Germany's top court ruled on Wednesday that there must be the option of registering a third gender on birth certificates.
The move, described by activists as a "small revolution", would make Germany the first European country to offer intersex people the choice of identifying as neither male nor female, the BBC reported.
The case was brought by a registered female whose chromosome test confirmed they were neither one sex nor the other. The constitutional court in Karlsruhe has given the government until the end of 2018 to pass a law specifying a category other than male or female.
The court said current regulations on civil status were discriminatory against intersex people. The category could be called "inter" or "various". A German government spokesperson said the government would comply with the ruling.
The activist group Third Option -- which has been campaigning for official recognition -- said on Twitter that it was "completely overwhelmed and speechless".
Intersex people are born with a mixture of male and female sex characteristics. The UN says the condition affects up to 1.7 per cent of the world's population.
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