NHS England is to be taken to court by the UK’s equality watchdog for failing to offer fertility services to transgender patients.

The Equality and Human Rights Commission will launch a high-profile judicial review action, a legal manoeuvre that is likely to prove controversial at a time when the NHS is struggling to balance budgets and provide core services.

Last month the Observer reported that the commission had written to NHS England putting it on notice that it needed to offer fertility services to transgender patients before they underwent treatment for gender dysphoria, a process that normally results in a loss of fertility.

By extracting and storing eggs and sperm before they undergo gender reassignment, transgender people can choose to have their biological children delivered via surrogates later in life. However, many are keen to proceed with treatment when they are teenagers, and may not have the resources to pay for such fertility services. This, the commission argues, discriminates against transgender people, whom it says should be offered the services as a standard procedure.

NHS England maintains that it is not its responsibility to ensure that fertility treatment is available to all patients, including transgender people. Currently it falls to individual clinical commissioning groups – the bodies that buy services for patients – to decide whether to provide them on the NHS, but many choose not to do so for transgender patients, according to the commission.

After receiving NHS England’s response , the commission has said it will now start legal proceedings. It is understood that NHS England continues to argue that it is under no obligation to offer the service at a national level.

“We have received a comprehensive response from NHS England to our letter regarding the provision of fertility services for transgender patients before they undergo treatment for gender dysphoria,” said Rebecca Hilsenrath, chief executive of the commission.

“We are proceeding with our judicial review claim and will remain in discussions with NHS England about the need to ensure the transgender community can access health services free from discrimination, and that individuals do not have to choose between treatment for gender dysphoria and the chance to start a family.”

The commission argues that gender dysphoria falls within NHS England’s specialised commissioning remit, which ensures appropriate treatment is given to those with complex conditions.

The legal case is likely to shine a light on how a large increase in people requesting transitioning treatment is placing greater demands on the health service.

Penny Mordaunt, minister for women and equalities, has launched an inquiry into what has driven a 4,400% increase in the number of girls being referred for transitioning treatment in the past decade. In 2009, 40 girls were referred by doctors for gender treatment. Last year the number had risen to 1,806.

The role of social media and the teaching of transgender issues in schools will form part of the inquiry.

A spokeswoman for NHS England said: “NHS England has responded in detail to the EHRC explaining why we believe their request is both misjudged and potentially unfair to NHS patients. If, however, they still decide to sue the NHS, the courts will consider the matter in the usual way.”