The AFL has blocked transgender athlete Hannah Mouncey from participating in the AFLW's 2018 season.
Lee Gaskin, a reporter working for the AFL in South Australia, revealed the game's governing body deemed Mouncey's "physical disparity is significant and would give unreasonable advantage".
Despite being denied for 2018, there is a chance Mouncey will be accepted for the 2019 season.
Mouncey previously represented Australia as a male in European handball.
Footy journalist Sam McClure said the AFL based its decision on the Victorian Equal Opportunity Act, which states athletes can be discriminated against based on their sex "if strength, stamina or physique is relevant".
Mouncey has released a statement saying she accepted the decision.
"While I am disappointed with the AFL's decision regarding my participation in the AFLW draft, I accept the league's decision and thank them for the genuine way in which they approached my situation," she said.
"Despite not being able to take part in the draft, I note that while I am not able to compete in the AFLW this season, the AFL has given me the all clear to play for Ainslie next year in the AFL Canberra competition for which I am very grateful and look forward to doing in 2018, before hopefully being able to nominate for next year's draft.
"I will be making no further comment at this time."
Mouncey also wished the girls good luck for the draft tomorrow in a tweet.
AFL General Manager, Inclusion and Social Policy, Tanya Hosch thanked the 27-year-old for her understanding.
"Hannah's passion for football is undeniable, and I want to thank her and her team for their constructive participation in the decision-making process," she said in an AFL media release.
"It was important to involve the right stakeholders to review all the information and data available. Every case will be decided on its own merits along with the individual circumstances of each future nominee," Hosch says.
"We acknowledge Hannah's openness and co-operation. She has contributed to a process which will substantially inform the development of the AFL's transgender policy and procedure for future players at the elite level."
"The AFL has made very strong commitments to equality and inclusion at all levels of the game. We recognise that participating in sport has physical, psychological and social benefits and we are committed to making Australian football on every level welcoming to all in our community."
Earlier, a leading Australian media lawyer said the AFL is in danger of being accused of discrimination for the polarising decision to deny Mouncey a spot in the league.
The 190cm, 100kg ruck played eight games for Ainslie in Canberra's women's competition this season and kicked 17 goals.
Melbourne-based lawyer Justin Quill on Tuesday warned the AFL it will leave itself open to a "messy" legal challenge if it denies Mouncey accreditation as a sanctioned AFLW footballer.
"If they don't it could get quite messy and quite complicated if they go the other route," Quill told SEN's Breakfast on Tuesday.
He said the IOC precedent means there is little scope for the AFL to try to block her inclusion if they decide Mouncey should not be allowed to compete.