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Abstract: Text-to-image diffusion models fail predictably on compositional prompts: attributes bind to the wrong objects, spatial relations invert, and multi-object scenes lose count. Recent architectures already augment CLIP with a T5 encoder precisely because CLIP's contrastive embedding loses compositional structure, yet these failures persist. We argue the binding problem is therefore not one of missing information but of misaligned information: a text encoder preserves compositional structure, but in a representation space shaped by language modelling rather than vision, and the denoising objective does not directly reward aligning the two. We show this correspondence can be supplied as an explicit training signal, that the relevant cross-modal information is concentrated in a low-rank subspace of self-supervised visual features, and that supplying it can be folded into diffusion training as a single auxiliary loss. Our method, ORCA (Orthogonal Residual Compositional Alignment), aligns the latent of a diffusion transformer with a low-rank target derived from a frozen visual encoder, through a predictor whose orthogonal basis is parameterised by a learned residual between T5 and CLIP embeddings, which provides a prompt-dependent signal for selecting the visual readout subspace. We prove that the cross-modal information recoverable at a given rank is bounded by the spectral mass of the visual encoder's covariance in the top components. Across three diffusion-transformer backbones (DiT-B/2, DiT-L/2, U-ViT-L), ORCA improves FID and GenEval over both vanilla and REPA baselines at zero inference-time cost; on DiT-L/2 it reaches FID 16.65 and GenEval 0.291 at 200K steps, exceeding the strongest 400K baseline at half the training cost, with the largest gains concentrated on attribute binding, spatial relations, and multi-object prompts.

Abstract: Latent Diffusion Models (LDMs) typically adopt a two-stage pipeline: an auto-encoder (AE) is first pre-trained to define a latent space, then a diffusion model is trained to perform denoising within it. Such a two-stage design introduces a representation mismatch, as the latent space is optimized for reconstruction rather than adapting the denoising dynamics. We reveal that the LDM itself is an AE, and consequently present LDM-is-AE, an end-to-end one-stage LDM training framework that eliminates the need for a separately trained tokenizer. Our key observation is that the LDM backbone actually performs a latent-to-feature-to-latent transformation at each denoising step, which can be interpreted as an internal decoding--encoding process. Leveraging this structure, we split the DiT backbone into two reciprocal components, DiT-E (i.e., DiT Encoding) and DiT-D (i.e., DiT Decoding), and impose image-space supervision on the intermediate features across all timesteps. Our model encourages the internal representation to align with the image domain throughout denoising, thereby establishing an explicit latent-to-image-to-latent path. At the zero-noise timestep, our model further performs an image-to-latent-to-image mapping, corresponding to an auto-encoding process. As a result, LDM-is-AE jointly learns latent representations and denoising dynamics in an end-to-end manner, yielding a diffusion-native latent space tailored to the generation process. Experiments demonstrate that LDM-is-AE exhibits highly competitive generation performance, achieving an FID of 1.80 and 1.90 on 256x256 and 512x512 class-conditional image generation, respectively.