diff --git a/sycl/source/detail/device_image_impl.hpp b/sycl/source/detail/device_image_impl.hpp
index dc7fc89f23cd9..83af5b246683a 100644
--- a/sycl/source/detail/device_image_impl.hpp
+++ b/sycl/source/detail/device_image_impl.hpp
@@ -747,7 +747,7 @@ class device_image_impl {
     if (!FetchedFromCache)
       UrProgram = createProgramFromSource(Devices, BuildOptions, LogPtr);
 
-    std::string XsFlags = extractXsFlags(BuildOptions);
+    std::string XsFlags = extractXsFlags(BuildOptions, MRTCBinInfo->MLanguage);
     auto Res = Adapter->call_nocheck<UrApiKind::urProgramBuildExp>(
         UrProgram, DeviceVec.size(), DeviceVec.data(), XsFlags.c_str());
     if (Res == UR_RESULT_ERROR_UNSUPPORTED_FEATURE) {
@@ -850,15 +850,20 @@ class device_image_impl {
   }
 
   static std::string
-  extractXsFlags(const std::vector<sycl::detail::string_view> &BuildOptions) {
+  extractXsFlags(const std::vector<sycl::detail::string_view> &BuildOptions,
+                 syclex::source_language lang) {
     std::stringstream SS;
     for (sycl::detail::string_view Option : BuildOptions) {
-      std::string_view OptionSV{Option};
-      auto Where = OptionSV.find("-Xs");
-      if (Where != std::string_view::npos) {
-        Where += 3;
-        std::string_view Flags = OptionSV.substr(Where);
-        SS << trimXsFlags(Flags) << " ";
+      if (lang == syclex::source_language::sycl) {
+        std::string_view OptionSV{Option};
+        auto Where = OptionSV.find("-Xs");
+        if (Where != std::string_view::npos) {
+          Where += 3;
+          std::string_view Flags = OptionSV.substr(Where);
+          SS << trimXsFlags(Flags) << " ";
+        }
+      } else {
+        SS << std::string_view{Option} << " ";
       }
     }
     return SS.str();
diff --git a/sycl/test-e2e/KernelCompiler/opencl_flags.cpp b/sycl/test-e2e/KernelCompiler/opencl_flags.cpp
new file mode 100644
index 0000000000000..c724f24b00b19
--- /dev/null
+++ b/sycl/test-e2e/KernelCompiler/opencl_flags.cpp
@@ -0,0 +1,73 @@
+// REQUIRES: ocloc && (opencl || level_zero)
+// UNSUPPORTED: accelerator
+// UNSUPPORTED-INTENDED: while accelerator is AoT only, this cannot run there.
+
+// RUN: %{build} -o %t.out
+// RUN: %{run} %t.out
+
+// This test ensures that the Kernel Compiler build option flags
+// are passed all the way through to the final binary when using OpenCL C
+// source.
+
+#include <cmath>
+
+#include <sycl/detail/core.hpp>
+#include <sycl/kernel_bundle.hpp>
+#include <sycl/usm.hpp>
+
+namespace syclex = sycl::ext::oneapi::experimental;
+
+const int N = 8;
+const char *KernelCLSource = "__kernel void sqrt_test(__global float* A) {"
+                             "    __private int x = get_global_id(0);"
+                             "    __private int y = get_global_id(1);"
+                             "    __private int w = get_global_size(1);"
+                             "    __private int address = x * w + y;"
+                             "    A[address] = sqrt(A[address]);"
+                             "}";
+
+int main(void) {
+  // Only one device is supported at this time, so we limit the queue and
+  // context to that.
+  sycl::device d{sycl::default_selector_v};
+  sycl::context ctx{d};
+  sycl::queue q{ctx, d};
+
+  bool ok =
+      q.get_device().ext_oneapi_can_build(syclex::source_language::opencl);
+  if (!ok) {
+    std::cout << "Apparently this device does not support OpenCL C source "
+                 "kernel bundle extension: "
+              << q.get_device().get_info<sycl::info::device::name>()
+              << std::endl;
+    return 0;
+  }
+
+  auto kb_src = syclex::create_kernel_bundle_from_source(
+      ctx, syclex::source_language::opencl, KernelCLSource);
+  auto kb_exe =
+      syclex::build(kb_src, syclex::properties{syclex::build_options(
+                                "-cl-fp32-correctly-rounded-divide-sqrt")});
+  sycl::kernel sqrt_test = kb_exe.ext_oneapi_get_kernel("sqrt_test");
+
+  float *A = sycl::malloc_shared<float>(N, q);
+  for (int i = 0; i < N; i++)
+    A[i] = static_cast<float>(i) / N;
+
+  q.submit([&](sycl::handler &cgh) {
+     cgh.set_args(A);
+     sycl::nd_range ndr{{N}, {1}};
+     cgh.parallel_for(ndr, sqrt_test);
+   }).wait();
+
+  for (int i = 0; i < N; i++) {
+    float diff = A[i] - std::sqrt(static_cast<float>(i) / N);
+    if (diff != 0.0) {
+      printf("i:%d diff:%.2e\n", i, diff);
+      return 1; // Error
+    }
+  }
+  sycl::free(A, q);
+
+  return 0;
+}
\ No newline at end of file