Germany’s highest court has decided that people must be allowed to be entered in official records as neither male nor female, ruling that authorities should either create a third identity or scrap gender entries altogether.
The Federal Constitutional Court ruled in the case of a person who had applied to have their entry in the birth register changed from "female" to "inter/diverse" or "diverse".
Officials rejected this on the grounds that the law only allows for children to be registered as male or female, or for the gender to be left blank.
The plaintiff, whose name was not released, argued that this was a violation of their personal rights.
The court found that the law protects sexual identity, which has a "key position" in how individuals perceive themselves and are perceived by others.
It said that "the sexual identity of those people who can be assigned neither to the male nor the female sex is also protected", and said the constitution also protects them against discrimination because of their gender.
The German government has until the end of 2018 to draw up new rules.
The court said authorities have two ways to ensure that the rules comply with the constitution. It said that they could decide to do without any gender entry in civil registers - but "can also create the possibility for the affected people to choose another positive designation of their sex that is not male or female".
It did not specify what that should be.
Advocacy group Dritte Option, which has campaigned for a third gender option, wrote on Twitter that it was "completely overwhelmed and speechless".
It added that "this borders on a small revolution".
The minister for families in Chancellor Angela Merkel’s outgoing government, Katarina Barley, said a third gender option was "overdue".
Ms Barley’s centre-left Social Democrats have vowed to go into opposition after Germany’s September election, but Mrs Merkel’s conservatives are negotiating with two socially liberal parties to form a new administration.
Interior ministry spokesman Johannes Dimroth said the government is studying the verdict and will abide by the court’s December 2018 deadline.