diff --git a/controllers/topology/desired_state.go b/controllers/topology/desired_state.go
index cc8af6447fbe..eb5286b86d5c 100644
--- a/controllers/topology/desired_state.go
+++ b/controllers/topology/desired_state.go
@@ -156,11 +156,16 @@ func computeControlPlane(_ context.Context, s *scope.Scope, infrastructureMachin
 
 		// Compute the labels and annotations to be applied to ControlPlane machines.
 		// We merge the labels and annotations from topology and ClusterClass.
+		// We also add the cluster-name and the topology owned labels, so they are propagated down to Machines.
 		topologyMetadata := s.Blueprint.Topology.ControlPlane.Metadata
 		clusterClassMetadata := s.Blueprint.ClusterClass.Spec.ControlPlane.Metadata
+
+		machineLabels := mergeMap(topologyMetadata.Labels, clusterClassMetadata.Labels)
+		machineLabels[clusterv1.ClusterLabelName] = cluster.Name
+		machineLabels[clusterv1.ClusterTopologyOwnedLabel] = ""
 		if err := contract.ControlPlane().MachineTemplate().Metadata().Set(controlPlane,
 			&clusterv1.ObjectMeta{
-				Labels:      mergeMap(topologyMetadata.Labels, clusterClassMetadata.Labels),
+				Labels:      machineLabels,
 				Annotations: mergeMap(topologyMetadata.Annotations, clusterClassMetadata.Annotations),
 			}); err != nil {
 			return nil, errors.Wrap(err, "failed to spec.machineTemplate.metadata in the ControlPlane object")
@@ -294,6 +299,13 @@ func computeMachineDeployment(_ context.Context, s *scope.Scope, machineDeployme
 	labels[clusterv1.ClusterTopologyMachineDeploymentLabelName] = machineDeploymentTopology.Name
 	desiredMachineDeploymentObj.SetLabels(labels)
 
+	// Also set the labels in .spec.template.labels so that they are propagated to
+	// MachineSet.labels and MachineSet.spec.template.labels and thus to Machine.labels.
+	// Note: the labels in MachineSet are used to properly cleanup templates when the MachineSet is deleted.
+	desiredMachineDeploymentObj.Spec.Template.Labels[clusterv1.ClusterLabelName] = s.Current.Cluster.Name
+	desiredMachineDeploymentObj.Spec.Template.Labels[clusterv1.ClusterTopologyOwnedLabel] = ""
+	desiredMachineDeploymentObj.Spec.Template.Labels[clusterv1.ClusterTopologyMachineDeploymentLabelName] = machineDeploymentTopology.Name
+
 	// Set the desired replicas.
 	desiredMachineDeploymentObj.Spec.Replicas = machineDeploymentTopology.Replicas
 
diff --git a/controllers/topology/desired_state_test.go b/controllers/topology/desired_state_test.go
index 9b2e28a68adb..fe6686f77321 100644
--- a/controllers/topology/desired_state_test.go
+++ b/controllers/topology/desired_state_test.go
@@ -345,8 +345,12 @@ func TestComputeControlPlane(t *testing.T) {
 		})
 		gotMetadata, err := contract.ControlPlane().MachineTemplate().Metadata().Get(obj)
 		g.Expect(err).ToNot(HaveOccurred())
+
+		expectedLabels := mergeMap(scope.Current.Cluster.Spec.Topology.ControlPlane.Metadata.Labels, blueprint.ClusterClass.Spec.ControlPlane.Metadata.Labels)
+		expectedLabels[clusterv1.ClusterLabelName] = cluster.Name
+		expectedLabels[clusterv1.ClusterTopologyOwnedLabel] = ""
 		g.Expect(gotMetadata).To(Equal(&clusterv1.ObjectMeta{
-			Labels:      mergeMap(scope.Current.Cluster.Spec.Topology.ControlPlane.Metadata.Labels, blueprint.ClusterClass.Spec.ControlPlane.Metadata.Labels),
+			Labels:      expectedLabels,
 			Annotations: mergeMap(scope.Current.Cluster.Spec.Topology.ControlPlane.Metadata.Annotations, blueprint.ClusterClass.Spec.ControlPlane.Metadata.Annotations),
 		}))
 
@@ -504,9 +508,11 @@ func TestComputeMachineDeployment(t *testing.T) {
 		g.Expect(actualMd.Name).To(ContainSubstring("big-pool-of-machines"))
 
 		g.Expect(actualMd.Labels).To(HaveKeyWithValue(clusterv1.ClusterTopologyMachineDeploymentLabelName, "big-pool-of-machines"))
+		g.Expect(actualMd.Labels).To(HaveKey(clusterv1.ClusterTopologyOwnedLabel))
 
 		g.Expect(actualMd.Spec.Template.ObjectMeta.Labels).To(HaveKeyWithValue("foo", "baz"))
 		g.Expect(actualMd.Spec.Template.ObjectMeta.Labels).To(HaveKeyWithValue("fizz", "buzz"))
+		g.Expect(actualMd.Spec.Template.ObjectMeta.Labels).To(HaveKey(clusterv1.ClusterTopologyOwnedLabel))
 		g.Expect(actualMd.Spec.Template.Spec.InfrastructureRef.Name).ToNot(Equal("linux-worker-inframachinetemplate"))
 		g.Expect(actualMd.Spec.Template.Spec.Bootstrap.ConfigRef.Name).ToNot(Equal("linux-worker-bootstraptemplate"))
 	})
@@ -549,9 +555,11 @@ func TestComputeMachineDeployment(t *testing.T) {
 		g.Expect(actualMd.Name).To(Equal("existing-deployment-1"))
 
 		g.Expect(actualMd.Labels).To(HaveKeyWithValue(clusterv1.ClusterTopologyMachineDeploymentLabelName, "big-pool-of-machines"))
+		g.Expect(actualMd.Labels).To(HaveKey(clusterv1.ClusterTopologyOwnedLabel))
 
 		g.Expect(actualMd.Spec.Template.ObjectMeta.Labels).To(HaveKeyWithValue("foo", "baz"))
 		g.Expect(actualMd.Spec.Template.ObjectMeta.Labels).To(HaveKeyWithValue("fizz", "buzz"))
+		g.Expect(actualMd.Spec.Template.ObjectMeta.Labels).To(HaveKey(clusterv1.ClusterTopologyOwnedLabel))
 		g.Expect(actualMd.Spec.Template.Spec.InfrastructureRef.Name).To(Equal("linux-worker-inframachinetemplate"))
 		g.Expect(actualMd.Spec.Template.Spec.Bootstrap.ConfigRef.Name).To(Equal("linux-worker-bootstraptemplate"))
 	})