diff --git a/packages/block-editor/src/components/media-upload/index.native.js b/packages/block-editor/src/components/media-upload/index.native.js
index 05aabd9a9a3cd..8f793e4c0fa3f 100644
--- a/packages/block-editor/src/components/media-upload/index.native.js
+++ b/packages/block-editor/src/components/media-upload/index.native.js
@@ -39,6 +39,7 @@ export const OPTION_TAKE_VIDEO = __( 'Take a Video' );
 export const OPTION_TAKE_PHOTO = __( 'Take a Photo' );
 export const OPTION_TAKE_PHOTO_OR_VIDEO = __( 'Take a Photo or Video' );
 export const OPTION_INSERT_FROM_URL = __( 'Insert from URL' );
+export const OPTION_WORDPRESS_MEDIA_LIBRARY = __( 'WordPress Media Library' );
 
 const URL_MEDIA_SOURCE = 'URL';
 
@@ -78,6 +79,8 @@ export class MediaUpload extends Component {
 	}
 
 	getAllSources() {
+		const { onSelectURL } = this.props;
+
 		const cameraImageSource = {
 			id: mediaSources.deviceCamera, // ID is the value sent to native.
 			value: mediaSources.deviceCamera + '-IMAGE', // This is needed to diferenciate image-camera from video-camera sources.
@@ -124,16 +127,17 @@ export class MediaUpload extends Component {
 			id: URL_MEDIA_SOURCE,
 			value: URL_MEDIA_SOURCE,
 			label: __( 'Insert from URL' ),
-			types: [ MEDIA_TYPE_AUDIO ],
+			types: [ MEDIA_TYPE_AUDIO, MEDIA_TYPE_IMAGE ],
 			icon: globe,
 		};
 
+		// Only include `urlSource` option if `onSelectURL` prop is present, in order to match the web behavior.
 		const internalSources = [
 			deviceLibrarySource,
 			cameraImageSource,
 			cameraVideoSource,
 			siteLibrarySource,
-			urlSource,
+			...( onSelectURL ? [ urlSource ] : [] ),
 		];
 
 		return internalSources.concat( this.state.otherMediaOptions );
diff --git a/packages/block-editor/src/components/media-upload/test/index.native.js b/packages/block-editor/src/components/media-upload/test/index.native.js
index e54a9f5219321..73cbf41b7dfc1 100644
--- a/packages/block-editor/src/components/media-upload/test/index.native.js
+++ b/packages/block-editor/src/components/media-upload/test/index.native.js
@@ -20,6 +20,7 @@ import {
 	OPTION_TAKE_VIDEO,
 	OPTION_TAKE_PHOTO,
 	OPTION_INSERT_FROM_URL,
+	OPTION_WORDPRESS_MEDIA_LIBRARY,
 } from '../index';
 
 const MEDIA_URL = 'http://host.media.type';
@@ -33,8 +34,11 @@ describe( 'MediaUpload component', () => {
 		expect( wrapper ).toBeTruthy();
 	} );
 
-	it( 'shows right media capture option for media type', () => {
-		const expectOptionForMediaType = ( mediaType, expectedOption ) => {
+	describe( 'Media capture options for different media block types', () => {
+		const expectOptionForMediaType = async (
+			mediaType,
+			expectedOptions
+		) => {
 			const wrapper = render(
 				<MediaUpload
 					allowedTypes={ [ mediaType ] }
@@ -52,11 +56,32 @@ describe( 'MediaUpload component', () => {
 			);
 			fireEvent.press( wrapper.getByText( 'Open Picker' ) );
 
-			wrapper.getByText( expectedOption );
+			expectedOptions.forEach( ( item ) => {
+				const option = wrapper.getByText( item );
+				expect( option ).toBeVisible();
+			} );
 		};
-		expectOptionForMediaType( MEDIA_TYPE_IMAGE, OPTION_TAKE_PHOTO );
-		expectOptionForMediaType( MEDIA_TYPE_VIDEO, OPTION_TAKE_VIDEO );
-		expectOptionForMediaType( MEDIA_TYPE_AUDIO, OPTION_INSERT_FROM_URL );
+
+		it( 'shows the correct media capture options for the Image block', () => {
+			expectOptionForMediaType( MEDIA_TYPE_IMAGE, [
+				OPTION_TAKE_PHOTO,
+				OPTION_WORDPRESS_MEDIA_LIBRARY,
+				OPTION_INSERT_FROM_URL,
+			] );
+		} );
+
+		it( 'shows the correct media capture options for the Video block', () => {
+			expectOptionForMediaType( MEDIA_TYPE_VIDEO, [
+				OPTION_TAKE_VIDEO,
+				OPTION_WORDPRESS_MEDIA_LIBRARY,
+			] );
+		} );
+
+		it( 'shows the correct media capture options for the Audio block', () => {
+			expectOptionForMediaType( MEDIA_TYPE_AUDIO, [
+				OPTION_INSERT_FROM_URL,
+			] );
+		} );
 	} );
 
 	const expectMediaPickerForOption = (
diff --git a/packages/block-library/src/image/edit.native.js b/packages/block-library/src/image/edit.native.js
index f9025bf2333f9..24df9fce2866a 100644
--- a/packages/block-library/src/image/edit.native.js
+++ b/packages/block-library/src/image/edit.native.js
@@ -1,7 +1,12 @@
 /**
  * External dependencies
  */
-import { View, TouchableWithoutFeedback } from 'react-native';
+import {
+	ActivityIndicator,
+	Image as RNImage,
+	TouchableWithoutFeedback,
+	View,
+} from 'react-native';
 import { useRoute } from '@react-navigation/native';
 
 /**
@@ -45,7 +50,7 @@ import {
 	blockSettingsScreens,
 } from '@wordpress/block-editor';
 import { __, _x, sprintf } from '@wordpress/i18n';
-import { getProtocol, hasQueryArg } from '@wordpress/url';
+import { getProtocol, hasQueryArg, isURL } from '@wordpress/url';
 import { doAction, hasAction } from '@wordpress/hooks';
 import { compose, withPreferredColorScheme } from '@wordpress/compose';
 import { withSelect, withDispatch } from '@wordpress/data';
@@ -57,6 +62,7 @@ import {
 } from '@wordpress/icons';
 import { store as coreStore } from '@wordpress/core-data';
 import { store as editPostStore } from '@wordpress/edit-post';
+import { store as noticesStore } from '@wordpress/notices';
 
 /**
  * Internal dependencies
@@ -207,6 +213,7 @@ export class ImageEdit extends Component {
 		this.onImagePressed = this.onImagePressed.bind( this );
 		this.onSetFeatured = this.onSetFeatured.bind( this );
 		this.onFocusCaption = this.onFocusCaption.bind( this );
+		this.onSelectURL = this.onSelectURL.bind( this );
 		this.updateAlignment = this.updateAlignment.bind( this );
 		this.accessibilityLabelCreator = this.accessibilityLabelCreator.bind(
 			this
@@ -461,6 +468,45 @@ export class ImageEdit extends Component {
 		} );
 	}
 
+	onSelectURL( newURL ) {
+		const {
+			createErrorNotice,
+			imageDefaultSize,
+			setAttributes,
+		} = this.props;
+
+		if ( isURL( newURL ) ) {
+			this.setState( {
+				isFetchingImage: true,
+			} );
+
+			// Use RN's Image.getSize to determine if URL is a valid image
+			RNImage.getSize(
+				newURL,
+				() => {
+					setAttributes( {
+						url: newURL,
+						id: undefined,
+						width: undefined,
+						height: undefined,
+						sizeSlug: imageDefaultSize,
+					} );
+					this.setState( {
+						isFetchingImage: false,
+					} );
+				},
+				() => {
+					createErrorNotice( __( 'Image file not found.' ) );
+					this.setState( {
+						isFetchingImage: false,
+					} );
+				}
+			);
+		} else {
+			createErrorNotice( __( 'Invalid URL.' ) );
+		}
+	}
+
 	onFocusCaption() {
 		if ( this.props.onFocus ) {
 			this.props.onFocus();
@@ -484,6 +530,14 @@ export class ImageEdit extends Component {
 		);
 	}
 
+	showLoadingIndicator() {
+		return (
+			<View style={ styles.image__loading }>
+				<ActivityIndicator animating />
+			</View>
+		);
+	}
+
 	getWidth() {
 		const { attributes } = this.props;
 		const { align, width } = attributes;
@@ -611,7 +665,7 @@ export class ImageEdit extends Component {
 	}
 
 	render() {
-		const { isCaptionSelected } = this.state;
+		const { isCaptionSelected, isFetchingImage } = this.state;
 		const {
 			attributes,
 			isSelected,
@@ -713,9 +767,11 @@ export class ImageEdit extends Component {
 		if ( ! url ) {
 			return (
 				<View style={ styles.content }>
+					{ isFetchingImage && this.showLoadingIndicator() }
 					<MediaPlaceholder
 						allowedTypes={ [ MEDIA_TYPE_IMAGE ] }
 						onSelect={ this.onSelectMediaUploadOption }
+						onSelectURL={ this.onSelectURL }
 						icon={ this.getPlaceholderIcon() }
 						onFocus={ this.props.onFocus }
 						autoOpenMediaUpload={
@@ -784,6 +840,8 @@ export class ImageEdit extends Component {
 							} ) => {
 								return (
 									<View style={ imageContainerStyles }>
+										{ isFetchingImage &&
+											this.showLoadingIndicator() }
 										<Image
 											align={
 												align && alignToFlex[ align ]
@@ -836,6 +894,7 @@ export class ImageEdit extends Component {
 				allowedTypes={ [ MEDIA_TYPE_IMAGE ] }
 				isReplacingMedia={ true }
 				onSelect={ this.onSelectMediaUploadOption }
+				onSelectURL={ this.onSelectURL }
 				render={ ( { open, getMediaOptions } ) => {
 					return getImageComponent( open, getMediaOptions );
 				} }
@@ -881,7 +940,10 @@ export default compose( [
 		};
 	} ),
 	withDispatch( ( dispatch ) => {
+		const { createErrorNotice } = dispatch( noticesStore );
+
 		return {
+			createErrorNotice,
 			closeSettingsBottomSheet() {
 				dispatch( editPostStore ).closeGeneralSidebar();
 			},
diff --git a/packages/block-library/src/image/styles.native.scss b/packages/block-library/src/image/styles.native.scss
index 476bb8b2be471..0bcec21b57189 100644
--- a/packages/block-library/src/image/styles.native.scss
+++ b/packages/block-library/src/image/styles.native.scss
@@ -57,3 +57,14 @@
 .removeFeaturedButton {
 	color: $alert-red;
 }
+
+.image__loading {
+	align-items: center;
+	background-color: rgba(10, 10, 10, 0.5);
+	flex: 1;
+	height: 100%;
+	justify-content: center;
+	position: absolute;
+	width: 100%;
+	z-index: 1;
+}