diff --git a/pkg/generate/generate.go b/pkg/generate/generate.go
index f777e47259..f17813f7b3 100644
--- a/pkg/generate/generate.go
+++ b/pkg/generate/generate.go
@@ -9,6 +9,7 @@ import (
 	"strings"
 	"time"
 
+	"github.com/gardener/controller-manager-library/pkg/logger"
 	"github.com/go-logr/logr"
 	kyverno "github.com/kyverno/kyverno/pkg/api/kyverno/v1"
 	"github.com/kyverno/kyverno/pkg/config"
@@ -344,7 +345,7 @@ func applyRule(log logr.Logger, client *dclient.Client, rule kyverno.Rule, resou
 	}
 
 	if genClone != nil && len(genClone) != 0 {
-		rdata, mode, err = manageClone(logger, genAPIVersion, genKind, genNamespace, genName, genClone, client)
+		rdata, mode, err = manageClone(logger, genAPIVersion, genKind, genNamespace, genName, policy, genClone, client)
 	} else {
 		rdata, mode, err = manageData(logger, genAPIVersion, genKind, genNamespace, genName, genData, client)
 	}
@@ -379,6 +380,7 @@ func applyRule(log logr.Logger, client *dclient.Client, rule kyverno.Rule, resou
 	label := newResource.GetLabels()
 	label["generate.kyverno.io/policy-name"] = policy
 	label["generate.kyverno.io/gr-name"] = gr.Name
+	delete(label, "generate.kyverno.io/clone-policy-name")
 	if mode == Create {
 		if rule.Generation.Synchronize {
 			label["generate.kyverno.io/synchronize"] = "enable"
@@ -442,7 +444,7 @@ func manageData(log logr.Logger, apiVersion, kind, namespace, name string, data
 	return updateObj.UnstructuredContent(), Update, nil
 }
 
-func manageClone(log logr.Logger, apiVersion, kind, namespace, name string, clone map[string]interface{}, client *dclient.Client) (map[string]interface{}, ResourceMode, error) {
+func manageClone(log logr.Logger, apiVersion, kind, namespace, name, policy string, clone map[string]interface{}, client *dclient.Client) (map[string]interface{}, ResourceMode, error) {
 	rNamespace, _, err := unstructured.NestedString(clone, "namespace")
 	if err != nil {
 		return nil, Skip, fmt.Errorf("failed to find source namespace: %v", err)
@@ -464,6 +466,38 @@ func manageClone(log logr.Logger, apiVersion, kind, namespace, name string, clon
 		return nil, Skip, fmt.Errorf("source resource %s %s/%s/%s not found. %v", apiVersion, kind, rNamespace, rName, err)
 	}
 
+	updateSource := true
+
+	// add label
+	label := obj.GetLabels()
+	if len(label) == 0 {
+		label = make(map[string]string)
+		label["generate.kyverno.io/clone-policy-name"] = policy
+	} else {
+		if label["generate.kyverno.io/clone-policy-name"] != "" {
+			policyNames := label["generate.kyverno.io/clone-policy-name"]
+			if !strings.Contains(policyNames, policy) {
+				policyNames = policyNames + "," + policy
+				label["generate.kyverno.io/clone-policy-name"] = policyNames
+			} else {
+				updateSource = false
+			}
+		} else {
+			label["generate.kyverno.io/clone-policy-name"] = policy
+		}
+	}
+
+	if updateSource {
+		log.V(4).Info("updating existing clone source")
+		obj.SetLabels(label)
+		_, err = client.UpdateResource(apiVersion, kind, rNamespace, obj, false)
+		if err != nil {
+			logger.Error(err, "updating existing resource")
+			return nil, Skip, fmt.Errorf("failed to update source label: %v", err)
+		}
+		log.V(2).Info("updated source")
+	}
+
 	// check if resource to be generated exists
 	newResource, err := client.GetResource(apiVersion, kind, namespace, name)
 	if err == nil {
diff --git a/pkg/webhooks/generation.go b/pkg/webhooks/generation.go
index b67a91640b..94a3a20112 100644
--- a/pkg/webhooks/generation.go
+++ b/pkg/webhooks/generation.go
@@ -86,8 +86,8 @@ func (ws *WebhookServer) HandleGenerate(request *v1beta1.AdmissionRequest, polic
 	return
 }
 
-//HandleUpdateAndDelete handles admission-requests for update and delete
-func (ws *WebhookServer) handleUpdateAndDelete(request *v1beta1.AdmissionRequest) {
+//HandleUpdateAndDelete handles admission-requests for delete
+func (ws *WebhookServer) handleDelete(request *v1beta1.AdmissionRequest) {
 	resource, err := enginutils.ConvertToUnstructured(request.OldObject.Raw)
 	if err != nil {
 		logger.Error(err, "failed to convert object resource to unstructured format")
@@ -104,6 +104,33 @@ func (ws *WebhookServer) handleUpdateAndDelete(request *v1beta1.AdmissionRequest
 	}
 }
 
+//HandleUpdateAndDelete handles admission-requests for update
+func (ws *WebhookServer) handleUpdate(request *v1beta1.AdmissionRequest) {
+	resource, err := enginutils.ConvertToUnstructured(request.OldObject.Raw)
+	if err != nil {
+		logger.Error(err, "failed to convert object resource to unstructured format")
+	}
+
+	resLabels := resource.GetLabels()
+	if resLabels["generate.kyverno.io/clone-policy-name"] != "" {
+		policyNames := strings.Split(resLabels["generate.kyverno.io/clone-policy-name"], ",")
+		for _, policyName := range policyNames {
+			selector := labels.SelectorFromSet(labels.Set(map[string]string{
+				"generate.kyverno.io/policy-name": policyName,
+			}))
+
+			grList, err := ws.grLister.List(selector)
+			if err != nil {
+				logger.Error(err, "failed to get generate request for the resource", "label", "generate.kyverno.io/policy-name")
+
+			}
+			for _, gr := range grList {
+				ws.grController.EnqueueGenerateRequestFromWebhook(gr)
+			}
+		}
+	}
+}
+
 func (ws *WebhookServer) deleteGR(logger logr.Logger, engineResponse *response.EngineResponse) {
 	logger.V(4).Info("querying all generate requests")
 	selector := labels.SelectorFromSet(labels.Set(map[string]string{
diff --git a/pkg/webhooks/server.go b/pkg/webhooks/server.go
index 6fa43fafd0..abf69254a6 100644
--- a/pkg/webhooks/server.go
+++ b/pkg/webhooks/server.go
@@ -378,7 +378,9 @@ func (ws *WebhookServer) ResourceMutation(request *v1beta1.AdmissionRequest) *v1
 func (ws *WebhookServer) resourceValidation(request *v1beta1.AdmissionRequest) *v1beta1.AdmissionResponse {
 	logger := ws.log.WithName("Validate").WithValues("uid", request.UID, "kind", request.Kind.Kind, "namespace", request.Namespace, "name", request.Name, "operation", request.Operation)
 	if request.Operation == v1beta1.Delete {
-		go ws.handleUpdateAndDelete(request)
+		go ws.handleDelete(request)
+	} else if request.Operation == v1beta1.Update {
+		go ws.handleUpdate(request)
 	}
 
 	if !ws.supportMutateValidate {