diff --git a/src/app/core/services/filters.service.ts b/src/app/core/services/filters.service.ts
index de2e2d538..583d0ea31 100644
--- a/src/app/core/services/filters.service.ts
+++ b/src/app/core/services/filters.service.ts
@@ -11,6 +11,7 @@ export type Filter = {
   labels: string[];
   milestones: string[];
   hiddenLabels: Set<string>;
+  deselectedLabels: Set<string>;
 };
 
 export const DEFAULT_FILTER: Filter = {
@@ -20,7 +21,8 @@ export const DEFAULT_FILTER: Filter = {
   sort: { active: 'id', direction: 'asc' },
   labels: [],
   milestones: [],
-  hiddenLabels: new Set()
+  hiddenLabels: new Set<string>(),
+  deselectedLabels: new Set<string>()
 };
 
 @Injectable({
diff --git a/src/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.css b/src/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.css
index 03e92e4be..69d9e392f 100644
--- a/src/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.css
+++ b/src/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.css
@@ -88,6 +88,26 @@
   flex-direction: row;
   justify-content: flex-start;
   align-items: center;
+  border-radius: 10px;
+  height: 40px;
+  padding: 0px 12px;
+  margin: 8px 4px;
+  box-sizing: border-box;
+  position: relative;
+}
+
+.flexbox-container:hover {
+  background-color: rgba(0, 0, 0, 0.04);
+}
+
+.flexbox-container-strikethrough {
+  position: absolute;
+  top: 50%;
+  width: 90%;
+  left: 50%;
+  transform: translate(-50%, -50%);
+  height: 2px;
+  background-color: black;
 }
 
 .input-field {
@@ -95,10 +115,6 @@
   padding: 0 15px;
 }
 
-.list-option {
-  width: 100%;
-}
-
 .mat-chip {
   height: auto;
   padding: 5.5px 7px;
@@ -109,7 +125,6 @@
   min-height: 16px;
   max-height: 42px;
   margin: 0px;
-  top: 50%;
 }
 
 .mat-stroked-button {
diff --git a/src/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.html b/src/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.html
index ae5b5ef32..ad12b066b 100644
--- a/src/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.html
+++ b/src/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.html
@@ -1,5 +1,5 @@
 <button mat-stroked-button *ngIf="loaded" [matMenuTriggerFor]="menu">
-  {{ selectedLabelNames.length == 0 ? 'All' : selectedLabelNames.length }} Selected | {{ hiddenLabelNames?.size || 0 }} Hidden ▾
+  {{ selectedLabelNames.size === 0 ? 'All' : selectedLabelNames.size }} Selected | {{ hiddenLabelNames?.size || 0 }} Hidden ▾
 </button>
 
 <button mat-stroked-button disabled *ngIf="!loaded" color="accent">
@@ -19,32 +19,28 @@
 
     <div class="scroll-container-wrapper">
       <div class="scroll-container">
-        <mat-selection-list (selectionChange)="updateSelection($event.options)">
-          <mat-list-option
-            #option
-            *ngFor="let label of this.labels$ | async"
-            [value]="label.name"
-            [selected]="selectedLabelNames.includes(label.name)"
-            class="list-option"
-            [class.hidden]="filter(input.value, label.name)"
+        <div
+          *ngFor="let label of this.allLabels"
+          class="flexbox-container"
+          (click)="changeLabelState(label)"
+          [class.hidden]="filter(input.value, label.name)"
+          [style]="{ border: '2px solid ' + getColor(label) }"
+        >
+          <button mat-icon-button *ngIf="!hiddenLabelNames.has(label.name)" (click)="hide(label.name); $event.stopPropagation()">
+            <mat-icon>visibility</mat-icon>
+          </button>
+          <button mat-icon-button *ngIf="hiddenLabelNames.has(label.name)" (click)="show(label.name); $event.stopPropagation()">
+            <mat-icon>visibility_off</mat-icon>
+          </button>
+          <mat-chip
+            [ngStyle]="labelService.setLabelStyle(label.color)"
+            [disabled]="hiddenLabelNames.has(label.name)"
+            (click)="changeLabelState(label)"
           >
-            <div class="flexbox-container">
-              <button mat-icon-button *ngIf="!hiddenLabelNames.has(label.name)" (click)="hide(label.name); $event.stopPropagation()">
-                <mat-icon>visibility</mat-icon>
-              </button>
-              <button mat-icon-button *ngIf="hiddenLabelNames.has(label.name)" (click)="show(label.name); $event.stopPropagation()">
-                <mat-icon>visibility_off</mat-icon>
-              </button>
-              <mat-chip
-                [ngStyle]="labelService.setLabelStyle(label.color)"
-                [disabled]="hiddenLabelNames.has(label.name)"
-                (click)="simulateClick(option); $event.stopPropagation()"
-              >
-                {{ label.name }}
-              </mat-chip>
-            </div>
-          </mat-list-option>
-        </mat-selection-list>
+            {{ label.name }}
+          </mat-chip>
+          <div *ngIf="deselectedLabelNames.has(label.name)" class="flexbox-container-strikethrough"></div>
+        </div>
       </div>
     </div>
   </div>
diff --git a/src/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.ts b/src/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.ts
index 6d4326277..38adeec95 100644
--- a/src/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.ts
+++ b/src/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.ts
@@ -1,5 +1,4 @@
 import { AfterViewInit, Component, OnDestroy, OnInit, ViewChild } from '@angular/core';
-import { MatListOption, MatSelectionList } from '@angular/material/list';
 import { Observable, Subscription } from 'rxjs';
 import { SimpleLabel } from '../../../core/models/label.model';
 import { FiltersService } from '../../../core/services/filters.service';
@@ -12,11 +11,14 @@ import { LoggingService } from '../../../core/services/logging.service';
   styleUrls: ['./label-filter-bar.component.css']
 })
 export class LabelFilterBarComponent implements OnInit, AfterViewInit, OnDestroy {
-  @ViewChild(MatSelectionList) matSelectionList;
+  private static readonly DEFAULT_LABEL_COLOR: string = 'transparent';
+  private static readonly DESELECTED_LABEL_COLOR: string = '#b00020';
+  private static readonly SELECTED_LABEL_COLOR: string = '#41c300';
 
   labels$: Observable<SimpleLabel[]>;
   allLabels: SimpleLabel[];
-  selectedLabelNames: string[] = [];
+  selectedLabelNames: Set<string> = new Set<string>();
+  deselectedLabelNames: Set<string> = new Set<string>();
   hiddenLabelNames: Set<string> = new Set();
   loaded = false;
 
@@ -35,7 +37,7 @@ export class LabelFilterBarComponent implements OnInit, AfterViewInit, OnDestroy
       this.labels$.subscribe((labels) => {
         this.allLabels = labels;
         this.filtersService.sanitizeLabels(this.allLabels);
-        this.selectedLabelNames = this.filtersService.filter$.value.labels;
+        this.selectedLabelNames = new Set<string>(this.filtersService.filter$.value.labels);
         this.hiddenLabelNames = this.filtersService.filter$.value.hiddenLabels;
       });
     });
@@ -64,16 +66,34 @@ export class LabelFilterBarComponent implements OnInit, AfterViewInit, OnDestroy
   }
 
   /**
-   * chip as of the current project version consumes click events
-   * this method is used as an workaround the issue.
-   * https://github.com/angular/components/issues/19759
+   * Change label to the next state.
+   * Label has the following state rotation: default -> selected -> deselected.
+   * @param label The label to change state
    */
-  simulateClick(el: MatListOption): void {
-    if (el.disabled) {
-      return;
+  changeLabelState(label: SimpleLabel) {
+    if (this.selectedLabelNames.has(label.name)) {
+      this.selectedLabelNames.delete(label.name);
+      this.deselectedLabelNames.add(label.name);
+    } else if (this.deselectedLabelNames.has(label.name)) {
+      this.deselectedLabelNames.delete(label.name);
+    } else {
+      this.selectedLabelNames.add(label.name);
+    }
+    this.updateSelection();
+  }
+
+  /**
+   * Returns the border color of the label.
+   * The border color represents the state of the label.
+   */
+  getColor(label: SimpleLabel): string {
+    if (this.selectedLabelNames.has(label.name)) {
+      return LabelFilterBarComponent.SELECTED_LABEL_COLOR;
+    } else if (this.deselectedLabelNames.has(label.name)) {
+      return LabelFilterBarComponent.DESELECTED_LABEL_COLOR;
+    } else {
+      return LabelFilterBarComponent.DEFAULT_LABEL_COLOR;
     }
-    el.toggle();
-    this.updateSelection([el]);
   }
 
   /** loads in the labels in the repository */
@@ -101,22 +121,16 @@ export class LabelFilterBarComponent implements OnInit, AfterViewInit, OnDestroy
     return this.allLabels.some((label) => !this.filter(filter, label.name));
   }
 
-  updateSelection(options: MatListOption[]): void {
-    options.forEach((option) => {
-      if (option.selected && !this.selectedLabelNames.includes(option.value)) {
-        this.selectedLabelNames.push(option.value);
-      }
-      if (!option.selected && this.selectedLabelNames.includes(option.value)) {
-        const index = this.selectedLabelNames.indexOf(option.value);
-        this.selectedLabelNames.splice(index, 1);
-      }
+  updateSelection(): void {
+    this.filtersService.updateFilters({
+      labels: Array.from(this.selectedLabelNames),
+      deselectedLabels: this.deselectedLabelNames
     });
-    this.filtersService.updateFilters({ labels: this.selectedLabelNames });
   }
 
   removeAllSelection(): void {
-    this.matSelectionList.deselectAll();
-    this.selectedLabelNames = [];
-    this.filtersService.updateFilters({ labels: this.selectedLabelNames });
+    this.selectedLabelNames = new Set<string>();
+    this.deselectedLabelNames = new Set<string>();
+    this.updateSelection();
   }
 }
diff --git a/src/app/shared/issue-tables/dropdownfilter.ts b/src/app/shared/issue-tables/dropdownfilter.ts
index 0b9e8ebef..e1f122f77 100644
--- a/src/app/shared/issue-tables/dropdownfilter.ts
+++ b/src/app/shared/issue-tables/dropdownfilter.ts
@@ -27,7 +27,7 @@ export function applyDropdownFilter(filter: Filter, data: Issue[]): Issue[] {
     }
 
     ret = ret && filter.milestones.some((milestone) => issue.milestone.title === milestone);
-
+    ret = ret && issue.labels.every((label) => !filter.deselectedLabels.has(label));
     return ret && filter.labels.every((label) => issue.labels.includes(label));
   });
   return filteredData;
diff --git a/tests/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.spec.ts b/tests/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.spec.ts
index 9ee9bfd31..d0d85a591 100644
--- a/tests/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.spec.ts
+++ b/tests/app/shared/filter-bar/label-filter-bar/label-filter-bar.component.spec.ts
@@ -119,23 +119,19 @@ describe('LabelFilterBarComponent', () => {
   describe('updateSelection', () => {
     it('should update filters service with selected labels', () => {
       const selectedLabels = [LABEL_NAME_SEVERITY_HIGH, LABEL_NAME_SEVERITY_LOW];
-      component.selectedLabelNames = selectedLabels;
+      component.selectedLabelNames = new Set<string>(selectedLabels);
 
-      component.updateSelection([]);
+      component.updateSelection();
 
-      expect(filtersServiceSpy.updateFilters).toHaveBeenCalledWith({ labels: selectedLabels });
+      expect(filtersServiceSpy.updateFilters).toHaveBeenCalledWith({ labels: selectedLabels, deselectedLabels: new Set<string>() });
     });
   });
 
   describe('removeAllSelection', () => {
     it('should deselect all labels and update the filter', () => {
-      const matSelectionListSpy = jasmine.createSpyObj<MatSelectionList>('MatSelectionList', ['deselectAll']);
-      component.matSelectionList = matSelectionListSpy;
-
       component.removeAllSelection();
-
-      expect(matSelectionListSpy.deselectAll).toHaveBeenCalled();
-      expect(filtersServiceSpy.updateFilters).toHaveBeenCalledWith({ labels: [] });
+      expect(component.selectedLabelNames).toEqual(new Set<string>());
+      expect(component.deselectedLabelNames).toEqual(new Set<string>());
     });
   });
 });