We propose a novel labeling technique based on N in-band wavelengths, each carrying M radio frequency (RF) multi-tones. The wavelength and the tone have a binary value. Thus, with N wavelength carrying M tones, up to 2N*M possible labels can be generated. We also develop an optical label processor (OLP) technique that allows parallel and on-the-fly operation of the 2N*M labels by using N photo-detectors and digital signal processor (DSP). We investigate the maximum number of RF tones that can be carried by one in-band wavelength. Analysis results show that, given packets of 100 ns duration (10 MSymbol/s) and an in-band wavelength with a narrow optical bandwidth of 1.5 GHz, up to 15 tones spaced by 100 MHz can be successfully delivered by only one wavelength and processed by the OLP with little guard time and latency introduced. We experimentally validate the generation and processing of 256 labels by using one wavelength (N=1) carrying 8 RF tones (M=8).