An ultrasound-based system is created to label the lumbar vertebrae for the purpose of percutaneous needle insertion. Many lumbar punctures have a preferable vertebral level for needle insertion, but the traditional method of manual palpation is known to be inaccurate for determining the level. Needle insertion for epidural anesthesia in obstetrics is preferably performed at the L3-L4 interspace and miscalculation can lead to complications such as nerve damage and paralysis. Similar risks occur for other spinal needle insertions. In this paper, an ultrasound-based system is devised that creates panorama images of lumbar vertebrae with an extended field of view starting from the coccyx. The vertebrae are labeled with a novel image processing algorithm. Since the coccyx is relatively easy to locate by palpation, the labels of the vertebrae from the panorama can be converted to skin location on the subject. The method is validated against independent measurements by a sonographer.