diff --git a/plugins/scaffolder-backend/src/scaffolder/tasks/TaskWorker.ts b/plugins/scaffolder-backend/src/scaffolder/tasks/TaskWorker.ts
index 4a09149bab..1e038ba65e 100644
--- a/plugins/scaffolder-backend/src/scaffolder/tasks/TaskWorker.ts
+++ b/plugins/scaffolder-backend/src/scaffolder/tasks/TaskWorker.ts
@@ -117,6 +117,7 @@ export class TaskWorker {
           const tmpDirs = new Array<string>();
 
           await action.handler({
+            baseUrl: task.spec.baseUrl,
             logger: taskLogger,
             logStream: stream,
             parameters,
diff --git a/plugins/scaffolder-backend/src/scaffolder/tasks/types.ts b/plugins/scaffolder-backend/src/scaffolder/tasks/types.ts
index d7f2e6e51f..42d8179a3e 100644
--- a/plugins/scaffolder-backend/src/scaffolder/tasks/types.ts
+++ b/plugins/scaffolder-backend/src/scaffolder/tasks/types.ts
@@ -45,6 +45,7 @@ export type DbTaskEventRow = {
 };
 
 export type TaskSpec = {
+  baseUrl?: string;
   values: JsonObject;
   steps: Array<{
     id: string;
@@ -116,6 +117,11 @@ export interface TaskStore {
 }
 
 export type ActionContext = {
+  /**
+   * Base URL for the location of the task spec, typically the url of the source entity file.
+   */
+  baseUrl?: string;
+
   logger: Logger;
   logStream: Writable;
 
diff --git a/plugins/scaffolder-backend/src/service/helpers.ts b/plugins/scaffolder-backend/src/service/helpers.ts
index dd3d43c6d1..905d85c35d 100644
--- a/plugins/scaffolder-backend/src/service/helpers.ts
+++ b/plugins/scaffolder-backend/src/service/helpers.ts
@@ -18,6 +18,11 @@ import os from 'os';
 import fs from 'fs-extra';
 import { Logger } from 'winston';
 import { Config } from '@backstage/config';
+import {
+  Entity,
+  LOCATION_ANNOTATION,
+  SOURCE_LOCATION_ANNOTATION,
+} from '@backstage/catalog-model';
 
 export async function getWorkingDirectory(
   config: Config,
@@ -42,3 +47,34 @@ export async function getWorkingDirectory(
   }
   return workingDirectory;
 }
+
+/**
+ * Gets the base URL of the entity location that points to the source location
+ * of the entity description within a repo. If there is not source location
+ * or if it has an invalid type, undefined will be returned instead.
+ *
+ * For file locations this will return a `file://` URL.
+ */
+export function getEntityBaseUrl(entity: Entity): string | undefined {
+  let location = entity.metadata.annotations?.[SOURCE_LOCATION_ANNOTATION];
+  if (!location) {
+    location = entity.metadata.annotations?.[LOCATION_ANNOTATION];
+  }
+  if (!location) {
+    return undefined;
+  }
+
+  const [type, url] = location.split(/:(.+)/);
+  if (!url) {
+    return undefined;
+  }
+
+  if (type === 'url') {
+    return url;
+  } else if (type === 'file') {
+    return `file://${url}`;
+  }
+  // Only url and file location are handled, as we otherwise don't know if
+  // what the url is pointing to makes sense to use as a baseUrl
+  return undefined;
+}
diff --git a/plugins/scaffolder-backend/src/service/router.ts b/plugins/scaffolder-backend/src/service/router.ts
index db5ab28064..79ae70d694 100644
--- a/plugins/scaffolder-backend/src/service/router.ts
+++ b/plugins/scaffolder-backend/src/service/router.ts
@@ -41,7 +41,7 @@ import {
 import { templateEntityToSpec } from '../scaffolder/tasks/TemplateConverter';
 import { TemplateActionRegistry } from '../scaffolder/tasks/TemplateActionRegistry';
 import { registerLegacyActions } from '../scaffolder/stages/legacy';
-import { getWorkingDirectory } from './helpers';
+import { getEntityBaseUrl, getWorkingDirectory } from './helpers';
 import {
   InputError,
   NotFoundError,
@@ -351,7 +351,10 @@ export async function createRouter(
           }
         }
 
+        const baseUrl = getEntityBaseUrl(template);
+
         taskSpec = {
+          baseUrl,
           values,
           steps: template.spec.steps.map((step, index) => ({
             ...step,