The main objective of this study is to develop an advanced core calculation methodology based on embedded diffusion and transport calculations. The scheme proposed in this work is based on embedded diffusion or SP3 pin-by-pin local fuel assembly calculation within the framework of the Nodal Expansion Method (NEM) diffusion core calculation. The SP3 method has gained popularity in the last 10 years as an advanced method for neutronics calculation. NEM is a multi-group nodal diffusion code developed, maintained and continuously improved at the Pennsylvania State University. The developed calculation scheme is a non-linear iteration process, which involves cross-section homogenization, on-line discontinuity factors generation, and boundary conditions evaluation by the global solution passed to the local calculation. In order to accomplish the local calculation, a new code has been developed based on the Finite Elements Method (FEM), which is capable of performing both diffusion and SP3 calculations. The new code will be used in the framework of the NEM code in order to perform embedded pin-by-pin diffusion and SP3 calculations on fuel assembly basis. The development of the diffusion and SP3 FEM code is presented first following by its application to several problems. Description of the proposed embedded scheme is provided next as well as the obtained preliminary results of the C3 MOX benchmark. The results from the embedded calculations are compared with direct pin-by-pin whole core calculations in terms of accuracy and efficiency followed by conclusions made about the feasibility of the proposed embedded approach.