The German government on Wednesday approved a draft law allowing a third gender option on birth certificates for babies who are not distinctly male or female.

In a move described by the justice minister as "long overdue", Chancellor Angela Merkel's left-right coalition passed a bill permitting children born intersex to be registered as "various".

The measure follows a ruling by Germany's top tribunal last November that current regulations on civil status are discriminatory against intersex people, noting that the sexual identity of an individual is protected as a basic right.

Germany has since 2013 allowed babies born with characteristics of both sexes to leave the gender options of male and female blank.

The Federal Constitutional Court gave parliament until the end of 2018 to amend the current legislation.

The decision was in favour of an appeal brought by an intersex adult and said that courts and state authorities should no longer compel intersex people to choose between identifying as male or female.