A label system having an unique label stock. The label stock includes a water reducible ink system for forming a water resistant ink label and a scuff resistant protective, clear coat layer. A label carrier, formed from non-absorbent paper or plastic, receives the water resistant ink label. In the preferred embodiment, a heat-activated adhesive is applied to the surface of the color coat layer for transferring the label from the label carrier to the substrate. The heat-activated adhesive has an activation temperature less than the distortion temperature of the label carrier so as to not distort the image during transfer. A heat-activated, cross-linking agent may be added in at least one of the color coat and the protective, clear coat to improve water soak resistance. The heat-activated, cross-linking agent has an activation temperature of greater than the activation temperature of the adhesive. This allows the adhesive to be activated at a first, lower temperature and the cross-linking agent to be activated at a second, higher temperature after the label has been transferred to the substrate. However, because of the mechanics of transferring a label, the heat-activated, cross-linking agent may have an activation temperature down to about equal to the activation temperature of the adhesive and still perform satisfactory.