John Pilley, a kidnapper serving a life sentence, will become the first prisoner to undergo "gender reassignment surgery" when he has an orchidectomy in Leicester next month.
Pilley, who is known as "Jane Anne", has had more than seven years of hormone-replacement treatment while in jail but took legal action after prison chiefs appeared to be blocking his demands for genital surgery. He argued that having given him treatment enabling him to develop breasts, it was unfair for the Prison Service to leave him in the limbo of being part-man and part-woman.
The Independent has learned that Treasury solicitors, representing the Prison Service, have been instructed not to continue contesting the case. Instead, Michael Longfield, the service's head of healthcare, has told officials at Gartree Prison, near Market Harborough, in Leicestershire, that Pilley can have his operation.
The orchidectomy, which costs around pounds 11,000, is due to take place next month at Leicester Royal Infirmary. Following the operation, Pilley is likely to be transferred to Holloway women's prison in north London.
The decision will create a precedent for at least five other prisoners seeking sex-change operations and pursuing legal cases against the Prison Service, including Philip Taplin, Matthew Richardspn, Douglas Wakefield and David Cross.
The barrister and former Liberal Democrat MP Alex Carlile, who campaigned for transsexual rights in parliament, said the decision was an "important step towards giving transsexuals proper civil liberties".
The Prison Service said yesterday that it was under an obligation to give prisoners the same access to medical care as other members of the public. It is now drawing up new guidelines for prison governors on how they should deal with transsexual inmates.
A spokeswoman said: "The general approach is that the prisoner should wait for release. It's not really a suitable environment to take such an irrevocable decision. The problems arise with prisoners serving a long sentence."
Pilley, 46, who was sentenced to life in jail for the kidnapping of a taxi-driver, Linda Charlesworth, in 1981, is allowed to wear women's clothing while he is locked in his cell.
He has drawn up a charter in which he promises not to put on his female attire in front of other inmates. It reads: "With the exception of underwear, I will keep the articles in my room at all times (apart from laundry). I will not dress in female clothing except between lock-up at night and unlock in the morning."
Pilley is a member of Gartree's therapeutic community, which includes other prisoners seeking sex changes, such as Philip Taplin and convicted killer Matthew Richardson, 42. Other transsexual prisoners are scattered around the jail system, often with little in the way of specialist support.
Douglas Wakefield makes life in Channings Wood Prison, in Devon, more bearable by decorating his cell with lace curtains and flowers. The double murderer has been diagnosed by a psychiatrist as having "gender identity disorientation". In letters from prison he has said: "Maleness has always been nothing less than an abhorrence to me - something to be threatened and intimidated by. I have grown to detest the body I live in."
Wakefield, who is allowed to wear women's ear-rings and has chosen to be called "Dee", was jailed for life at Leeds Crown Court in 1974 for murdering an uncle who had taunted him about his sexuality. Four years later he strangled fellow prisoner Brian Peake with a shoelace, then stabbed and beat him to death in the psychiatric wing of Parkhurst jail on the Isle of Wight in Hampshire. He spent a record 1,200 days in solitary confinement after twice taking prison officers hostage and trying to kill one of them.
Now a model prisoner, he says that he could happily live the rest of his life behind bars, provided he was given a sex change and moved to a women's prison.
At Parkhurst, David Cross - now known as Kelly Denise Richards - is taking Androcur, the hormone drug cyproterone acetate, which reduces levels of testosterone.
Although transsexual prisoners such as Cross are terrified of stopping such treatment and reverting to men, they are aware that the prolonged use of such drugs carries a risk of liver failure. Cross, an armed robber serving 17 years, is anxiously awaiting his orchidectomy.
Dr Russell Reid, a consultant psychiatrist who has advised Cross and other transsexual inmates, said that prison life made it very difficult for inmates to satisfy the necessary criteria before they could be given such a life-changing operation.
He said: "They must adjust successfully and live and work in their female role for two years before they can be considered for surgery. It is very difficult, though not impossible for them to fulfil that."
But Susan Marshall of Press for Change, a campaigning organisation which is seeking equal rights for people who have gender identity disorder, said that prisoners were entitled to medical help to change their sex.
"They are supposed to lose their liberty but they should not be further punished by removal of treatment for a recognised medical condition from which they are suffering," she said.