diff --git a/packages/block-library/src/navigation/edit.js b/packages/block-library/src/navigation/edit.js
index 99adf28132389b..46ec973e7dbbf1 100644
--- a/packages/block-library/src/navigation/edit.js
+++ b/packages/block-library/src/navigation/edit.js
@@ -78,29 +78,24 @@ function Navigation( {
 		clientId
 	);
 
-	const innerBlocksProps = useInnerBlocksProps(
-		{
-			className: 'wp-block-navigation__container',
-		},
-		{
-			allowedBlocks: ALLOWED_BLOCKS,
-			orientation: attributes.orientation || 'horizontal',
-			renderAppender:
-				( isImmediateParentOfSelectedBlock &&
-					! selectedBlockHasDescendants ) ||
-				isSelected
-					? InnerBlocks.DefaultAppender
-					: false,
-			__experimentalAppenderTagName: 'li',
-			__experimentalCaptureToolbars: true,
-			// Template lock set to false here so that the Nav
-			// Block on the experimental menus screen does not
-			// inherit templateLock={ 'all' }.
-			templateLock: false,
-			__experimentalLayout: LAYOUT,
-			placeholder: <PlaceholderPreview />,
-		}
-	);
+	const innerBlocksProps = useInnerBlocksProps( blockProps, {
+		allowedBlocks: ALLOWED_BLOCKS,
+		orientation: attributes.orientation || 'horizontal',
+		renderAppender:
+			( isImmediateParentOfSelectedBlock &&
+				! selectedBlockHasDescendants ) ||
+			isSelected
+				? InnerBlocks.DefaultAppender
+				: false,
+		__experimentalAppenderTagName: 'li',
+		__experimentalCaptureToolbars: true,
+		// Template lock set to false here so that the Nav
+		// Block on the experimental menus screen does not
+		// inherit templateLock={ 'all' }.
+		templateLock: false,
+		__experimentalLayout: LAYOUT,
+		placeholder: <PlaceholderPreview />,
+	} );
 
 	if ( isPlaceholderShown ) {
 		return (
@@ -166,15 +161,13 @@ function Navigation( {
 					</PanelBody>
 				) }
 			</InspectorControls>
-			<nav { ...blockProps }>
+			<nav { ...innerBlocksProps }>
 				<ResponsiveWrapper
 					id={ clientId }
 					onToggle={ setResponsiveMenuVisibility }
 					isOpen={ isResponsiveMenuOpen }
 					isResponsive={ attributes.isResponsive }
-				>
-					<ul { ...innerBlocksProps }></ul>
-				</ResponsiveWrapper>
+				></ResponsiveWrapper>
 			</nav>
 		</>
 	);
diff --git a/packages/block-library/src/navigation/index.php b/packages/block-library/src/navigation/index.php
index 0dff15eeaa1978..f156bf87bb8c0a 100644
--- a/packages/block-library/src/navigation/index.php
+++ b/packages/block-library/src/navigation/index.php
@@ -147,7 +147,16 @@ function render_block_core_navigation( $attributes, $content, $block ) {
 	);
 
 	$inner_blocks_html = '';
+	$is_list_open = false;
 	foreach ( $block->inner_blocks as $inner_block ) {
+		if ($inner_block->name === "core/navigation-link" && $is_list_open === false) {
+			$is_list_open = true;
+			$inner_blocks_html .= '<ul class="wp-block-navigation__container">';
+		}
+		if ($inner_block->name !== "core/navigation-link" && $inner_block->name !== "core/spacer" && $is_list_open === true) {
+			$is_list_open = false;
+			$inner_blocks_html .= '</ul>';
+		}
 		$inner_blocks_html .= $inner_block->render();
 	}