There are a number of ways to do it. I use Bubble Jet Set. It's a little pricey but goes a long way since you can pour it back in the bottle after you've soaked your fabric in it. This you use to treat the fabric before you print on it. It prepares the fabric to receive the ink. After the printing is dry you can then press it with an iron. There is also Bubble Jet 2000 which is a soak you use after printing and the ink is dry to remove any excess ink.
Another way to set your ink is to soak it in white vinegar, let dry and then press. I have a friend that does this and her labels are nice and don't smell after.
Google using printer to print on fabric and you'll see some other ideas as well.
To save on solution and fabric I print my label of paper first. I draw an arrow facing toward me on the paper so I know how to reload it in the printer when I have fabric attached. (I always seem to forget how the paper goes through the printing process and this helps). After I know how the label is going to look by printing it on paper I then cut a piece of fabric a little larger than what I want the label to be and iron it on the shiny side of freezer paper. I take that then and position it over the printing on the paper and glue it in place. The glue in glue sticks work well for this. You are gluing the back of the freezer paper to the paper. Make sure you have all the edges stuck down so it won't catch when going through the printer. Once this is done put it in the paper tray of your printer with the arrow you drew facing up and toward you and then click print on your file you made on your computer. The printing on your fabric label will be nicely centered with no waste of fabric. Let it dry thoroughly before ironing. It will peel right off the freezer paper.
To finish my label and get nice clean edges and corners I take a piece of fusible light weight interfacing and put it fusible side toward the right side of the label. Stitch around all the edges, trim corners to reduce bulk. Put a slit in the interfacing and turn to the back. You now have a label with all raw edges contained and you can iron/fuse the label onto your quilt because now the fusible side has been turned to the outside back. I then hand stitch around the edge to secure but no pins are needed in the process since it is fused in place.