The Obama administration sent a letter Friday to every public school district in America warning them they should allow transgender students to use bathrooms consistent with their chosen gender identity, or risk losing federal funding.

The sweeping guidance does not have the force of law but warns that schools that don't comply could face lawsuits or lose federal aid. The move ups the ante in the debate over bathroom laws, which are the subject of a highly charged lawsuit between North Carolina and the Department of Justice.

A gender-neutral bathroom is seen at the University of California, Irvine in Irvine, California September 30, 2014. REUTERS/Lucy Nicholson/Files

At the heart of Friday's letter, which was first reported by the New York Times, is guidelines on Title IX — the 1972 law that prohibits discrimination on the basis of sex in federally funded education.

"A school's failure to treat students consistent with their gender identity may create or contribute to a hostile environment in violation of Title IX," the letter, sent from the Department of Justice and the Department of Education, said.

Related: Read the letter from the Departments of Justice and Education (.pdf)

If schools are found to be discriminatory, they could lose Title IX funds, it added.

The letter outlined basic LGBT terminology ("A transgender male is someone who identifies as male but was assigned the sex of female at birth") and reminded schools that for the purposes of Title IX, "a school must not treat a transgender student different from the way it treats other students of the same gender identity."

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Following the announcement, lookups for the word "transgender" skyrocketed more than 630 percent on Merriam-Webster.com, the dictionary company said on Twitter.

Lookups for 'transgender' are up more than 630% this morning, following a letter from the Obama administration. https://t.co/SsExi7kDkb — Merriam-Webster (@MerriamWebster) May 13, 2016

The move comes during an ongoing legal battle between the federal government and North Carolina Gov. Pat McCrory over the state's law that requires individuals to use public restrooms that correspond to the sex on their birth certificate.

Related: DOJ Files Lawsuit Challenging North Carolina Bathroom Law

The administration's letter touches on issues beyond restrooms, such as locker rooms and athletic teams, and even yearbook photos.

"A school may not discipline students or exclude them from participating in activities for appearing or behaving in a manner that is consistent with their gender identity or that doesn't not conform to stereotypical notions of masculinity or femininity (e.g.yearbook photographs, at school dances, or at graduation ceremonies," it said.

More on Title IX: A Level Playing Field: Why the U.S. Is So Strong In Women's Soccer

It also urged privacy for transgender students, informing schools they needed to "take reasonable steps" to keep a students assigned sex or birth name private if a student wishes, or risk violating the Family Educational Rights and Privacy Act.

It was signed by Catherine Lhamon, assistant secretary for in the Office for Civil Rights with the Department of Education, and Vanita Gupta, head of the Justice Department's civil rights division.

Sent along with the letter was a list of "Examples of Policies and Emerging Practices for Supporting Transgender Students," such as a policy issued by the Los Angeles Unified School District that states, "there is no medical or mental health diagnosis or treatment threshold that students must meet in order to have their gender identity recognized and respected."

The National Center for Lesbian Rights, a group devoted to the legal rights of the lesbian, gay, bisexual, and transgender community, praised the federal guidance.

“This is the boldest stance the federal government could take to support transgender students,” said NCLR Transgender Youth Project Staff Attorney Asaf Orr in a statement. “We applaud this historic step, which sends the strongest possible message to transgender students and their families that they are valuable, equal, and welcome members of our national community."

But the letter was met with immediate backlash, too. Texas Gov. Greg Abbott tweeted Friday morning, "I announced today that Texas is fighting this. Obama can't rewrite the Civil Rights Act. He's not a King."

And Texas Lt. Gov. Dan Patrick said, "We will not yield to blackmail from the president of the United States."

"This goes against the values of so many people," he said. "This has everything to do with keeping the federal government out of local issues."

Texas Sen. John Cornyn said the Obama administration’s guidance "is unwelcomed."