In good news for Australians whose gender does not fall into conventional male and female categories, new passport guidelines approved by the federal government will now allow them to simply use the letter 'X'.

Foreign Ministry officials said Thursday the new rule will benefit mostly transgender people or those in an ambiguous intersex category, but to use the label on their passport they will need a certificate from a medical doctor.

Foreign Minister Kevin Rudd said the new measures will ensure that Australians with indeterminate gender will not be subjected to discrimination just because they have different sexual orientation or use unconventional gender identity.

"This amendment makes life easier and significantly reduces the administrative burden for sex and gender diverse people who want a passport that reflects their gender and physical appearance," Rudd said in a statement.

Like most countries, Australia has limited passport designations to male or female, but allows a change if the person has undergone medical procedures that effectively altered his or her gender.

Sen. Louise Pratt praised the government initiative, which she said should eliminate the unnecessary hassles that transgender travellers encounter at airports because their look failed to match their gender declaration.

"It's a really important recognition of people's human rights that if they choose to have their sex as ''indeterminate' ... they can," Pratt told The Associated Press.

"X is really quite important because there are people who are indeed genetically ambiguous and were probably arbitrarily assigned as one sex or the other at birth," the senator added.

Attorney-General Robert McClelland called the passport revision a milestone in eradicating any trace of discrimination against Australians who wish to travel unhindered by their identity.