Australian passports will now have three gender options - male, female and x - so that people who are not biologically entirely male or female will find it easier to travel.
Australia's foreign minister said the amendment makes life easier and 'significantly reduces' the red tape gender diverse people have to go through to get a passport that 'reflects their gender and physical appearance'.
Previously in Australia, travellers were not allowed to change sex on their passport unless they had undergone surgery.
Transgendered passport holders, who have changed gender but not had surgery, can choose male or female, but cannot choose x.
Australian senator Louise Pratt, whose partner was born female and now lives as a man, said it is an enormous step for people who have trouble travelling abroad because their appearance doesn't match their gender.
She told the Daily Mail: '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.
'It's a really important recognition of people's human rights that if they choose to have their sex as "indeterminate", they can.'