A transgender beauty pageant is offering sex change surgery as the top prize for contestants.

The 2016 Miss Transsexual Australia pageant, to be held in Melbourne on January 30, offers winners a gift voucher for free male-to-female sex reassignment surgery at Kamol Hospital in Bangkok.

The prize, which includes return airfares, accommodation and cash, it valued at $20,000, but co-pageant organiser Gayzha Davao said prize winners are not obligated to undergo the procedure.

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Reining pageant queen: The current Miss Transsexual Australia title holder is J.O Rojas (right) who was crowned in 2015

Beauty queens: Contestants at the 2015 Miss Gay and Miss Transsexual Australia Beauty Pageant

'The choice of sex change surgery is purely up to the winner,' Ms Davao said.

'She can choose to have a sex change, or, undergo cosmetic or plastic surgery services other than a sex change, at one of the Thailand's top cosmetic and plastic surgery hospitals.

'As a beauty pageant organiser, our role is to raise awareness and promote acceptance and positive images of transgender people.

'We are not promoting surgery for transgender people. We are saying that surgery is an option for some transgender people to help them complete their transition journey.'

Surgery prize: The pageant has offered free male-to-female sex reassignment surgery as its top prize, pictured are contestants Karina Lago (left) and Yasmin London (right)

According to the Thailand Law Reform, patients that wish to undergo sex reassignment surgery in Thailand must adhere to medical guidelines.

These include approval from at least two psychiatrists and the person having lived their desired sex for at least one year.

In addition, the Kamol Hospital website said patients must be 20 years of age or have permission from their legal guardian or parent, have taken female hormones for at least one year, must have felt feminine feelings for a long time and must feel disgusted with their sexual organ.

Option only: 'We are not promoting surgery for transgender people. We are saying that surgery is an option for some transgender people to help them complete their transition journey,' a pageant organiser said

Different options: If they do not wish to undergo sex change surgery, contestants can opt for alternative cosmetic or plastic surgery options, pictured are contestants Andrea Smith (left) and Nadia Chin (right)

A Miss Transsexual Australia spokesman told Daily Mail Australia the prize was donated by Kamol Hospital and was selected as 'no one else made an offer of sponsorship'.

It is the first time the prize has been offered in the pageant.

'The pageant is more widely known in the transgender communities in Thailand and Philippines than it is here,' he said.

'If an Australian hospital made such an offer then it would be considered, but as you know Thailand has much more experience in this kind of surgery than any other country.'

Glitz and glamour: This is the first time surgery has been offered as a prize in the contest, pictures are Miss Gay and Miss Transsexual contestants

Personal choice: Ms Daveo said: 'the winner who believes surgery is the only option will welcome the prize', pictured are contestants Talissa Andrada (left) and Alyssa Luck (right)

Eight contestants from across Australia will take part in the pageant, which will run alongside a competition for female impersonators and drag queens.

The spokesman said if the winner wants to undergo sex reassignment surgery, the prize is appropriate.

'Certainly the winner who believes surgery is the only option will welcome the prize,' Ms Davao said.

Festival fun: The Miss Transexual Australia pageant will be held as part of the Midsumma Festival, pictured is contestant Laura Robertson

Facing discrimination: 'Life is not easy for a transgender, same as it is not easy for all members of the LGBTIQ community,'a spokesman said

The Miss Transsexual pageant will be held as part of the Midsumma Festival.

Contestants will be judges on their costume, swim wear and evening wear followed by a question and answer session for the top three contestants.

The pageant spokesman said the Australian community was slowly adjusting to the transgender community, but discrimination was still an issue.

'Life is not easy for a transgender, same as it is not easy for all members of the LGBTIQ community,' he said.