Use a label type mailmerge and delete the Next Record  field from each of
the labels.  With that arrangement, each new sheet of labels will however
advance to the next record.  If you need more that one page of the same
label, after setting up the labels using the label type main document,
change it to a formletter document and copy and paste the required number of
additional rows.

You want your cake and your ha'penny :)
Propagate will only be available with the document type set to label, but
propagate will add the next fields also. Change the document type to label
propagate the labels, then change it back to form letter and with the field
content displayed (ALT+F9) use the replace function to replace ^d NEXT with
nothing. Then add NEXT fields to the cells where you require them. or leave
them off for a page of labels for each address.

The following macro will do all of this except add the next fields:

Sub DuplicateLabels()

'Change the document type to mailing label
ActiveDocument.MailMerge.MainDocumentType = _
wdMailingLabels

'propagate the labels
WordBasic.MailMergePropagateLabel

'display the field codes so they can be removed
ActiveWindow.View.ShowFieldCodes = True
Selection.Find.ClearFormatting
Selection.Find.Replacement.ClearFormatting

'search for and remove the {next} fields

'added by the propagation and which are not required
With Selection.Find
.Text = "^d NEXT"
.Replacement.Text = ""
.Forward = True
.Wrap = wdFindContinue
.Format = False
.MatchCase = False
.MatchWholeWord = False
.MatchWildcards = False
.MatchSoundsLike = False
.MatchAllWordForms = False
End With
Selection.Find.Execute replace:=wdReplaceAll

'revert the document type to a normal document
ActiveDocument.MailMerge.MainDocumentType = _

wdFormLetters
End Sub

See http://www.gmayor.com/installing_macro.htm