diff --git a/packages/block-library/src/navigation/edit.js b/packages/block-library/src/navigation/edit.js
index 9edc6046f9deea..034e0ba4255d03 100644
--- a/packages/block-library/src/navigation/edit.js
+++ b/packages/block-library/src/navigation/edit.js
@@ -72,29 +72,24 @@ 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 (
@@ -145,9 +140,7 @@ function Navigation( {
 					</PanelBody>
 				) }
 			</InspectorControls>
-			<nav { ...blockProps }>
-				<ul { ...innerBlocksProps } />
-			</nav>
+			<nav { ...innerBlocksProps } />
 		</>
 	);
 }
diff --git a/packages/block-library/src/navigation/index.php b/packages/block-library/src/navigation/index.php
index b1fe553df3b3fb..7bbd88e31fd4b0 100644
--- a/packages/block-library/src/navigation/index.php
+++ b/packages/block-library/src/navigation/index.php
@@ -135,7 +135,16 @@ 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();
 	}
 
@@ -149,7 +158,7 @@ function render_block_core_navigation( $attributes, $content, $block ) {
 	);
 
 	return sprintf(
-		'<nav %1$s><ul class="wp-block-navigation__container">%2$s</ul></nav>',
+		'<nav %1$s>%2$s</nav>',
 		$wrapper_attributes,
 		$inner_blocks_html
 	);