Advocates are concerned for the safety of a Sydney woman who is being housed in a male prison in Western Australia because authorities do not recogniser her gender identity.

CJ Palmer, 38, has been in Perth’s Hakea remand prison since Friday after being extradited from New South Wales, two days after being arrested at a hotel in Surry Hills.

She faced court via video link from Hakea on Tuesday on charges of grievous bodily harm for allegedly knowingly exposing a male partner to HIV, and was refused bail. She is yet to enter a plea.

Rebecca Davies, president of People for Sex Worker Rights in Western Australia, said Palmer was “very distressed” and currently separated from the general population for her own protection. Davies said she was concerned Palmer may be put in solitary confinement.

“We are concerned for her safety and her mental well being,” Davies told Guardian Australia.

“It’s been shown repeatedly that solitary confinement is really bad for people’s mental health, and also solitary confinement is usually reserved as a punishment … she hasn’t done anything wrong in prison to be in solitary confinement.

“I don’t think that she would be safe if she wasn’t, though.”

Davies said Palmer was also distressed by media coverage of the case, which has focused on her role as a sex worker.

WA police identified Palmer as “a transgender sex worker” in a statement last week, and alleged she was diagnosed HIV positive in August 2014.

“Despite the diagnoses and counselling about treatment options and disclosure obligations, the woman allegedly participated in unprotected sex with a male client from early 2015,” police spokesman Luke Elliott said. “That client was diagnosed with HIV in September 2015, which subsequently resulted in a complaint to WA police.”

In the Perth magistrates’ court on Tuesday, Palmer’s lawyer, Martin Muk, said she denied she knew of the diagnosis and said the man was not a client but someone with whom she was in a consensual relationship.

“She is super stressed out right now,” Davies said. “This is a person here, and no one is acting like that. It’s really upsetting both for her and for us, for sex workers as a community.”

The WA Department of Corrective Services declined to comment on where Palmer was being housed, but said it “treats all prisoners in accordance with the WA Prisons Act”.

“Assessment of prisoners is based on risk factors including vulnerability and self-harm,” it said in a statement to Guardian Australia.

“The department is bound by the WA Gender Reassignment Act 2000 when required.”

The WA Prisoners Act does not specifically mention a policy relating to transgender prisoners or remandees, saying only: “In a prison containing prisoners of each sex, separate cells and sleeping quarters in different parts of the prison shall be allocated to male and female prisoners.”

The Gender Reassignment Act makes provisions for a person to be legally recognised in accordance with their gender identity, provided they make an application to the Gender Reassignment Board. The board can only consider an application from someone who was born in WA, underwent gender reassignment surgery in WA, or has been a resident of WA for more than 12 months.

Palmer has not legally changed her gender identity.

Human Rights Law Centre director of advocacy and strategic litigation, Anna Brown, said transgender people remained a relatively hidden subset of Australia’s prison population.

The UK government has promised to start providing statistics on the number of transgender people in its prisons, after two women, Joanne Latham and Vicky Thompson, apparently committed suicide within weeks of each other while being held in men’s jails.

“Trans people are already at high risk of suicide,” Brown told Guardian Australia. “If a trans woman is housed with men, treated as though they are male and constantly misgendered in a punitive environment where they are vulnerable to abuse, then that risk is likely to increase.

“Based on the information we know, placing this trans woman in a male prison seems inappropriate and puts an already vulnerable person at risk of psychological harm, whether from being treated as male or living in fear of abuse.”

Brown said most Australian jurisdictions required a person to have begun some kind of surgical or therapeutic transition to be legally recognised in accordance with their gender identity.

“If they haven’t changed their legal sex then I would have thought there’s an increased risk of being held in accordance with their legal sex, which would not be in accordance of with their gender identity,” she said.

Brown said there was a push to encourage Australian jurisdictions to legally recognise the gender identity of transgender and intersex people based on their affirmation alone.

“There needs to be a wholesale reform of the way we deal with legal recognition of sex in Australia, so that trans people can access the identity documents that they need to be treated with dignity and respect without invasive surgery or medical treatment,” she said.