The Australian Defence Force has cleared gay members to march in uniform in next year's Sydney Gay and Lesbian Mardi Gras.

The move comes 20 years after the ADF lifted a ban on homosexuals in the armed forces.

A statement issued by the ADF says soldiers, sailors and air men and women will march in formation in the parade in March next year.

They have been allowed to join a Defence Force contingent in the parade for the last five years, but not in uniform.

The chair of the Defence Lesbian, Gay, Bisexual, Transgender and Intersex Information Service says the last request for permission in 2006 was refused.

Air Force Squadron Leader Vince Chong says the decision removes any doubts about gay people having successful careers in the military .

"Mardi Gras is an important event celebrating sexual orientation and gender diversity," he said.

"It really a great time for Defence to be participating. What this tells the international community is that the Australian Defence Force is an inclusive organisation.

"The decision to allow a uniformed contingent really highlights the importance the Department is placing on diversity and inclusion."

The statement says diversity is an asset and workplace inclusion will be a high priority as Defence undergoes cultural change.

The ADF says the decision demonstrates the ADF's desire to reflect the community it serves.