By Gopal Sharma

KATHMANDU (Thomson Reuters Foundation) - Nepal will issue passports to sexual minorities, adding a third gender category, an official said on Wednesday in a sign of the conservative Hindu-majority country becoming more liberal since the end of a decade-long civil war.

The Himalayan nation's lesbian, gay, bisexual and transgender (LGBT) people are identified as either male or female in passports, despite a 2007 Supreme Court ruling ordering authorities to amend laws to include a third gender.

"We have changed the passport regulations and will add a third category of gender for those people who do not want to be identified as male or female," Lok Bahadur Thapa, chief of the government’s passport department, told the Thomson Reuters Foundation.

Nepal joins a handful of countries that recognize a third gender: citizens of Australia and New Zealand can choose from three genders for their passports - male female or indeterminate, marked by an "x" in the passport.

India's Supreme Court last year recognized the third gender, which lawyers say would apply to all identity documents, including a birth certificate, passport and driving license.

In Nepal, activists said the third gender recognition on passports would help tackle widespread discrimination against the country's sexual minorities.

"It is a very progressive move, and we welcome it," said Pinky Gurung, chief of the Blue Diamond Society, a leading gay rights group.

Gurung called on authorities to also amend legislation, such as inheritance laws, to include the third gender as currently inheritance rights are only awarded to either "sons" or "daughters".

Nepal emerged from a decade of conflict against Maoist rebels in 2006, after which it began to acknowledge the rights of the LGBT community.

Same-sex marriages have taken place in public though they still remain unrecognized by law, and gay pride parades and beauty contests have also been held in the capital Kathmandu.

However, gay sex remains illegal with a maximum sentence of one year imprisonment, and gay rights activists say the LGBT community continues to face discrimination.

The Maoists, who form the main opposition group in parliament now, say one of the objectives of the conflict was the protection of the rights of sexual minorities.

The country is preparing its first constitution after the abolition of the 239-year-old Hindu monarchy in 2008. The charter due to be adopted this month is expected to ensure greater rights to minority groups such as the LGBT community.

(Reporting by Gopal Sharma. Editing by Nita Bhalla and Alisa Tang.)