diff --git a/packages/angular_devkit/build_angular/src/babel/babel-loader.d.ts b/packages/angular_devkit/build_angular/src/babel/babel-loader.d.ts
index 0c0756d9e54a..49fbff8b8344 100644
--- a/packages/angular_devkit/build_angular/src/babel/babel-loader.d.ts
+++ b/packages/angular_devkit/build_angular/src/babel/babel-loader.d.ts
@@ -7,9 +7,7 @@
  */
 
 declare module 'babel-loader' {
-  type BabelLoaderCustomizer<T> = (
-    babel: typeof import('@babel/core'),
-  ) => {
+  type BabelLoaderCustomizer<T> = (babel: typeof import('@babel/core')) => {
     customOptions?(
       this: import('webpack').loader.LoaderContext,
       loaderOptions: Record<string, unknown>,
@@ -20,6 +18,17 @@ declare module 'babel-loader' {
       configuration: import('@babel/core').PartialConfig,
       loaderArguments: { source: string; map?: unknown; customOptions: T },
     ): import('@babel/core').TransformOptions;
+    result?(
+      this: import('webpack').loader.LoaderContext,
+      result: import('@babel/core').BabelFileResult,
+      context: {
+        source: string;
+        map?: unknown;
+        customOptions: T;
+        configuration: import('@babel/core').PartialConfig;
+        options: import('@babel/core').TransformOptions;
+      },
+    ): import('@babel/core').BabelFileResult;
   };
   function custom<T>(customizer: BabelLoaderCustomizer<T>): import('webpack').loader.Loader;
 }
diff --git a/packages/angular_devkit/build_angular/src/babel/webpack-loader.ts b/packages/angular_devkit/build_angular/src/babel/webpack-loader.ts
index 04fd3d0f7fb7..b41bd7f6d7a5 100644
--- a/packages/angular_devkit/build_angular/src/babel/webpack-loader.ts
+++ b/packages/angular_devkit/build_angular/src/babel/webpack-loader.ts
@@ -6,6 +6,7 @@
  * found in the LICENSE file at https://angular.io/license
  */
 
+import remapping from '@ampproject/remapping';
 import { custom } from 'babel-loader';
 import { ScriptTarget } from 'typescript';
 import { loadEsmModule } from '../utils/load-esm';
@@ -21,6 +22,9 @@ interface AngularCustomOptions extends Pick<ApplicationPresetOptions, 'angularLi
   };
 }
 
+// Extract Sourcemap input type from the remapping function since it is not currently exported
+type SourceMapInput = Exclude<Parameters<typeof remapping>[0], unknown[]>;
+
 /**
  * Cached instance of the compiler-cli linker's needsLinking function.
  */
@@ -201,10 +205,10 @@ export default custom<AngularCustomOptions>(() => {
 
       return {
         ...configuration.options,
-        // Workaround for https://github.com/babel/babel-loader/pull/896 is available
-        // Delete once the above PR is released
+        // Using `false` disables babel from attempting to locate sourcemaps or process any inline maps.
+        // The babel types do not include the false option even though it is valid
         // eslint-disable-next-line @typescript-eslint/no-explicit-any
-        inputSourceMap: configuration.options.inputSourceMap || (false as any), // Typings are not correct
+        inputSourceMap: false as any,
         plugins,
         presets: [
           ...(configuration.options.presets || []),
@@ -229,5 +233,20 @@ export default custom<AngularCustomOptions>(() => {
         ],
       };
     },
+    result(result, { map: inputSourceMap }) {
+      if (result.map && inputSourceMap) {
+        // Merge the intermediate sourcemap generated by babel with the input source map.
+        // The casting is required due to slight differences in the types for babel and
+        // `@ampproject/remapping` source map objects but both are compatible with Webpack.
+        // This method for merging is used because it provides more accurate output
+        // and is faster while using less memory.
+        result.map = remapping(
+          [result.map as SourceMapInput, inputSourceMap as SourceMapInput],
+          () => null,
+        ) as typeof result.map;
+      }
+
+      return result;
+    },
   };
 });