Previously, "exceptional circumstances" had to be applied to funding applications for treatment of gender dysphoria.

The condition means those affected feel trapped in the body of the wrong sex.

The HCW said the Welsh health minister had now approved this policy. It means Wales follows other UK nations.

A HCW spokesman said: "We have been working with the Gender Trust on the development of a policy for accessing this treatment in Wales.

"The policy will enhance access to treatment under clear access criteria."

In the last 12 months, the HCW has reviewed a backlog of failed cases since 2005, and funded approximately 20.

The Gender Trust and Press for Change, another organisation for transgender people, have welcomed the move.

Benjamin Thom, vice-chair of the Gender Trust, said: "Welsh trans people had been dramatically affected by the policy, leading to suicide attempts, public abuse and financial ruin."

Trans people is a term used to describe those who often have complex gender identities - including transvestite, transgender and transsexual.

Mr Thom estimates that around five trans people per year will seek gender reassignment in Wales.

Miss Pearce (who withheld her first name), 27, was diagnosed with gender dysphoria six years ago, when she was told there were no options for treatment.

"Waiting these past six years has been completely soul destroying. I tried to kill myself three times," Miss Pearce, from Pontycymer in Bridgend county, said.

It is understood that surgery to treat gender reassignment, from male to female, can cost between £8,000 and £15,000, while surgery from female to male is more expensive.

A Welsh Assembly Government spokesperson said: "Funding for the treatment will come from the existing HCW budget. There is no additional funding."

Gender reassignment can be "crucial" for trans people who want to live permanently in their preferred gender role, said Stephen Whittle, a professor of equalities law at Manchester Met University and vice-president of Press for Change.

He said: "People still think gender reassignment treatment is a matter of personal lifestyle choice when in fact they are life savers."

Dr Deenesh Khoosal, a psychiatrist and spokesman for the Royal College of Psychiatrists, said treatment of gender dysphoria is "a complicated process" that can include surgery, hormone therapy, counselling and speech therapy.