The American Psychiatric Association has agreed to no longer classify people who are transgender and non-gender conforming as having mental illness.

The revisions to the Diagnostic and Statistical Manual of Mental Disorders mirrors similar moves to declassify homosexuality as a mental illness in the USA in 1973.

Until now "gender identity disorder" was used to label people who are trans and this has been used as a basis for anti-equality campaigners to argue against the rights of trans people.

The new edition of Diagnostic and Statistical Manual of Mental Disorders will label trans people as having "Gender Dysphoria," a term to communicate the distress caused by "a marked incongruence between one's experienced/expressed gender and assigned gender." The aim is so that treatment can be offered without stigmatising trans people as having a mental disorder.

Temple University psychology professor Frank Farley told CBS News that even though the change is an improvement; it's not complete. "Significant decisions are made about people in the courts, in the mental health system, with insurers so we want it to be absolutely impeccable and so some of these aspects are not particularly solid science," he said.

Last year, the European Parliament has passed a resolution calling for the World Health Organisation to stop classifying transgender people as mentally ill.

'Gender identity disorder' is currently classified as a 'mental and behavioural disorder' in the WHO's International Classification of Diseases.

Many transgender people and clinicians prefer to use the term 'gender dysphoria'. While the causes are not yet known, research has suggested genetic and hormonal reasons.

The WHO's International Classification of Diseases is currently under review with the next list to be finalised in 2015.

Until 1990, the body classed homosexuality as a mental illness.