Like others, I use Pigma pens. Early on I made a label for a quilt with a Sharpie, and the ink bled and made it look fuzzy, plus, over time and not as many washings as you would think, it faded A LOT.

I've used Pigma pens to write on a piece of muslin with a Spirograph and put a square of that in my son's eye-spy quilt, which has been washed often, and it isn't faded. But heat set, and if you use colors instead of black, I suggest washing a test fabric a few times. It seems like some of the colors, but I don't remember which ones, were more prone to bleeding and transfer to other fabrics with a washing.

Thanks for the info. I've just bought a Fabrico pen and it's perfect - I want to do a family tree quilt, so am going to write the names onto fabric leaves.