diff --git a/.gitignore b/.gitignore
index f834520..74a9dba 100644
--- a/.gitignore
+++ b/.gitignore
@@ -63,4 +63,7 @@ localstack-pro-azure/tests/otherlangs/dotnet/*/obj
 
 # setuptools_scm version.py
 */*/*/*/version.py
-localstack-sdk-python-2/.openapi-generator/
\ No newline at end of file
+localstack-sdk-python-2/.openapi-generator/
+
+# setuptools_scm version.py
+**/version.py
diff --git a/VERSION b/VERSION
deleted file mode 100644
index 81340c7..0000000
--- a/VERSION
+++ /dev/null
@@ -1 +0,0 @@
-0.0.4
diff --git a/bin/generate.sh b/bin/generate.sh
index 083804a..beeeb59 100755
--- a/bin/generate.sh
+++ b/bin/generate.sh
@@ -1,7 +1,5 @@
 #!/bin/bash
 
-version=$(cat VERSION)
-
 docker run --rm -v "${PWD}:/local" openapitools/openapi-generator-cli:v7.10.0 generate \
     -i https://raw.githubusercontent.com/localstack/openapi/refs/heads/main/openapi/emulators/localstack-spec-latest.yml \
     --skip-validate-spec \
@@ -9,7 +7,6 @@ docker run --rm -v "${PWD}:/local" openapitools/openapi-generator-cli:v7.10.0 ge
     -o /local//packages/localstack-sdk-generated \
     --global-property models,apis,supportingFiles \
     -p packageName=localstack.sdk \
-    -p packageVersion=$version \
     --template-dir /local/packages/localstack-sdk-generated/templates \
     --global-property apiTests=false,modelTests=false \
     --global-property apiDocs=false,modelDocs=False
diff --git a/localstack-sdk-python/localstack/sdk/clients.py b/localstack-sdk-python/localstack/sdk/clients.py
index 3c7207c..d29ef6e 100644
--- a/localstack-sdk-python/localstack/sdk/clients.py
+++ b/localstack-sdk-python/localstack/sdk/clients.py
@@ -1,3 +1,4 @@
+from localstack.sdk import version
 from localstack.sdk.api_client import ApiClient
 from localstack.sdk.configuration import Configuration
 
@@ -30,3 +31,5 @@ def __init__(self, host: str | None = None, auth_token: str | None = None, **kwa
         self.auth_token = auth_token
         self.configuration = Configuration(host=self.host)
         self._api_client = ApiClient(configuration=self.configuration)
+        # The generated code comes with 1.0.0 hard-coded. We set here the correct version
+        self._api_client.user_agent = f"LocalStack SDK/{version.version}/python"
diff --git a/packages/localstack-sdk-generated/localstack/sdk/api_client.py b/packages/localstack-sdk-generated/localstack/sdk/api_client.py
index 16fe354..7cb3732 100644
--- a/packages/localstack-sdk-generated/localstack/sdk/api_client.py
+++ b/packages/localstack-sdk-generated/localstack/sdk/api_client.py
@@ -91,7 +91,7 @@ def __init__(
             self.default_headers[header_name] = header_value
         self.cookie = cookie
         # Set default User-Agent.
-        self.user_agent = 'OpenAPI-Generator/0.0.4/python'
+        self.user_agent = 'OpenAPI-Generator/1.0.0/python'
         self.client_side_validation = configuration.client_side_validation
 
     def __enter__(self):
diff --git a/packages/localstack-sdk-generated/localstack/sdk/configuration.py b/packages/localstack-sdk-generated/localstack/sdk/configuration.py
index 66e1426..c114bfc 100644
--- a/packages/localstack-sdk-generated/localstack/sdk/configuration.py
+++ b/packages/localstack-sdk-generated/localstack/sdk/configuration.py
@@ -495,7 +495,7 @@ def to_debug_report(self) -> str:
                "OS: {env}\n"\
                "Python Version: {pyversion}\n"\
                "Version of the API: latest\n"\
-               "SDK Package Version: 0.0.4".\
+               "SDK Package Version: 1.0.0".\
                format(env=sys.platform, pyversion=sys.version)
 
     def get_host_settings(self) -> List[HostSetting]:
diff --git a/packages/localstack-sdk-generated/pyproject.toml b/packages/localstack-sdk-generated/pyproject.toml
index 49bb53e..ce3995e 100644
--- a/packages/localstack-sdk-generated/pyproject.toml
+++ b/packages/localstack-sdk-generated/pyproject.toml
@@ -1,6 +1,6 @@
 [project]
 name = "localstack-sdk-generated"
-version = "0.0.4"
+dynamic = ["version"]
 description = "LocalStack REST API - Generated Code"
 authors = [
         { name = "LocalStack Contributors", email = "info@localstack.cloud" }
@@ -18,13 +18,17 @@ dev-dependencies = [
 ]
 
 [build-system]
-requires = ["setuptools"]
+requires = ["setuptools", "setuptools_scm>=8"]
 build-backend = "setuptools.build_meta"
 
+[tool.setuptools_scm]
+local_scheme = "no-local-version"
+root = "../.."
+
 [tool.setuptools]
 package-dir = { "" = "."}
 
 [tool.setuptools.packages.find]
 where = ["."]
 include = ["*"]
-exclude = ["tests*"]
\ No newline at end of file
+exclude = ["tests*"]
diff --git a/packages/localstack-sdk-generated/templates/pyproject.mustache b/packages/localstack-sdk-generated/templates/pyproject.mustache
index a6c7628..ce3995e 100644
--- a/packages/localstack-sdk-generated/templates/pyproject.mustache
+++ b/packages/localstack-sdk-generated/templates/pyproject.mustache
@@ -1,6 +1,6 @@
 [project]
 name = "localstack-sdk-generated"
-version = "{{{packageVersion}}}"
+dynamic = ["version"]
 description = "LocalStack REST API - Generated Code"
 authors = [
         { name = "LocalStack Contributors", email = "info@localstack.cloud" }
@@ -18,13 +18,17 @@ dev-dependencies = [
 ]
 
 [build-system]
-requires = ["setuptools"]
+requires = ["setuptools", "setuptools_scm>=8"]
 build-backend = "setuptools.build_meta"
 
+[tool.setuptools_scm]
+local_scheme = "no-local-version"
+root = "../.."
+
 [tool.setuptools]
 package-dir = { "" = "."}
 
 [tool.setuptools.packages.find]
 where = ["."]
 include = ["*"]
-exclude = ["tests*"]
\ No newline at end of file
+exclude = ["tests*"]
diff --git a/pyproject.toml b/pyproject.toml
index fba9e55..3dc46e6 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -5,7 +5,7 @@ description = "Python SDK for LocalStack"
 authors = [
         { name = "LocalStack Team", email = "info@localstack.cloud"}
 ]
-version = "0.0.4"
+dynamic = ["version"]
 dependencies = [
     "localstack-sdk-generated"
 ]
@@ -17,9 +17,13 @@ Repository = "https://github.com/localstack/localstack-sdk-python.git"
 Issues = "https://github.com/localstack/localstack-sdk-python/issues"
 
 [build-system]
-requires = ["setuptools>=64"]
+requires = ["setuptools>=64", "setuptools_scm>=8"]
 build-backend = "setuptools.build_meta"
 
+[tool.setuptools_scm]
+version_file = "localstack-sdk-python/localstack/sdk/version.py"
+local_scheme = "no-local-version"
+
 [tool.setuptools.dynamic]
 readme = { file = ["README.md"], content-type = "text/markdown"}
 
@@ -30,6 +34,8 @@ dev-dependencies=[
     "boto3>=1.35.40",
 ]
 
+cache-keys = [{ file = "pyproject.toml" }, { git = { commit = true , tags = true }}]
+
 [tool.uv.sources]
 localstack-sdk-generated = { workspace = true }
 
diff --git a/tests/test_client.py b/tests/test_client.py
new file mode 100644
index 0000000..dc529f3
--- /dev/null
+++ b/tests/test_client.py
@@ -0,0 +1,7 @@
+import localstack.sdk.aws
+from localstack.sdk import version
+
+
+def test_client_version():
+    client = localstack.sdk.aws.AWSClient()
+    assert version.version in client._api_client.user_agent
diff --git a/uv.lock b/uv.lock
index c0e910e..c237825 100644
--- a/uv.lock
+++ b/uv.lock
@@ -77,7 +77,6 @@ wheels = [
 
 [[package]]
 name = "localstack-sdk-generated"
-version = "0.0.4"
 source = { editable = "packages/localstack-sdk-generated" }
 dependencies = [
     { name = "pydantic" },
@@ -104,7 +103,6 @@ dev = [{ name = "pytest", specifier = ">=7.2.1" }]
 
 [[package]]
 name = "localstack-sdk-python"
-version = "0.0.4"
 source = { editable = "." }
 dependencies = [
     { name = "localstack-sdk-generated" },