diff --git a/.changelog/11667.txt b/.changelog/11667.txt
new file mode 100644
index 00000000000..37ea1c9b23d
--- /dev/null
+++ b/.changelog/11667.txt
@@ -0,0 +1,3 @@
+```release-note:bug
+workbench: fixed a bug in the `google_workbench_instance` resource where the removal of `labels` was not functioning as expected.
+```
\ No newline at end of file
diff --git a/google/services/workbench/resource_workbench_instance.go b/google/services/workbench/resource_workbench_instance.go
index 2526248a312..92be5292626 100644
--- a/google/services/workbench/resource_workbench_instance.go
+++ b/google/services/workbench/resource_workbench_instance.go
@@ -274,6 +274,26 @@ func resizeWorkbenchInstanceDisk(config *transport_tpg.Config, d *schema.Resourc
 	return nil
 }
 
+// mergeLabels takes two maps of labels and returns a new map with the labels merged.
+// If a key exists in old_labels but not in new_labels, it is added to the new map with an empty value.
+func mergeLabels(oldLabels, newLabels map[string]interface{}) map[string]string {
+	modifiedLabels := make(map[string]string)
+
+	// Add all labels from newLabels to modifiedLabels
+	for k, v := range newLabels {
+		modifiedLabels[k] = v.(string)
+	}
+
+	// Add any keys from oldLabels that are not in newLabels with an empty value
+	for k := range oldLabels {
+		if _, ok := newLabels[k]; !ok {
+			modifiedLabels[k] = ""
+		}
+	}
+
+	return modifiedLabels
+}
+
 func ResourceWorkbenchInstance() *schema.Resource {
 	return &schema.Resource{
 		Create: resourceWorkbenchInstanceCreate,
@@ -1104,6 +1124,13 @@ func resourceWorkbenchInstanceUpdate(d *schema.ResourceData, meta interface{}) e
 		return err
 	}
 
+	if d.HasChange("effective_labels") {
+		old_labels_interface, new_labels_interface := d.GetChange("effective_labels")
+		old_labels := old_labels_interface.(map[string]interface{})
+		new_labels := new_labels_interface.(map[string]interface{})
+		obj["labels"] = mergeLabels(old_labels, new_labels)
+	}
+
 	name := d.Get("name").(string)
 	if stopInstance {
 		state := d.Get("state").(string)
diff --git a/google/services/workbench/resource_workbench_instance_test.go b/google/services/workbench/resource_workbench_instance_test.go
index e1cf2d5b776..ba39529ad53 100644
--- a/google/services/workbench/resource_workbench_instance_test.go
+++ b/google/services/workbench/resource_workbench_instance_test.go
@@ -626,3 +626,69 @@ resource "google_workbench_instance" "instance" {
 }
 `, context)
 }
+
+func TestAccWorkbenchInstance_updatelabels(t *testing.T) {
+	t.Parallel()
+
+	context := map[string]interface{}{
+		"random_suffix": acctest.RandString(t, 10),
+	}
+
+	acctest.VcrTest(t, resource.TestCase{
+		PreCheck:                 func() { acctest.AccTestPreCheck(t) },
+		ProtoV5ProviderFactories: acctest.ProtoV5ProviderFactories(t),
+		Steps: []resource.TestStep{
+			{
+				Config: testAccWorkbenchInstance_label(context),
+				Check: resource.ComposeTestCheckFunc(
+					resource.TestCheckResourceAttr(
+						"google_workbench_instance.instance", "state", "ACTIVE"),
+				),
+			},
+			{
+				ResourceName:            "google_workbench_instance.instance",
+				ImportState:             true,
+				ImportStateVerify:       true,
+				ImportStateVerifyIgnore: []string{"name", "instance_owners", "location", "instance_id", "request_id", "labels", "terraform_labels", "desired_state"},
+			},
+			{
+				Config: testAccWorkbenchInstance_basic(context),
+				Check: resource.ComposeTestCheckFunc(
+					resource.TestCheckResourceAttr(
+						"google_workbench_instance.instance", "state", "ACTIVE"),
+				),
+			},
+			{
+				ResourceName:            "google_workbench_instance.instance",
+				ImportState:             true,
+				ImportStateVerify:       true,
+				ImportStateVerifyIgnore: []string{"name", "instance_owners", "location", "instance_id", "request_id", "labels", "terraform_labels", "desired_state"},
+			},
+			{
+				Config: testAccWorkbenchInstance_label(context),
+				Check: resource.ComposeTestCheckFunc(
+					resource.TestCheckResourceAttr(
+						"google_workbench_instance.instance", "state", "ACTIVE"),
+				),
+			},
+			{
+				ResourceName:            "google_workbench_instance.instance",
+				ImportState:             true,
+				ImportStateVerify:       true,
+				ImportStateVerifyIgnore: []string{"name", "instance_owners", "location", "instance_id", "request_id", "labels", "terraform_labels", "desired_state"},
+			},
+		},
+	})
+}
+
+func testAccWorkbenchInstance_label(context map[string]interface{}) string {
+	return acctest.Nprintf(`
+resource "google_workbench_instance" "instance" {
+  name = "tf-test-workbench-instance%{random_suffix}"
+  location = "us-central1-a"
+  labels = {
+    k = "val"
+  }
+}
+`, context)
+}