Nepal has become the third country in Asia after India and Bangladesh to grant separate recognition to sexual minorities based on their gender identities.
On Wednesday, the country's home ministry decided to provide citizenship certificate to LGBTIs (lesbians, gays, bisexuals, transgender and inter sex) as 'others' and not categorize them as males or females.
"The LGBTI community will from now onwards be categorized as 'others'. We have already written to the law ministry in this regard," Republica quoted home ministry spokesperson Shankar Koirala.
The direction comes five years after the country's Supreme Court asked the government to frame equal laws for LGBTIs and at a time when Nepal is within months of getting a new constitution.
Sexual minorities who faced harassment, problems in getting work or difficulties in even opening a bank account due to their refusal to identity as males or females are ecstatic at the development.
"It's a big decision and we are very happy. This will help us get work, recognition and also hopefully bring down cases of harassment," said Badri Pun, 37, who was born a female but grew up as male.
Despite any official order, last year Pun became the second person in Nepal to be granted a citizenship certificate by the Myagdi district administration where his gender was shown as 'third'.
Though there has been no official census on the number of LGBTIs in Nepal, estimates say they could be somewhere around 500,000 in a country of 27 million.
"Half the battle has been won. Now we will try to get equal rights in all spheres and also seek a proper census of LGBTIs," said Sunil Babu Pant, Nepal's first openly gay lawmaker who started Blue Diamond Society a decade ago to fight for rights of sexual minorities.
Bhumika Shrestha, 24, Nepal's first transgender politician and member of Nepali Congress, feels with Wednesday's decision society's views on the LGBTI community would also change slowly.
"I am very proud that our movement has finally got official recognition. I am very eager to get my citizenship certificate as 'others'," said Manisha Bista, 37, President of Federation of Sexual and Gender Minorities (Nepal).
In 2005 India allowed third-gender citizens to registers for passports as eunuchs or 'E'. Four years later the Election Commission started following the same practice while issuing voter identity cards.
While Bangladesh also categories third-gender citizens separately in voter identity cards, Pakistan is yet to implement such provisions despite a 2009 Supreme Court order.