The Australian Olympic Committee (AOC) says it will leave transgender women's eligibility to compete in women's sports to be determined by individual sports, in line with the International Olympic Committee's (IOC) guidelines.
Transgender women's futures in elite sports has been thrown into the spotlight after FINA, swimming's world governing body, voted to effectively ban transgender swimmers from elite women's competitions.
Swimming is the first Olympic sport to adopt such an edict and it has sparked a chain reaction elsewhere.
International Rugby League has excluded transgender athletes from sanctioned international matches, including this year's Rugby League Women's World Cup in England.
FIFA, World Athletics and the World Netball Federation are all reviewing their respective policies.
The IOC last year revised its guidelines on inclusion with a new framework advising that athletes should not be excluded from competition on the grounds of "perceived" unfair advantage, but has ultimately left it up to sports federations to decide the rules.
The AOC will follow the global Olympic body's lead.
"The thing we constantly need to focus on is the fact that sport needs to be inclusive," AOC president Ian Chesterman told AAP.
"We need to create opportunities for every young Australian, and particularly if you come from a marginalised group, we need to be encouraging you to be using sport as part of your development and your growth.
"There does come a point in time when we move through being involved in sport to at a point in elite competition where there is a need to have a fair competition and each sport will decide how they achieve that balance.
"The IOC is really the body who's taking the lead on this rather than a national Olympic Committee and they have set out a framework which says respect must be part of it, inclusion must be part of it, but fairness must be part of it.
"So you need to balance all those things as we move through the pathway of sport from someone who's just starting out to someone who's at an Olympic Games or Paralympic Games."
AOC chief executive Matt Carroll also stressed the Australian body's "overarching" policy would be to follow the IOC's framework and said it coudn't be a "one policy fits all" situation due to the differences between sports.
Chesterman said as yet, he hadn't received much feedback from Olympic athletes on FINA's decision.
Both Chesterman and Carroll, speaking on Olympian Day, were confident Australia's Olympic movement remained a welcoming and inclusive place for transgender women, and stressed the importance of keeping the current conversation respectful.
"Everyone is welcome into sport, absolutely," Carroll said.
"There are 46 sports and everyone can find a place in an Olympic sport, without a doubt, and they are most welcome."