Transgender footballer Hannah Mouncey will be allowed to play in state and territory women's leagues in 2018, as the AFL finalises its gender diversity policy for the national league.

The AFL blocked Mouncey from entering last year's AFLW draft after she had played several games for Ainslie in the ACT women's league.

She wants to play in Victoria against the state's top AFLW talent in 2018.

Previously, Mouncey would have had to apply to the individual league she wanted to play for and be given clearance, but the ruling means she is automatically accepted into any league under the AFL umbrella.

On Twitter, Mouncey issued a lengthy written statement. She also posted a YouTube video.

She said while she welcomed the AFL's decision, it would be "highly inappropriate" for her to thank them for allowing her to "do something open to every other Australian, which science and research has supported all along".

She outlined the difficulties of transitioning, including problems finding housing, employment and support, as well as losing friends through the process.

"It's with those examples in mind I think back to all those people who said I would transition just to play sport," she said.

"To all those people, all I can say is you need to wake up to yourselves.

"I can't think of anyone who would not just put themselves through something like this, but put those who they care about through it."

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It is unclear whether the ruling applies to all transgender players, or just Mouncey.

"Eligibility decisions are generally made by state and local leagues in accordance with the rules and policies of the relevant football body," the AFL said in a statement.

"However, the AFL strongly encourages all Australian football competitions to adopt the AFL's recommendation to facilitate the inclusion of trans players at the community level until the AFL's gender diversity policy is finalised."

'We are not people to be ignored'

The AFL said on Tuesday that the decision to not let Mouncey enter the AFLW draft only applied to last year.

AFL general manager of inclusion and social policy Tanya Hosch said the league was seeking advice from the Australian Sports Commission and the Australian Human Rights Commission on the issue.

"We are committed to inclusion, and want all Australians to be able to play or participate in our game," she said in a statement.

"These are complex issues and we are considering expert opinion, international frameworks and feedback from the communities that are impacted by our decisions."

Mouncey had previously played for the Australian men's handball team before transitioning.

In a statement, the AFL said it was developing a more comprehensive policy on the participation of trans and gender diverse athletes in its games.

Mouncey said the battle for her had become about much more than just playing football.

"It became about making sure that I as a trans person am not treated any differently to anyone else, and neither is any other trans person out there," she said.

"Yes, the AFL might prefer that I did not exist or chose to go and do something else, but that is not how it is, and we are not people to be ignored in the hope that will happen."

ABC/AAP