Trans people will be allowed to put down a different sex from the one stated on their birth certificate in the next census.
The census is a major survey of the UK population that takes place every 10 years, with the next one due in 2021.
Data gathered through the census is used by the Government to help shape and formulate policy for the next decade.
In a departure from previous censuses, the next questionnaire is expected to tell respondents that they can declare their sex to be "different from what is on your birth certificate".
The option is detailed in new guidance from the Office for National Statistics around the census question on sex.
"If you are one or more of non-binary, transgender, have variations of sex characteristics, sometimes also known as intersex, the answer you give can be different from what is on your birth certificate," it states.
"If you're not sure how to answer, use the sex registered on your official documents, such as passport or driving licence, or whichever answer best describes your sex.
"A later question gives the option to tell us if your gender is different from your sex registered at birth, and, if different, to record your gender."
The change comes at a time of national debate over the issue of gender identity, with educational bodies, prison services, the NHS and other public bodies increasingly adapting policies and procedures to cater for people who do not identify with their birth gender.
Speaking to the Mail on Sunday, NHS paediatrician Dr Juile Maxwell raised concerns that allowing people to choose their gender could be detrimental to the provision of health care services.
"Almost every kind of illness behaves differently in men and women," she told the newspaper.
"If the national statistics are skewed in this way so you don't know how many biological men or women there are, and if you add on to that the fact people are already changing their sex on medical records, you lose any meaningful knowledge of how often health problems are happening in men and women.
"And my biggest fear for children is they are not going to get appropriate health services allocated for their needs because of messing around with statistics."