadrupoles, an energy demixing chicane with conventional dipoles, a second set of quadrupoles for further dedicated focusing in the undulator. A test experiment for the demonstration of FEL amplification with a LWFA is under preparation and progress on the equipment preparation and expected performance are described.