diff --git a/src/components/DropdownSelect.vue b/src/components/DropdownSelect.vue
index 9164c06..5205ec8 100644
--- a/src/components/DropdownSelect.vue
+++ b/src/components/DropdownSelect.vue
@@ -171,11 +171,14 @@ const {
   updateModelValue,
 } = useMultiselect(props, emit);
 
-const setModelValue = (event: Event) => {
+const setModelValue = (
+  event: Event,
+  existingValue = false as number | false
+) => {
   const target = event.target as HTMLInputElement;
   const value = target.value;
 
-  updateModelValue(value, target.checked);
+  updateModelValue(value, target.checked, existingValue);
 };
 
 const filteredOptions = computed(() => {
@@ -357,7 +360,7 @@ defineExpose({ focus });
       </li>
 
       <li
-        v-for="option in orderedOptions?.slice(0, props.visibleLimit)"
+        v-for="(option, index) in orderedOptions?.slice(0, props.visibleLimit)"
         :key="option[modelKey]"
       >
         <slot
@@ -366,6 +369,8 @@ defineExpose({ focus });
           :checked="isOptionSelected(option)"
           :updateModelValue="setModelValue"
           :modelValue="props.modelValue"
+          :index="index"
+          :value="option[modelKey]"
         >
           <label>
             <input
diff --git a/src/components/__tests__/DropdownSelect.spec.ts b/src/components/__tests__/DropdownSelect.spec.ts
index 19d6435..3b0ddff 100644
--- a/src/components/__tests__/DropdownSelect.spec.ts
+++ b/src/components/__tests__/DropdownSelect.spec.ts
@@ -510,4 +510,50 @@ describe("Dropdown Select", () => {
       ["One", "Two", "Three"],
     ]);
   });
+
+  it("correctly updates a value in place when setModelValue is passed with an index in the second", async () => {
+    //  We need to use the slots to test this
+    const wrapper = mount(DropdownSelect, {
+      props: {
+        open: true,
+        options: ["One", "Two", "Three"],
+        modelValue: ["One", "Two", "Three"],
+        multiple: true,
+        "onUpdate:modelValue": (value) => {
+          wrapper.setProps({ modelValue: value });
+        },
+      },
+      slots: {
+        optionSlot: `
+        <template
+            #optionSlot="{ option, updateModelValue, modelValue, index }"
+          >
+          <label>
+            <input type="text"
+              :value="option.id"
+              @input="updateModelValue($event, index)"
+            />
+            {{ option }}
+          </label>
+        </template>
+      `,
+      },
+    });
+
+    // Click on the summary to open the dropdown
+    await wrapper.find("details").trigger("click");
+
+    // Find the input for the second option - it will have the value of Two
+    const input = wrapper.findAll("input").at(1);
+
+    expect(input?.element.value).toBe("Two");
+
+    // Change the value of the input
+    await input?.setValue("New Value");
+
+    // Confirm the value has been updated by checking that the second option is now "New Value"
+    expect(wrapper.emitted("update:modelValue")?.[0]).toEqual([
+      ["One", "New Value", "Three"],
+    ]);
+  });
 });