System and method for virtual private local area network service to use the flow aware pseudowire

An apparatus comprising a provider edge (PE) coupled to a second PE and to a customer edge (CE) and configured to establish a Virtual Private Local Area Network (LAN) Service (VPLS) that is interconnected by either a flow aware pseudowire (PW) or a flow unaware PW and exchange a flow label indication with the second PE to enable using a flow label below a PW label on the label stack. Also disclosed is a network component comprising a processor configured to support a signaling protocol that indicates a capability to send, receive, or both a flow label over a PW configured for a Layer Two (Layer 2) Virtual Private Network (VPN), a transmitter configured to send a PW packet with a flow label to a peer network component, and a receiver configured to receive a PW packet either with a flow label or without a flow label.