diff --git a/dev/tools/gen_defaults/lib/input_decorator_template.dart b/dev/tools/gen_defaults/lib/input_decorator_template.dart
index 0e4c76b7596..a73472f0676 100644
--- a/dev/tools/gen_defaults/lib/input_decorator_template.dart
+++ b/dev/tools/gen_defaults/lib/input_decorator_template.dart
@@ -21,6 +21,16 @@ class _${blockName}DefaultsM3 extends InputDecorationTheme {
   late final ColorScheme _colors = Theme.of(context).colorScheme;
   late final TextTheme _textTheme = Theme.of(context).textTheme;
 
+  // For InputDecorator, focused state should take precedence over hovered state.
+  // For instance, the focused state increases border width (2dp) and applies bright
+  // colors (primary color or error color) while the hovered state has the same border
+  // than the non-focused state (1dp) and uses a color a little darker than non-focused
+  // state. On desktop, it is also very common that a text field is focused and hovered
+  // because users often rely on mouse selection.
+  // For other widgets, hovered state takes precedence over focused state, because it
+  // is mainly used to determine the overlay color,
+  // see https://github.com/flutter/flutter/pull/125905.
+
   @override
   TextStyle? get hintStyle => MaterialStateTextStyle.resolveWith((Set<MaterialState> states) {
     if (states.contains(MaterialState.disabled)) {
@@ -139,20 +149,20 @@ class _${blockName}DefaultsM3 extends InputDecorationTheme {
       return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.disabled.label-text')});
     }
     if (states.contains(MaterialState.error)) {
-      if (states.contains(MaterialState.hovered)) {
-        return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.error.hover.label-text')});
-      }
       if (states.contains(MaterialState.focused)) {
         return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.error.focus.label-text')});
       }
+      if (states.contains(MaterialState.hovered)) {
+        return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.error.hover.label-text')});
+      }
       return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.error.label-text')});
     }
-    if (states.contains(MaterialState.hovered)) {
-      return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.hover.label-text')});
-    }
     if (states.contains(MaterialState.focused)) {
       return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.focus.label-text')});
     }
+    if (states.contains(MaterialState.hovered)) {
+      return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.hover.label-text')});
+    }
     return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.label-text')});
   });
 
@@ -163,20 +173,20 @@ class _${blockName}DefaultsM3 extends InputDecorationTheme {
       return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.disabled.label-text')});
     }
     if (states.contains(MaterialState.error)) {
-      if (states.contains(MaterialState.hovered)) {
-        return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.error.hover.label-text')});
-      }
       if (states.contains(MaterialState.focused)) {
         return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.error.focus.label-text')});
       }
+      if (states.contains(MaterialState.hovered)) {
+        return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.error.hover.label-text')});
+      }
       return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.error.label-text')});
     }
-    if (states.contains(MaterialState.hovered)) {
-      return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.hover.label-text')});
-    }
     if (states.contains(MaterialState.focused)) {
       return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.focus.label-text')});
     }
+    if (states.contains(MaterialState.hovered)) {
+      return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.hover.label-text')});
+    }
     return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.label-text')});
   });
 
@@ -185,12 +195,12 @@ class _${blockName}DefaultsM3 extends InputDecorationTheme {
     final TextStyle textStyle = ${textStyle("md.comp.filled-text-field.supporting-text")} ?? const TextStyle();
     if (states.contains(MaterialState.disabled)) {
       return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.disabled.supporting-text')});
-    }${componentColor('md.comp.filled-text-field.hover.supporting-text') == componentColor('md.comp.filled-text-field.supporting-text') ? '' : '''
-    if (states.contains(MaterialState.hovered)) {
-      return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.hover.supporting-text')});
-    }'''}${componentColor('md.comp.filled-text-field.focus.supporting-text') == componentColor('md.comp.filled-text-field.supporting-text') ? '' : '''
+    }${componentColor('md.comp.filled-text-field.focus.supporting-text') == componentColor('md.comp.filled-text-field.supporting-text') ? '' : '''
     if (states.contains(MaterialState.focused)) {
       return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.focus.supporting-text')});
+    }'''}${componentColor('md.comp.filled-text-field.hover.supporting-text') == componentColor('md.comp.filled-text-field.supporting-text') ? '' : '''
+    if (states.contains(MaterialState.hovered)) {
+      return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.hover.supporting-text')});
     }'''}
     return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.supporting-text')});
   });
@@ -198,11 +208,11 @@ class _${blockName}DefaultsM3 extends InputDecorationTheme {
   @override
   TextStyle? get errorStyle => MaterialStateTextStyle.resolveWith((Set<MaterialState> states) {
     final TextStyle textStyle = ${textStyle("md.comp.filled-text-field.supporting-text")} ?? const TextStyle();${componentColor('md.comp.filled-text-field.error.hover.supporting-text') == componentColor('md.comp.filled-text-field.error.supporting-text') ? '' : '''
-    if (states.contains(MaterialState.hovered)) {
-      return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.error.hover.supporting-text')});
-    }'''}${componentColor('md.comp.filled-text-field.error.focus.supporting-text') == componentColor('md.comp.filled-text-field.error.supporting-text') ? '' : '''
     if (states.contains(MaterialState.focused)) {
       return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.error.focus.supporting-text')});
+    }'''}${componentColor('md.comp.filled-text-field.error.focus.supporting-text') == componentColor('md.comp.filled-text-field.error.supporting-text') ? '' : '''
+    if (states.contains(MaterialState.hovered)) {
+      return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.error.hover.supporting-text')});
     }'''}
     return textStyle.copyWith(color: ${componentColor('md.comp.filled-text-field.error.supporting-text')});
   });
diff --git a/packages/flutter/lib/src/material/input_decorator.dart b/packages/flutter/lib/src/material/input_decorator.dart
index c37c55e536f..b9a449f35c0 100644
--- a/packages/flutter/lib/src/material/input_decorator.dart
+++ b/packages/flutter/lib/src/material/input_decorator.dart
@@ -4617,6 +4617,16 @@ class _InputDecoratorDefaultsM3 extends InputDecorationTheme {
   late final ColorScheme _colors = Theme.of(context).colorScheme;
   late final TextTheme _textTheme = Theme.of(context).textTheme;
 
+  // For InputDecorator, focused state should take precedence over hovered state.
+  // For instance, the focused state increases border width (2dp) and applies bright
+  // colors (primary color or error color) while the hovered state has the same border
+  // than the non-focused state (1dp) and uses a color a little darker than non-focused
+  // state. On desktop, it is also very common that a text field is focused and hovered
+  // because users often rely on mouse selection.
+  // For other widgets, hovered state takes precedence over focused state, because it
+  // is mainly used to determine the overlay color,
+  // see https://github.com/flutter/flutter/pull/125905.
+
   @override
   TextStyle? get hintStyle => MaterialStateTextStyle.resolveWith((Set<MaterialState> states) {
     if (states.contains(MaterialState.disabled)) {
@@ -4705,20 +4715,20 @@ class _InputDecoratorDefaultsM3 extends InputDecorationTheme {
       return textStyle.copyWith(color: _colors.onSurface.withOpacity(0.38));
     }
     if (states.contains(MaterialState.error)) {
-      if (states.contains(MaterialState.hovered)) {
-        return textStyle.copyWith(color: _colors.onErrorContainer);
-      }
       if (states.contains(MaterialState.focused)) {
         return textStyle.copyWith(color: _colors.error);
       }
+      if (states.contains(MaterialState.hovered)) {
+        return textStyle.copyWith(color: _colors.onErrorContainer);
+      }
       return textStyle.copyWith(color: _colors.error);
     }
-    if (states.contains(MaterialState.hovered)) {
-      return textStyle.copyWith(color: _colors.onSurfaceVariant);
-    }
     if (states.contains(MaterialState.focused)) {
       return textStyle.copyWith(color: _colors.primary);
     }
+    if (states.contains(MaterialState.hovered)) {
+      return textStyle.copyWith(color: _colors.onSurfaceVariant);
+    }
     return textStyle.copyWith(color: _colors.onSurfaceVariant);
   });
 
@@ -4729,20 +4739,20 @@ class _InputDecoratorDefaultsM3 extends InputDecorationTheme {
       return textStyle.copyWith(color: _colors.onSurface.withOpacity(0.38));
     }
     if (states.contains(MaterialState.error)) {
-      if (states.contains(MaterialState.hovered)) {
-        return textStyle.copyWith(color: _colors.onErrorContainer);
-      }
       if (states.contains(MaterialState.focused)) {
         return textStyle.copyWith(color: _colors.error);
       }
+      if (states.contains(MaterialState.hovered)) {
+        return textStyle.copyWith(color: _colors.onErrorContainer);
+      }
       return textStyle.copyWith(color: _colors.error);
     }
-    if (states.contains(MaterialState.hovered)) {
-      return textStyle.copyWith(color: _colors.onSurfaceVariant);
-    }
     if (states.contains(MaterialState.focused)) {
       return textStyle.copyWith(color: _colors.primary);
     }
+    if (states.contains(MaterialState.hovered)) {
+      return textStyle.copyWith(color: _colors.onSurfaceVariant);
+    }
     return textStyle.copyWith(color: _colors.onSurfaceVariant);
   });
 
diff --git a/packages/flutter/test/material/input_decorator_test.dart b/packages/flutter/test/material/input_decorator_test.dart
index 528f64b0704..7061dbf4ce5 100644
--- a/packages/flutter/test/material/input_decorator_test.dart
+++ b/packages/flutter/test/material/input_decorator_test.dart
@@ -1634,6 +1634,328 @@ void main() {
     });
   });
 
+  group('Material3 - InputDecoration label', () {
+    group('for filled text field', () {
+      group('when field is enabled', () {
+        testWidgets('label text has correct style', (WidgetTester tester) async {
+          await tester.pumpWidget(
+            buildInputDecorator(
+              decoration: const InputDecoration(
+                filled: true,
+                labelText: labelText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          final Color expectedColor = theme.colorScheme.onSurfaceVariant;
+          // Current input decorator implementation forces line height to 1.0,
+          // this is not compliant with M3 spec.
+          final TextStyle expectedStyle = theme.textTheme.bodyLarge!.copyWith(color: expectedColor, height: 1.0);
+          expect(getLabelStyle(tester), expectedStyle);
+        });
+      });
+
+      group('when field is disabled', () {
+        testWidgets('label text has correct color', (WidgetTester tester) async {
+          await tester.pumpWidget(
+            buildInputDecorator(
+              decoration: const InputDecoration(
+                filled: true,
+                enabled: false,
+                labelText: labelText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.onSurface.withOpacity(0.38));
+        });
+      });
+
+      group('when field is hovered', () {
+        testWidgets('label text has correct color', (WidgetTester tester) async {
+          await tester.pumpWidget(
+            buildInputDecorator(
+              isHovering: true,
+              decoration: const InputDecoration(
+                filled: true,
+                labelText: labelText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.onSurfaceVariant);
+        });
+      });
+
+      group('when field is focused', () {
+        testWidgets('label text has correct color', (WidgetTester tester) async {
+          await tester.pumpWidget(
+            buildInputDecorator(
+              isFocused: true,
+              decoration: const InputDecoration(
+                filled: true,
+                labelText: labelText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.primary);
+        });
+
+        testWidgets('label text has correct color when focused and hovered', (WidgetTester tester) async {
+          // Regression test for https://github.com/flutter/flutter/issues/146565.
+          await tester.pumpWidget(
+            buildInputDecorator(
+              isFocused: true,
+              isHovering: true,
+              decoration: const InputDecoration(
+                filled: true,
+                labelText: labelText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.primary);
+        });
+      });
+
+      group('when field is in error', () {
+        testWidgets('label text has correct color', (WidgetTester tester) async {
+          await tester.pumpWidget(
+            buildInputDecorator(
+              decoration: const InputDecoration(
+                filled: true,
+                labelText: labelText,
+                errorText: errorText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.error);
+        });
+
+        testWidgets('label text has correct color when focused', (WidgetTester tester) async {
+          await tester.pumpWidget(
+            buildInputDecorator(
+              isFocused: true,
+              decoration: const InputDecoration(
+                filled: true,
+                labelText: labelText,
+                errorText: errorText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.error);
+        });
+
+        testWidgets('label text has correct style when hovered', (WidgetTester tester) async {
+          await tester.pumpWidget(
+            buildInputDecorator(
+              isHovering: true,
+              decoration: const InputDecoration(
+                filled: true,
+                labelText: labelText,
+                errorText: errorText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.onErrorContainer);
+        });
+
+        testWidgets('label text has correct style when focused and hovered', (WidgetTester tester) async {
+          // Regression test for https://github.com/flutter/flutter/issues/146565.
+          await tester.pumpWidget(
+            buildInputDecorator(
+              isFocused: true,
+              isHovering: true,
+              decoration: const InputDecoration(
+                filled: true,
+                labelText: labelText,
+                errorText: errorText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.error);
+        });
+      });
+    });
+
+    group('for outlined text field', () {
+      group('when field is enabled', () {
+        testWidgets('label text has correct style', (WidgetTester tester) async {
+          await tester.pumpWidget(
+            buildInputDecorator(
+              decoration: const InputDecoration(
+                border: OutlineInputBorder(),
+                labelText: labelText,
+                helperText: helperText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          final Color expectedColor = theme.colorScheme.onSurfaceVariant;
+          // Current input decorator implementation forces line height to 1.0,
+          // this is not compliant with M3 spec.
+          final TextStyle expectedStyle = theme.textTheme.bodyLarge!.copyWith(color: expectedColor, height: 1.0);
+          expect(getLabelStyle(tester), expectedStyle);
+        });
+      });
+
+      group('when field is disabled', () {
+        testWidgets('label text has correct color', (WidgetTester tester) async {
+          await tester.pumpWidget(
+            buildInputDecorator(
+              decoration: const InputDecoration(
+                border: OutlineInputBorder(),
+                enabled: false,
+                labelText: labelText,
+                helperText: helperText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.onSurface.withOpacity(0.38));
+        });
+      });
+
+      group('when field is hovered', () {
+        testWidgets('label text has correct color', (WidgetTester tester) async {
+          await tester.pumpWidget(
+            buildInputDecorator(
+              isHovering: true,
+              decoration: const InputDecoration(
+                border: OutlineInputBorder(),
+                labelText: labelText,
+                helperText: helperText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.onSurfaceVariant);
+        });
+      });
+
+      group('when field is focused', () {
+        testWidgets('label text has correct color', (WidgetTester tester) async {
+          await tester.pumpWidget(
+            buildInputDecorator(
+              isFocused: true,
+              decoration: const InputDecoration(
+                border: OutlineInputBorder(),
+                labelText: labelText,
+                helperText: helperText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.primary);
+        });
+
+
+        testWidgets('label text has correct color when focused and hovered', (WidgetTester tester) async {
+          // Regression test for https://github.com/flutter/flutter/issues/146565.
+          await tester.pumpWidget(
+            buildInputDecorator(
+              isFocused: true,
+              isHovering: true,
+              decoration: const InputDecoration(
+                border: OutlineInputBorder(),
+                labelText: labelText,
+                helperText: helperText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.primary);
+        });
+      });
+
+      group('when field is in error', () {
+        testWidgets('label text has correct color', (WidgetTester tester) async {
+          await tester.pumpWidget(
+            buildInputDecorator(
+              decoration: const InputDecoration(
+                border: OutlineInputBorder(),
+                labelText: labelText,
+                errorText: errorText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.error);
+        });
+
+        testWidgets('label text has correct color when focused', (WidgetTester tester) async {
+          await tester.pumpWidget(
+            buildInputDecorator(
+              isFocused: true,
+              decoration: const InputDecoration(
+                border: OutlineInputBorder(),
+                labelText: labelText,
+                errorText: errorText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.error);
+        });
+
+        testWidgets('label text has correct color when hovered', (WidgetTester tester) async {
+          await tester.pumpWidget(
+            buildInputDecorator(
+              isHovering: true,
+              decoration: const InputDecoration(
+                border: OutlineInputBorder(),
+                labelText: labelText,
+                errorText: errorText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.onErrorContainer);
+        });
+
+        testWidgets('label text has correct color when focused and hovered', (WidgetTester tester) async {
+          // Regression test for https://github.com/flutter/flutter/issues/146565.
+          await tester.pumpWidget(
+            buildInputDecorator(
+              isFocused: true,
+              isHovering: true,
+              decoration: const InputDecoration(
+                border: OutlineInputBorder(),
+                labelText: labelText,
+                errorText: errorText,
+              ),
+            ),
+          );
+
+          final ThemeData theme = Theme.of(tester.element(findDecorator()));
+          expect(getLabelStyle(tester).color, theme.colorScheme.error);
+        });
+      });
+    });
+  });
+
   group('Material3 - InputDecoration labelText layout', () {
     testWidgets('The label appears above input', (WidgetTester tester) async {
       await tester.pumpWidget(
@@ -3957,40 +4279,6 @@ void main() {
     expect(getIconStyle(tester, Icons.close)?.color, theme.colorScheme.error);
   });
 
-  testWidgets('InputDecoration default floatingLabelStyle resolves hovered/focused states', (WidgetTester tester) async {
-    final FocusNode focusNode = FocusNode();
-    addTearDown(focusNode.dispose);
-
-    await tester.pumpWidget(
-      MaterialApp(
-        home: Material(
-          child: TextField(
-            focusNode: focusNode,
-            decoration: const InputDecoration(
-              labelText: 'label',
-            ),
-          ),
-        ),
-      ),
-    );
-
-    // Focused.
-    focusNode.requestFocus();
-    await tester.pump(kTransitionDuration);
-    final ThemeData theme = Theme.of(tester.element(find.byType(TextField)));
-    expect(getLabelStyle(tester).color, theme.colorScheme.primary);
-
-    // Hovered.
-    final Offset center = tester.getCenter(find.byType(TextField));
-    final TestGesture gesture = await tester.createGesture(
-      kind: PointerDeviceKind.mouse,
-    );
-    await gesture.addPointer();
-    await gesture.moveTo(center);
-    await tester.pump(kTransitionDuration);
-    expect(getLabelStyle(tester).color, theme.colorScheme.onSurfaceVariant);
-  });
-
   testWidgets('FloatingLabelAlignment.toString()', (WidgetTester tester) async {
     expect(FloatingLabelAlignment.start.toString(), 'FloatingLabelAlignment.start');
     expect(FloatingLabelAlignment.center.toString(), 'FloatingLabelAlignment.center');