Transgender Victorians will now have the freedom to choose the gender on their birth certificates without gender reassignment surgery.
The birth certificate bill passed 26-14 in the Victorian Upper House on Tuesday night and will become law once receiving royal assent.
"Interstate and international evidence shows that whilst not a large number of people take up these options it's simply is an option that's there to people the choice to make sure that identity documents reflect the reality of the life that people live," Equality Minister Martin Foley told 3AW on Wednesday.
Victoria joins Tasmania, Northern Territory, South Australia and the ACT in passing the laws.
In April, Tasmania was the first state to make the inclusion on birth certificates.
Gender diversity activists took so social media to celebrate the success, which marks a significant win in the fight for transgender equality in Australia.