diff --git a/models/issues/label.go b/models/issues/label.go
index 90e4eb458f847..35c649e8f24d9 100644
--- a/models/issues/label.go
+++ b/models/issues/label.go
@@ -7,12 +7,12 @@ package issues
 import (
 	"context"
 	"fmt"
-	"regexp"
 	"strconv"
 	"strings"
 
 	"code.gitea.io/gitea/models/db"
 	user_model "code.gitea.io/gitea/models/user"
+	"code.gitea.io/gitea/modules/label"
 	"code.gitea.io/gitea/modules/timeutil"
 	"code.gitea.io/gitea/modules/util"
 
@@ -78,9 +78,6 @@ func (err ErrLabelNotExist) Unwrap() error {
 	return util.ErrNotExist
 }
 
-// LabelColorPattern is a regexp witch can validate LabelColor
-var LabelColorPattern = regexp.MustCompile("^#?(?:[0-9a-fA-F]{6}|[0-9a-fA-F]{3})$")
-
 // Label represents a label of repository for issues.
 type Label struct {
 	ID              int64 `xorm:"pk autoincr"`
@@ -109,12 +106,12 @@ func init() {
 }
 
 // CalOpenIssues sets the number of open issues of a label based on the already stored number of closed issues.
-func (label *Label) CalOpenIssues() {
-	label.NumOpenIssues = label.NumIssues - label.NumClosedIssues
+func (l *Label) CalOpenIssues() {
+	l.NumOpenIssues = l.NumIssues - l.NumClosedIssues
 }
 
 // CalOpenOrgIssues calculates the open issues of a label for a specific repo
-func (label *Label) CalOpenOrgIssues(ctx context.Context, repoID, labelID int64) {
+func (l *Label) CalOpenOrgIssues(ctx context.Context, repoID, labelID int64) {
 	counts, _ := CountIssuesByRepo(ctx, &IssuesOptions{
 		RepoID:   repoID,
 		LabelIDs: []int64{labelID},
@@ -122,22 +119,22 @@ func (label *Label) CalOpenOrgIssues(ctx context.Context, repoID, labelID int64)
 	})
 
 	for _, count := range counts {
-		label.NumOpenRepoIssues += count
+		l.NumOpenRepoIssues += count
 	}
 }
 
 // LoadSelectedLabelsAfterClick calculates the set of selected labels when a label is clicked
-func (label *Label) LoadSelectedLabelsAfterClick(currentSelectedLabels []int64, currentSelectedExclusiveScopes []string) {
+func (l *Label) LoadSelectedLabelsAfterClick(currentSelectedLabels []int64, currentSelectedExclusiveScopes []string) {
 	var labelQuerySlice []string
 	labelSelected := false
-	labelID := strconv.FormatInt(label.ID, 10)
-	labelScope := label.ExclusiveScope()
+	labelID := strconv.FormatInt(l.ID, 10)
+	labelScope := l.ExclusiveScope()
 	for i, s := range currentSelectedLabels {
-		if s == label.ID {
+		if s == l.ID {
 			labelSelected = true
-		} else if -s == label.ID {
+		} else if -s == l.ID {
 			labelSelected = true
-			label.IsExcluded = true
+			l.IsExcluded = true
 		} else if s != 0 {
 			// Exclude other labels in the same scope from selection
 			if s < 0 || labelScope == "" || labelScope != currentSelectedExclusiveScopes[i] {
@@ -148,23 +145,23 @@ func (label *Label) LoadSelectedLabelsAfterClick(currentSelectedLabels []int64,
 	if !labelSelected {
 		labelQuerySlice = append(labelQuerySlice, labelID)
 	}
-	label.IsSelected = labelSelected
-	label.QueryString = strings.Join(labelQuerySlice, ",")
+	l.IsSelected = labelSelected
+	l.QueryString = strings.Join(labelQuerySlice, ",")
 }
 
 // BelongsToOrg returns true if label is an organization label
-func (label *Label) BelongsToOrg() bool {
-	return label.OrgID > 0
+func (l *Label) BelongsToOrg() bool {
+	return l.OrgID > 0
 }
 
 // BelongsToRepo returns true if label is a repository label
-func (label *Label) BelongsToRepo() bool {
-	return label.RepoID > 0
+func (l *Label) BelongsToRepo() bool {
+	return l.RepoID > 0
 }
 
 // Get color as RGB values in 0..255 range
-func (label *Label) ColorRGB() (float64, float64, float64, error) {
-	color, err := strconv.ParseUint(label.Color[1:], 16, 64)
+func (l *Label) ColorRGB() (float64, float64, float64, error) {
+	color, err := strconv.ParseUint(l.Color[1:], 16, 64)
 	if err != nil {
 		return 0, 0, 0, err
 	}
@@ -176,9 +173,9 @@ func (label *Label) ColorRGB() (float64, float64, float64, error) {
 }
 
 // Determine if label text should be light or dark to be readable on background color
-func (label *Label) UseLightTextColor() bool {
-	if strings.HasPrefix(label.Color, "#") {
-		if r, g, b, err := label.ColorRGB(); err == nil {
+func (l *Label) UseLightTextColor() bool {
+	if strings.HasPrefix(l.Color, "#") {
+		if r, g, b, err := l.ColorRGB(); err == nil {
 			// Perceived brightness from: https://www.w3.org/TR/AERT/#color-contrast
 			// In the future WCAG 3 APCA may be a better solution
 			brightness := (0.299*r + 0.587*g + 0.114*b) / 255
@@ -190,40 +187,26 @@ func (label *Label) UseLightTextColor() bool {
 }
 
 // Return scope substring of label name, or empty string if none exists
-func (label *Label) ExclusiveScope() string {
-	if !label.Exclusive {
+func (l *Label) ExclusiveScope() string {
+	if !l.Exclusive {
 		return ""
 	}
-	lastIndex := strings.LastIndex(label.Name, "/")
-	if lastIndex == -1 || lastIndex == 0 || lastIndex == len(label.Name)-1 {
+	lastIndex := strings.LastIndex(l.Name, "/")
+	if lastIndex == -1 || lastIndex == 0 || lastIndex == len(l.Name)-1 {
 		return ""
 	}
-	return label.Name[:lastIndex]
+	return l.Name[:lastIndex]
 }
 
 // NewLabel creates a new label
-func NewLabel(ctx context.Context, label *Label) error {
-	if !LabelColorPattern.MatchString(label.Color) {
-		return fmt.Errorf("bad color code: %s", label.Color)
-	}
-
-	// normalize case
-	label.Color = strings.ToLower(label.Color)
-
-	// add leading hash
-	if label.Color[0] != '#' {
-		label.Color = "#" + label.Color
-	}
-
-	// convert 3-character shorthand into 6-character version
-	if len(label.Color) == 4 {
-		r := label.Color[1]
-		g := label.Color[2]
-		b := label.Color[3]
-		label.Color = fmt.Sprintf("#%c%c%c%c%c%c", r, r, g, g, b, b)
+func NewLabel(ctx context.Context, l *Label) error {
+	color, err := label.NormalizeColor(l.Color)
+	if err != nil {
+		return err
 	}
+	l.Color = color
 
-	return db.Insert(ctx, label)
+	return db.Insert(ctx, l)
 }
 
 // NewLabels creates new labels
@@ -234,11 +217,14 @@ func NewLabels(labels ...*Label) error {
 	}
 	defer committer.Close()
 
-	for _, label := range labels {
-		if !LabelColorPattern.MatchString(label.Color) {
-			return fmt.Errorf("bad color code: %s", label.Color)
+	for _, l := range labels {
+		color, err := label.NormalizeColor(l.Color)
+		if err != nil {
+			return err
 		}
-		if err := db.Insert(ctx, label); err != nil {
+		l.Color = color
+
+		if err := db.Insert(ctx, l); err != nil {
 			return err
 		}
 	}
@@ -247,15 +233,18 @@ func NewLabels(labels ...*Label) error {
 
 // UpdateLabel updates label information.
 func UpdateLabel(l *Label) error {
-	if !LabelColorPattern.MatchString(l.Color) {
-		return fmt.Errorf("bad color code: %s", l.Color)
+	color, err := label.NormalizeColor(l.Color)
+	if err != nil {
+		return err
 	}
+	l.Color = color
+
 	return updateLabelCols(db.DefaultContext, l, "name", "description", "color", "exclusive")
 }
 
 // DeleteLabel delete a label
 func DeleteLabel(id, labelID int64) error {
-	label, err := GetLabelByID(db.DefaultContext, labelID)
+	l, err := GetLabelByID(db.DefaultContext, labelID)
 	if err != nil {
 		if IsErrLabelNotExist(err) {
 			return nil
@@ -271,10 +260,10 @@ func DeleteLabel(id, labelID int64) error {
 
 	sess := db.GetEngine(ctx)
 
-	if label.BelongsToOrg() && label.OrgID != id {
+	if l.BelongsToOrg() && l.OrgID != id {
 		return nil
 	}
-	if label.BelongsToRepo() && label.RepoID != id {
+	if l.BelongsToRepo() && l.RepoID != id {
 		return nil
 	}
 
@@ -682,14 +671,14 @@ func newIssueLabels(ctx context.Context, issue *Issue, labels []*Label, doer *us
 	if err = issue.LoadRepo(ctx); err != nil {
 		return err
 	}
-	for _, label := range labels {
+	for _, l := range labels {
 		// Don't add already present labels and invalid labels
-		if HasIssueLabel(ctx, issue.ID, label.ID) ||
-			(label.RepoID != issue.RepoID && label.OrgID != issue.Repo.OwnerID) {
+		if HasIssueLabel(ctx, issue.ID, l.ID) ||
+			(l.RepoID != issue.RepoID && l.OrgID != issue.Repo.OwnerID) {
 			continue
 		}
 
-		if err = newIssueLabel(ctx, issue, label, doer); err != nil {
+		if err = newIssueLabel(ctx, issue, l, doer); err != nil {
 			return fmt.Errorf("newIssueLabel: %w", err)
 		}
 	}
diff --git a/models/issues/label_test.go b/models/issues/label_test.go
index 0e45e0db0bac6..1f6ce4f42ee78 100644
--- a/models/issues/label_test.go
+++ b/models/issues/label_test.go
@@ -15,8 +15,6 @@ import (
 	"github.com/stretchr/testify/assert"
 )
 
-// TODO TestGetLabelTemplateFile
-
 func TestLabel_CalOpenIssues(t *testing.T) {
 	assert.NoError(t, unittest.PrepareTestDatabase())
 	label := unittest.AssertExistsAndLoadBean(t, &issues_model.Label{ID: 1})
diff --git a/modules/label/label.go b/modules/label/label.go
new file mode 100644
index 0000000000000..d3ef0e1dc967a
--- /dev/null
+++ b/modules/label/label.go
@@ -0,0 +1,46 @@
+// Copyright 2023 The Gitea Authors. All rights reserved.
+// SPDX-License-Identifier: MIT
+
+package label
+
+import (
+	"fmt"
+	"regexp"
+	"strings"
+)
+
+// colorPattern is a regexp which can validate label color
+var colorPattern = regexp.MustCompile("^#?(?:[0-9a-fA-F]{6}|[0-9a-fA-F]{3})$")
+
+// Label represents label information loaded from template
+type Label struct {
+	Name        string `yaml:"name"`
+	Color       string `yaml:"color"`
+	Description string `yaml:"description,omitempty"`
+	Exclusive   bool   `yaml:"exclusive,omitempty"`
+}
+
+// NormalizeColor normalizes a color string to a 6-character hex code
+func NormalizeColor(color string) (string, error) {
+	// normalize case
+	color = strings.TrimSpace(strings.ToLower(color))
+
+	// add leading hash
+	if len(color) == 6 || len(color) == 3 {
+		color = "#" + color
+	}
+
+	if !colorPattern.MatchString(color) {
+		return "", fmt.Errorf("bad color code: %s", color)
+	}
+
+	// convert 3-character shorthand into 6-character version
+	if len(color) == 4 {
+		r := color[1]
+		g := color[2]
+		b := color[3]
+		color = fmt.Sprintf("#%c%c%c%c%c%c", r, r, g, g, b, b)
+	}
+
+	return color, nil
+}
diff --git a/modules/label/parser.go b/modules/label/parser.go
new file mode 100644
index 0000000000000..768c72a61b014
--- /dev/null
+++ b/modules/label/parser.go
@@ -0,0 +1,126 @@
+// Copyright 2023 The Gitea Authors. All rights reserved.
+// SPDX-License-Identifier: MIT
+
+package label
+
+import (
+	"errors"
+	"fmt"
+	"strings"
+
+	"code.gitea.io/gitea/modules/options"
+
+	"gopkg.in/yaml.v3"
+)
+
+type labelFile struct {
+	Labels []*Label `yaml:"labels"`
+}
+
+// ErrTemplateLoad represents a "ErrTemplateLoad" kind of error.
+type ErrTemplateLoad struct {
+	TemplateFile  string
+	OriginalError error
+}
+
+// IsErrTemplateLoad checks if an error is a ErrTemplateLoad.
+func IsErrTemplateLoad(err error) bool {
+	_, ok := err.(ErrTemplateLoad)
+	return ok
+}
+
+func (err ErrTemplateLoad) Error() string {
+	return fmt.Sprintf("Failed to load label template file '%s': %v", err.TemplateFile, err.OriginalError)
+}
+
+// GetTemplateFile loads the label template file by given name,
+// then parses and returns a list of name-color pairs and optionally description.
+func GetTemplateFile(name string) ([]*Label, error) {
+	data, err := options.GetRepoInitFile("label", name+".yaml")
+	if err == nil && len(data) > 0 {
+		return parseYamlFormat(name+".yaml", data)
+	}
+
+	data, err = options.GetRepoInitFile("label", name+".yml")
+	if err == nil && len(data) > 0 {
+		return parseYamlFormat(name+".yml", data)
+	}
+
+	data, err = options.GetRepoInitFile("label", name)
+	if err != nil {
+		return nil, ErrTemplateLoad{name, fmt.Errorf("GetRepoInitFile: %w", err)}
+	}
+
+	return parseLegacyFormat(name, data)
+}
+
+func parseYamlFormat(name string, data []byte) ([]*Label, error) {
+	lf := &labelFile{}
+
+	if err := yaml.Unmarshal(data, lf); err != nil {
+		return nil, err
+	}
+
+	// Validate label data and fix colors
+	for _, l := range lf.Labels {
+		l.Color = strings.TrimSpace(l.Color)
+		if len(l.Name) == 0 || len(l.Color) == 0 {
+			return nil, ErrTemplateLoad{name, errors.New("label name and color are required fields")}
+		}
+		color, err := NormalizeColor(l.Color)
+		if err != nil {
+			return nil, ErrTemplateLoad{name, fmt.Errorf("bad HTML color code '%s' in label: %s", l.Color, l.Name)}
+		}
+		l.Color = color
+	}
+
+	return lf.Labels, nil
+}
+
+func parseLegacyFormat(name string, data []byte) ([]*Label, error) {
+	lines := strings.Split(string(data), "\n")
+	list := make([]*Label, 0, len(lines))
+	for i := 0; i < len(lines); i++ {
+		line := strings.TrimSpace(lines[i])
+		if len(line) == 0 {
+			continue
+		}
+
+		parts, description, _ := strings.Cut(line, ";")
+
+		color, name, ok := strings.Cut(parts, " ")
+		if !ok {
+			return nil, ErrTemplateLoad{name, fmt.Errorf("line is malformed: %s", line)}
+		}
+
+		color, err := NormalizeColor(color)
+		if err != nil {
+			return nil, ErrTemplateLoad{name, fmt.Errorf("bad HTML color code '%s' in line: %s", color, line)}
+		}
+
+		list = append(list, &Label{
+			Name:        strings.TrimSpace(name),
+			Color:       color,
+			Description: strings.TrimSpace(description),
+		})
+	}
+
+	return list, nil
+}
+
+// LoadFormatted loads the labels' list of a template file as a string separated by comma
+func LoadFormatted(name string) (string, error) {
+	var buf strings.Builder
+	list, err := GetTemplateFile(name)
+	if err != nil {
+		return "", err
+	}
+
+	for i := 0; i < len(list); i++ {
+		if i > 0 {
+			buf.WriteString(", ")
+		}
+		buf.WriteString(list[i].Name)
+	}
+	return buf.String(), nil
+}
diff --git a/modules/label/parser_test.go b/modules/label/parser_test.go
new file mode 100644
index 0000000000000..5c8042f66863c
--- /dev/null
+++ b/modules/label/parser_test.go
@@ -0,0 +1,72 @@
+// Copyright 2023 The Gitea Authors. All rights reserved.
+// SPDX-License-Identifier: MIT
+
+package label
+
+import (
+	"testing"
+
+	"github.com/stretchr/testify/assert"
+	"github.com/stretchr/testify/require"
+)
+
+func TestYamlParser(t *testing.T) {
+	data := []byte(`labels:
+  - name: priority/low
+    exclusive: true
+    color: "#0000ee"
+    description: "Low priority"
+  - name: priority/medium
+    exclusive: true
+    color: "0e0"
+    description: "Medium priority"
+  - name: priority/high
+    exclusive: true
+    color: "#ee0000"
+    description: "High priority"
+  - name: type/bug
+    color: "#f00"
+    description: "Bug"`)
+
+	labels, err := parseYamlFormat("test", data)
+	require.NoError(t, err)
+	require.Len(t, labels, 4)
+	assert.Equal(t, "priority/low", labels[0].Name)
+	assert.True(t, labels[0].Exclusive)
+	assert.Equal(t, "#0000ee", labels[0].Color)
+	assert.Equal(t, "Low priority", labels[0].Description)
+	assert.Equal(t, "priority/medium", labels[1].Name)
+	assert.True(t, labels[1].Exclusive)
+	assert.Equal(t, "#00ee00", labels[1].Color)
+	assert.Equal(t, "Medium priority", labels[1].Description)
+	assert.Equal(t, "priority/high", labels[2].Name)
+	assert.True(t, labels[2].Exclusive)
+	assert.Equal(t, "#ee0000", labels[2].Color)
+	assert.Equal(t, "High priority", labels[2].Description)
+	assert.Equal(t, "type/bug", labels[3].Name)
+	assert.False(t, labels[3].Exclusive)
+	assert.Equal(t, "#ff0000", labels[3].Color)
+	assert.Equal(t, "Bug", labels[3].Description)
+}
+
+func TestLegacyParser(t *testing.T) {
+	data := []byte(`#ee0701 bug   ;   Something is not working
+#cccccc   duplicate ; This issue or pull request already exists
+#84b6eb enhancement`)
+
+	labels, err := parseLegacyFormat("test", data)
+	require.NoError(t, err)
+	require.Len(t, labels, 3)
+	assert.Equal(t, "bug", labels[0].Name)
+	assert.False(t, labels[0].Exclusive)
+	assert.Equal(t, "#ee0701", labels[0].Color)
+	assert.Equal(t, "Something is not working", labels[0].Description)
+	assert.Equal(t, "duplicate", labels[1].Name)
+	assert.False(t, labels[1].Exclusive)
+	assert.Equal(t, "#cccccc", labels[1].Color)
+	assert.Equal(t, "This issue or pull request already exists", labels[1].Description)
+	assert.Equal(t, "enhancement", labels[2].Name)
+	assert.False(t, labels[2].Exclusive)
+	assert.Equal(t, "#84b6eb", labels[2].Color)
+	assert.Empty(t, labels[2].Description)
+}
diff --git a/modules/options/repo.go b/modules/options/repo.go
new file mode 100644
index 0000000000000..1480f7808176c
--- /dev/null
+++ b/modules/options/repo.go
@@ -0,0 +1,44 @@
+// Copyright 2023 The Gitea Authors. All rights reserved.
+// SPDX-License-Identifier: MIT
+
+package options
+
+import (
+	"fmt"
+	"os"
+	"path"
+	"strings"
+
+	"code.gitea.io/gitea/modules/log"
+	"code.gitea.io/gitea/modules/setting"
+	"code.gitea.io/gitea/modules/util"
+)
+
+// GetRepoInitFile returns repository init files
+func GetRepoInitFile(tp, name string) ([]byte, error) {
+	cleanedName := strings.TrimLeft(path.Clean("/"+name), "/")
+	relPath := path.Join("options", tp, cleanedName)
+
+	// Use custom file when available.
+	customPath := path.Join(setting.CustomPath, relPath)
+	isFile, err := util.IsFile(customPath)
+	if err != nil {
+		log.Error("Unable to check if %s is a file. Error: %v", customPath, err)
+	}
+	if isFile {
+		return os.ReadFile(customPath)
+	}
+
+	switch tp {
+	case "readme":
+		return Readme(cleanedName)
+	case "gitignore":
+		return Gitignore(cleanedName)
+	case "license":
+		return License(cleanedName)
+	case "label":
+		return Labels(cleanedName)
+	default:
+		return []byte{}, fmt.Errorf("Invalid init file type")
+	}
+}
diff --git a/modules/repository/create.go b/modules/repository/create.go
index 1704ea792cbf8..6a1fa41b6b87d 100644
--- a/modules/repository/create.go
+++ b/modules/repository/create.go
@@ -23,6 +23,7 @@ import (
 	user_model "code.gitea.io/gitea/models/user"
 	"code.gitea.io/gitea/models/webhook"
 	"code.gitea.io/gitea/modules/git"
+	"code.gitea.io/gitea/modules/label"
 	"code.gitea.io/gitea/modules/log"
 	"code.gitea.io/gitea/modules/setting"
 	api "code.gitea.io/gitea/modules/structs"
@@ -189,7 +190,7 @@ func CreateRepository(doer, u *user_model.User, opts CreateRepoOptions) (*repo_m
 
 	// Check if label template exist
 	if len(opts.IssueLabels) > 0 {
-		if _, err := GetLabelTemplateFile(opts.IssueLabels); err != nil {
+		if _, err := label.GetTemplateFile(opts.IssueLabels); err != nil {
 			return nil, err
 		}
 	}
diff --git a/modules/repository/init.go b/modules/repository/init.go
index 771b68a4916f8..49c8d2a904d1a 100644
--- a/modules/repository/init.go
+++ b/modules/repository/init.go
@@ -18,6 +18,7 @@ import (
 	repo_model "code.gitea.io/gitea/models/repo"
 	user_model "code.gitea.io/gitea/models/user"
 	"code.gitea.io/gitea/modules/git"
+	"code.gitea.io/gitea/modules/label"
 	"code.gitea.io/gitea/modules/log"
 	"code.gitea.io/gitea/modules/options"
 	"code.gitea.io/gitea/modules/setting"
@@ -40,114 +41,6 @@ var (
 	LabelTemplates map[string]string
 )
 
-// ErrIssueLabelTemplateLoad represents a "ErrIssueLabelTemplateLoad" kind of error.
-type ErrIssueLabelTemplateLoad struct {
-	TemplateFile  string
-	OriginalError error
-}
-
-// IsErrIssueLabelTemplateLoad checks if an error is a ErrIssueLabelTemplateLoad.
-func IsErrIssueLabelTemplateLoad(err error) bool {
-	_, ok := err.(ErrIssueLabelTemplateLoad)
-	return ok
-}
-
-func (err ErrIssueLabelTemplateLoad) Error() string {
-	return fmt.Sprintf("Failed to load label template file '%s': %v", err.TemplateFile, err.OriginalError)
-}
-
-// GetRepoInitFile returns repository init files
-func GetRepoInitFile(tp, name string) ([]byte, error) {
-	cleanedName := strings.TrimLeft(path.Clean("/"+name), "/")
-	relPath := path.Join("options", tp, cleanedName)
-
-	// Use custom file when available.
-	customPath := path.Join(setting.CustomPath, relPath)
-	isFile, err := util.IsFile(customPath)
-	if err != nil {
-		log.Error("Unable to check if %s is a file. Error: %v", customPath, err)
-	}
-	if isFile {
-		return os.ReadFile(customPath)
-	}
-
-	switch tp {
-	case "readme":
-		return options.Readme(cleanedName)
-	case "gitignore":
-		return options.Gitignore(cleanedName)
-	case "license":
-		return options.License(cleanedName)
-	case "label":
-		return options.Labels(cleanedName)
-	default:
-		return []byte{}, fmt.Errorf("Invalid init file type")
-	}
-}
-
-// GetLabelTemplateFile loads the label template file by given name,
-// then parses and returns a list of name-color pairs and optionally description.
-func GetLabelTemplateFile(name string) ([][3]string, error) {
-	data, err := GetRepoInitFile("label", name)
-	if err != nil {
-		return nil, ErrIssueLabelTemplateLoad{name, fmt.Errorf("GetRepoInitFile: %w", err)}
-	}
-
-	lines := strings.Split(string(data), "\n")
-	list := make([][3]string, 0, len(lines))
-	for i := 0; i < len(lines); i++ {
-		line := strings.TrimSpace(lines[i])
-		if len(line) == 0 {
-			continue
-		}
-
-		parts := strings.SplitN(line, ";", 2)
-
-		fields := strings.SplitN(parts[0], " ", 2)
-		if len(fields) != 2 {
-			return nil, ErrIssueLabelTemplateLoad{name, fmt.Errorf("line is malformed: %s", line)}
-		}
-
-		color := strings.Trim(fields[0], " ")
-		if len(color) == 6 {
-			color = "#" + color
-		}
-		if !issues_model.LabelColorPattern.MatchString(color) {
-			return nil, ErrIssueLabelTemplateLoad{name, fmt.Errorf("bad HTML color code in line: %s", line)}
-		}
-
-		var description string
-
-		if len(parts) > 1 {
-			description = strings.TrimSpace(parts[1])
-		}
-
-		fields[1] = strings.TrimSpace(fields[1])
-		list = append(list, [3]string{fields[1], color, description})
-	}
-
-	return list, nil
-}
-
-func loadLabels(labelTemplate string) ([]string, error) {
-	list, err := GetLabelTemplateFile(labelTemplate)
-	if err != nil {
-		return nil, err
-	}
-
-	labels := make([]string, len(list))
-	for i := 0; i < len(list); i++ {
-		labels[i] = list[i][0]
-	}
-	return labels, nil
-}
-
-// LoadLabelsFormatted loads the labels' list of a template file as a string separated by comma
-func LoadLabelsFormatted(labelTemplate string) (string, error) {
-	labels, err := loadLabels(labelTemplate)
-	return strings.Join(labels, ", "), err
-}
-
 // LoadRepoConfig loads the repository config
 func LoadRepoConfig() {
 	// Load .gitignore and license files and readme templates.
@@ -158,6 +51,14 @@ func LoadRepoConfig() {
 		if err != nil {
 			log.Fatal("Failed to get %s files: %v", t, err)
 		}
+		if t == "label" {
+			for i, f := range files {
+				ext := strings.ToLower(filepath.Ext(f))
+				if ext == ".yaml" || ext == ".yml" {
+					files[i] = f[:len(f)-len(ext)]
+				}
+			}
+		}
 		customPath := path.Join(setting.CustomPath, "options", t)
 		isDir, err := util.IsDir(customPath)
 		if err != nil {
@@ -190,7 +91,7 @@ func LoadRepoConfig() {
 	// Load label templates
 	LabelTemplates = make(map[string]string)
 	for _, templateFile := range LabelTemplatesFiles {
-		labels, err := LoadLabelsFormatted(templateFile)
+		labels, err := label.LoadFormatted(templateFile)
 		if err != nil {
 			log.Error("Failed to load labels: %v", err)
 		}
@@ -235,7 +136,7 @@ func prepareRepoCommit(ctx context.Context, repo *repo_model.Repository, tmpDir,
 	}
 
 	// README
-	data, err := GetRepoInitFile("readme", opts.Readme)
+	data, err := options.GetRepoInitFile("readme", opts.Readme)
 	if err != nil {
 		return fmt.Errorf("GetRepoInitFile[%s]: %w", opts.Readme, err)
 	}
@@ -263,7 +164,7 @@ func prepareRepoCommit(ctx context.Context, repo *repo_model.Repository, tmpDir,
 		var buf bytes.Buffer
 		names := strings.Split(opts.Gitignores, ",")
 		for _, name := range names {
-			data, err = GetRepoInitFile("gitignore", name)
+			data, err = options.GetRepoInitFile("gitignore", name)
 			if err != nil {
 				return fmt.Errorf("GetRepoInitFile[%s]: %w", name, err)
 			}
@@ -281,7 +182,7 @@ func prepareRepoCommit(ctx context.Context, repo *repo_model.Repository, tmpDir,
 
 	// LICENSE
 	if len(opts.License) > 0 {
-		data, err = GetRepoInitFile("license", opts.License)
+		data, err = options.GetRepoInitFile("license", opts.License)
 		if err != nil {
 			return fmt.Errorf("GetRepoInitFile[%s]: %w", opts.License, err)
 		}
@@ -443,7 +344,7 @@ func initRepository(ctx context.Context, repoPath string, u *user_model.User, re
 
 // InitializeLabels adds a label set to a repository using a template
 func InitializeLabels(ctx context.Context, id int64, labelTemplate string, isOrg bool) error {
-	list, err := GetLabelTemplateFile(labelTemplate)
+	list, err := label.GetTemplateFile(labelTemplate)
 	if err != nil {
 		return err
 	}
@@ -451,9 +352,10 @@ func InitializeLabels(ctx context.Context, id int64, labelTemplate string, isOrg
 	labels := make([]*issues_model.Label, len(list))
 	for i := 0; i < len(list); i++ {
 		labels[i] = &issues_model.Label{
-			Name:        list[i][0],
-			Description: list[i][2],
-			Color:       list[i][1],
+			Name:        list[i].Name,
+			Exclusive:   list[i].Exclusive,
+			Description: list[i].Description,
+			Color:       list[i].Color,
 		}
 		if isOrg {
 			labels[i].OrgID = id
diff --git a/options/label/Advanced.yaml b/options/label/Advanced.yaml
new file mode 100644
index 0000000000000..27b2c146372b3
--- /dev/null
+++ b/options/label/Advanced.yaml
@@ -0,0 +1,70 @@
+labels:
+  - name: "Kind/Bug"
+    color: ee0701
+    description: Something is not working
+  - name: "Kind/Feature"
+    color: 0288d1
+    description: New functionality
+  - name: "Kind/Enhancement"
+    color: 84b6eb
+    description: Improve existing functionality
+  - name: "Kind/Security"
+    color: 9c27b0
+    description: This is security issue
+  - name: "Kind/Testing"
+    color: 795548
+    description: Issue or pull request related to testing
+  - name: "Kind/Breaking"
+    color: c62828
+    description: Breaking change that won't be backward compatible
+  - name: "Kind/Documentation"
+    color: 37474f
+    description: Documentation changes
+  - name: "Reviewed/Duplicate"
+    exclusive: true
+    color: 616161
+    description: This issue or pull request already exists
+  - name: "Reviewed/Invalid"
+    exclusive: true
+    color: 546e7a
+    description: Invalid issue
+  - name: "Reviewed/Confirmed"
+    exclusive: true
+    color: 795548
+    description: Issue has been confirmed
+  - name: "Reviewed/Won't Fix"
+    exclusive: true
+    color: eeeeee
+    description: This issue won't be fixed
+  - name: "Status/Need More Info"
+    exclusive: true
+    color: 424242
+    description: Feedback is required to reproduce issue or to continue work
+  - name: "Status/Blocked"
+    exclusive: true
+    color: 880e4f
+    description: Something is blocking this issue or pull request
+  - name: "Status/Abandoned"
+    exclusive: true
+    color: "222222"
+    description: Somebody has started to work on this but abandoned work
+  - name: "Priority/Critical"
+    exclusive: true
+    color: b71c1c
+    description: The priority is critical
+    priority: critical
+  - name: "Priority/High"
+    exclusive: true
+    color: d32f2f
+    description: The priority is high
+    priority: high
+  - name: "Priority/Medium"
+    exclusive: true
+    color: e64a19
+    description: The priority is medium
+    priority: medium
+  - name: "Priority/Low"
+    exclusive: true
+    color: 4caf50
+    description: The priority is low
+    priority: low
diff --git a/routers/api/v1/org/label.go b/routers/api/v1/org/label.go
index 938fe79df64cc..183c1e6cc8a8c 100644
--- a/routers/api/v1/org/label.go
+++ b/routers/api/v1/org/label.go
@@ -4,13 +4,13 @@
 package org
 
 import (
-	"fmt"
 	"net/http"
 	"strconv"
 	"strings"
 
 	issues_model "code.gitea.io/gitea/models/issues"
 	"code.gitea.io/gitea/modules/context"
+	"code.gitea.io/gitea/modules/label"
 	api "code.gitea.io/gitea/modules/structs"
 	"code.gitea.io/gitea/modules/web"
 	"code.gitea.io/gitea/routers/api/v1/utils"
@@ -84,13 +84,12 @@ func CreateLabel(ctx *context.APIContext) {
 	//     "$ref": "#/responses/validationError"
 	form := web.GetForm(ctx).(*api.CreateLabelOption)
 	form.Color = strings.Trim(form.Color, " ")
-	if len(form.Color) == 6 {
-		form.Color = "#" + form.Color
-	}
-	if !issues_model.LabelColorPattern.MatchString(form.Color) {
-		ctx.Error(http.StatusUnprocessableEntity, "ColorPattern", fmt.Errorf("bad color code: %s", form.Color))
+	color, err := label.NormalizeColor(form.Color)
+	if err != nil {
+		ctx.Error(http.StatusUnprocessableEntity, "Color", err)
 		return
 	}
+	form.Color = color
 
 	label := &issues_model.Label{
 		Name:        form.Name,
@@ -183,7 +182,7 @@ func EditLabel(ctx *context.APIContext) {
 	//   "422":
 	//     "$ref": "#/responses/validationError"
 	form := web.GetForm(ctx).(*api.EditLabelOption)
-	label, err := issues_model.GetLabelInOrgByID(ctx, ctx.Org.Organization.ID, ctx.ParamsInt64(":id"))
+	l, err := issues_model.GetLabelInOrgByID(ctx, ctx.Org.Organization.ID, ctx.ParamsInt64(":id"))
 	if err != nil {
 		if issues_model.IsErrOrgLabelNotExist(err) {
 			ctx.NotFound()
@@ -194,30 +193,28 @@ func EditLabel(ctx *context.APIContext) {
 	}
 
 	if form.Name != nil {
-		label.Name = *form.Name
+		l.Name = *form.Name
 	}
 	if form.Exclusive != nil {
-		label.Exclusive = *form.Exclusive
+		l.Exclusive = *form.Exclusive
 	}
 	if form.Color != nil {
-		label.Color = strings.Trim(*form.Color, " ")
-		if len(label.Color) == 6 {
-			label.Color = "#" + label.Color
-		}
-		if !issues_model.LabelColorPattern.MatchString(label.Color) {
-			ctx.Error(http.StatusUnprocessableEntity, "ColorPattern", fmt.Errorf("bad color code: %s", label.Color))
+		color, err := label.NormalizeColor(*form.Color)
+		if err != nil {
+			ctx.Error(http.StatusUnprocessableEntity, "Color", err)
 			return
 		}
+		l.Color = color
 	}
 	if form.Description != nil {
-		label.Description = *form.Description
+		l.Description = *form.Description
 	}
-	if err := issues_model.UpdateLabel(label); err != nil {
+	if err := issues_model.UpdateLabel(l); err != nil {
 		ctx.Error(http.StatusInternalServerError, "UpdateLabel", err)
 		return
 	}
 
-	ctx.JSON(http.StatusOK, convert.ToLabel(label, nil, ctx.Org.Organization.AsUser()))
+	ctx.JSON(http.StatusOK, convert.ToLabel(l, nil, ctx.Org.Organization.AsUser()))
 }
 
 // DeleteLabel delete a label for an organization
diff --git a/routers/api/v1/repo/label.go b/routers/api/v1/repo/label.go
index a06d26e837335..6cb231f596c8b 100644
--- a/routers/api/v1/repo/label.go
+++ b/routers/api/v1/repo/label.go
@@ -5,13 +5,12 @@
 package repo
 
 import (
-	"fmt"
 	"net/http"
 	"strconv"
-	"strings"
 
 	issues_model "code.gitea.io/gitea/models/issues"
 	"code.gitea.io/gitea/modules/context"
+	"code.gitea.io/gitea/modules/label"
 	api "code.gitea.io/gitea/modules/structs"
 	"code.gitea.io/gitea/modules/web"
 	"code.gitea.io/gitea/routers/api/v1/utils"
@@ -93,14 +92,14 @@ func GetLabel(ctx *context.APIContext) {
 	//     "$ref": "#/responses/Label"
 
 	var (
-		label *issues_model.Label
-		err   error
+		l   *issues_model.Label
+		err error
 	)
 	strID := ctx.Params(":id")
 	if intID, err2 := strconv.ParseInt(strID, 10, 64); err2 != nil {
-		label, err = issues_model.GetLabelInRepoByName(ctx, ctx.Repo.Repository.ID, strID)
+		l, err = issues_model.GetLabelInRepoByName(ctx, ctx.Repo.Repository.ID, strID)
 	} else {
-		label, err = issues_model.GetLabelInRepoByID(ctx, ctx.Repo.Repository.ID, intID)
+		l, err = issues_model.GetLabelInRepoByID(ctx, ctx.Repo.Repository.ID, intID)
 	}
 	if err != nil {
 		if issues_model.IsErrRepoLabelNotExist(err) {
@@ -111,7 +110,7 @@ func GetLabel(ctx *context.APIContext) {
 		return
 	}
 
-	ctx.JSON(http.StatusOK, convert.ToLabel(label, ctx.Repo.Repository, nil))
+	ctx.JSON(http.StatusOK, convert.ToLabel(l, ctx.Repo.Repository, nil))
 }
 
 // CreateLabel create a label for a repository
@@ -145,28 +144,27 @@ func CreateLabel(ctx *context.APIContext) {
 	//     "$ref": "#/responses/validationError"
 
 	form := web.GetForm(ctx).(*api.CreateLabelOption)
-	form.Color = strings.Trim(form.Color, " ")
-	if len(form.Color) == 6 {
-		form.Color = "#" + form.Color
-	}
-	if !issues_model.LabelColorPattern.MatchString(form.Color) {
-		ctx.Error(http.StatusUnprocessableEntity, "ColorPattern", fmt.Errorf("bad color code: %s", form.Color))
+
+	color, err := label.NormalizeColor(form.Color)
+	if err != nil {
+		ctx.Error(http.StatusUnprocessableEntity, "StringToColor", err)
 		return
 	}
+	form.Color = color
 
-	label := &issues_model.Label{
+	l := &issues_model.Label{
 		Name:        form.Name,
 		Exclusive:   form.Exclusive,
 		Color:       form.Color,
 		RepoID:      ctx.Repo.Repository.ID,
 		Description: form.Description,
 	}
-	if err := issues_model.NewLabel(ctx, label); err != nil {
+	if err := issues_model.NewLabel(ctx, l); err != nil {
 		ctx.Error(http.StatusInternalServerError, "NewLabel", err)
 		return
 	}
 
-	ctx.JSON(http.StatusCreated, convert.ToLabel(label, ctx.Repo.Repository, nil))
+	ctx.JSON(http.StatusCreated, convert.ToLabel(l, ctx.Repo.Repository, nil))
 }
 
 // EditLabel modify a label for a repository
@@ -206,7 +204,7 @@ func EditLabel(ctx *context.APIContext) {
 	//     "$ref": "#/responses/validationError"
 
 	form := web.GetForm(ctx).(*api.EditLabelOption)
-	label, err := issues_model.GetLabelInRepoByID(ctx, ctx.Repo.Repository.ID, ctx.ParamsInt64(":id"))
+	l, err := issues_model.GetLabelInRepoByID(ctx, ctx.Repo.Repository.ID, ctx.ParamsInt64(":id"))
 	if err != nil {
 		if issues_model.IsErrRepoLabelNotExist(err) {
 			ctx.NotFound()
@@ -217,30 +215,28 @@ func EditLabel(ctx *context.APIContext) {
 	}
 
 	if form.Name != nil {
-		label.Name = *form.Name
+		l.Name = *form.Name
 	}
 	if form.Exclusive != nil {
-		label.Exclusive = *form.Exclusive
+		l.Exclusive = *form.Exclusive
 	}
 	if form.Color != nil {
-		label.Color = strings.Trim(*form.Color, " ")
-		if len(label.Color) == 6 {
-			label.Color = "#" + label.Color
-		}
-		if !issues_model.LabelColorPattern.MatchString(label.Color) {
-			ctx.Error(http.StatusUnprocessableEntity, "ColorPattern", fmt.Errorf("bad color code: %s", label.Color))
+		color, err := label.NormalizeColor(*form.Color)
+		if err != nil {
+			ctx.Error(http.StatusUnprocessableEntity, "StringToColor", err)
 			return
 		}
+		l.Color = color
 	}
 	if form.Description != nil {
-		label.Description = *form.Description
+		l.Description = *form.Description
 	}
-	if err := issues_model.UpdateLabel(label); err != nil {
+	if err := issues_model.UpdateLabel(l); err != nil {
 		ctx.Error(http.StatusInternalServerError, "UpdateLabel", err)
 		return
 	}
 
-	ctx.JSON(http.StatusOK, convert.ToLabel(label, ctx.Repo.Repository, nil))
+	ctx.JSON(http.StatusOK, convert.ToLabel(l, ctx.Repo.Repository, nil))
 }
 
 // DeleteLabel delete a label for a repository
diff --git a/routers/api/v1/repo/repo.go b/routers/api/v1/repo/repo.go
index 0395198e209a3..8490eb99f93ef 100644
--- a/routers/api/v1/repo/repo.go
+++ b/routers/api/v1/repo/repo.go
@@ -19,6 +19,7 @@ import (
 	user_model "code.gitea.io/gitea/models/user"
 	"code.gitea.io/gitea/modules/context"
 	"code.gitea.io/gitea/modules/git"
+	"code.gitea.io/gitea/modules/label"
 	"code.gitea.io/gitea/modules/log"
 	repo_module "code.gitea.io/gitea/modules/repository"
 	"code.gitea.io/gitea/modules/setting"
@@ -248,7 +249,7 @@ func CreateUserRepo(ctx *context.APIContext, owner *user_model.User, opt api.Cre
 			ctx.Error(http.StatusConflict, "", "The repository with the same name already exists.")
 		} else if db.IsErrNameReserved(err) ||
 			db.IsErrNamePatternNotAllowed(err) ||
-			repo_module.IsErrIssueLabelTemplateLoad(err) {
+			label.IsErrTemplateLoad(err) {
 			ctx.Error(http.StatusUnprocessableEntity, "", err)
 		} else {
 			ctx.Error(http.StatusInternalServerError, "CreateRepository", err)
diff --git a/routers/web/org/org_labels.go b/routers/web/org/org_labels.go
index e96627762bd54..9ce05680d7bd2 100644
--- a/routers/web/org/org_labels.go
+++ b/routers/web/org/org_labels.go
@@ -9,6 +9,7 @@ import (
 	"code.gitea.io/gitea/models/db"
 	issues_model "code.gitea.io/gitea/models/issues"
 	"code.gitea.io/gitea/modules/context"
+	"code.gitea.io/gitea/modules/label"
 	repo_module "code.gitea.io/gitea/modules/repository"
 	"code.gitea.io/gitea/modules/web"
 	"code.gitea.io/gitea/services/forms"
@@ -103,8 +104,8 @@ func InitializeLabels(ctx *context.Context) {
 	}
 
 	if err := repo_module.InitializeLabels(ctx, ctx.Org.Organization.ID, form.TemplateName, true); err != nil {
-		if repo_module.IsErrIssueLabelTemplateLoad(err) {
-			originalErr := err.(repo_module.ErrIssueLabelTemplateLoad).OriginalError
+		if label.IsErrTemplateLoad(err) {
+			originalErr := err.(label.ErrTemplateLoad).OriginalError
 			ctx.Flash.Error(ctx.Tr("repo.issues.label_templates.fail_to_load_file", form.TemplateName, originalErr))
 			ctx.Redirect(ctx.Org.OrgLink + "/settings/labels")
 			return
diff --git a/routers/web/repo/issue_label.go b/routers/web/repo/issue_label.go
index d4fece9f014b7..31bf85fedb29a 100644
--- a/routers/web/repo/issue_label.go
+++ b/routers/web/repo/issue_label.go
@@ -11,6 +11,7 @@ import (
 	"code.gitea.io/gitea/models/organization"
 	"code.gitea.io/gitea/modules/base"
 	"code.gitea.io/gitea/modules/context"
+	"code.gitea.io/gitea/modules/label"
 	"code.gitea.io/gitea/modules/log"
 	repo_module "code.gitea.io/gitea/modules/repository"
 	"code.gitea.io/gitea/modules/web"
@@ -41,8 +42,8 @@ func InitializeLabels(ctx *context.Context) {
 	}
 
 	if err := repo_module.InitializeLabels(ctx, ctx.Repo.Repository.ID, form.TemplateName, false); err != nil {
-		if repo_module.IsErrIssueLabelTemplateLoad(err) {
-			originalErr := err.(repo_module.ErrIssueLabelTemplateLoad).OriginalError
+		if label.IsErrTemplateLoad(err) {
+			originalErr := err.(label.ErrTemplateLoad).OriginalError
 			ctx.Flash.Error(ctx.Tr("repo.issues.label_templates.fail_to_load_file", form.TemplateName, originalErr))
 			ctx.Redirect(ctx.Repo.RepoLink + "/labels")
 			return
diff --git a/services/migrations/gitea_uploader.go b/services/migrations/gitea_uploader.go
index 20370d99f9824..8b259a362b1eb 100644
--- a/services/migrations/gitea_uploader.go
+++ b/services/migrations/gitea_uploader.go
@@ -21,6 +21,7 @@ import (
 	repo_model "code.gitea.io/gitea/models/repo"
 	user_model "code.gitea.io/gitea/models/user"
 	"code.gitea.io/gitea/modules/git"
+	"code.gitea.io/gitea/modules/label"
 	"code.gitea.io/gitea/modules/log"
 	base "code.gitea.io/gitea/modules/migration"
 	repo_module "code.gitea.io/gitea/modules/repository"
@@ -217,18 +218,20 @@ func (g *GiteaLocalUploader) CreateMilestones(milestones ...*base.Milestone) err
 // CreateLabels creates labels
 func (g *GiteaLocalUploader) CreateLabels(labels ...*base.Label) error {
 	lbs := make([]*issues_model.Label, 0, len(labels))
-	for _, label := range labels {
-		// We must validate color here:
-		if !issues_model.LabelColorPattern.MatchString("#" + label.Color) {
-			log.Warn("Invalid label color: #%s for label: %s in migration to %s/%s", label.Color, label.Name, g.repoOwner, g.repoName)
-			label.Color = "ffffff"
+	for _, l := range labels {
+		if color, err := label.NormalizeColor(l.Color); err != nil {
+			log.Warn("Invalid label color: #%s for label: %s in migration to %s/%s", l.Color, l.Name, g.repoOwner, g.repoName)
+			l.Color = "#ffffff"
+		} else {
+			l.Color = color
 		}
 
 		lbs = append(lbs, &issues_model.Label{
 			RepoID:      g.repo.ID,
-			Name:        label.Name,
-			Description: label.Description,
-			Color:       "#" + label.Color,
+			Name:        l.Name,
+			Exclusive:   l.Exclusive,
+			Description: l.Description,
+			Color:       l.Color,
 		})
 	}