British transsexuals are to be given the right to marry, change their sex on their birth certificate and be legally recognised in their new gender under a change in the law to be announced by ministers.

Rosie Winterton, the minister for Social Exclusion, is expected to announce the change in the law in the next few weeks after government lawyers warned that the current situation breached transsexuals' human rights.

Britain is one of only a few countries in Europe, such as Albania and Andorra, where transsexuals are not recognised in their new sex. Under the current law, transsexuals who marry can be arrested and charged with perjury, an imprisonable offence. They are also not allowed to claim lower insurance premiums offered to women if they were born men. Nor can they claim the pensions and benefits of their new gender or change their sex on their birth certificates.

Transsexuals have complained that they face discrimination at work because they have to reveal that they have had sex changes if asked and also find themselves having to "out themselves" to claim benefits or even insurance.

Lobby groups which have been working for 10 years to win rights for transsexuals said yesterday that they would welcome a change in the law. But they worried that the government proposals might contain a "get out clause" which would allow discrimination to continue.

Christine Burns of Press for Change, which has led the campaign for full legal recognition for the up to 500,000 transsexuals estimated to live in Britain, said lawyers would be "examining the fine print" of the draft bill.

"They have had 33 years in which to make up their minds and Britain is practically the last place in the world to legislate," she said. "We just want to get on with our lives in peace."

The announcement comes after years of consultation and discussion by a special government working group set up to review the law. It follows an announcement last week that gay couples will be able to register their relationships for the first time.

Government sources said that they were prepared to grant transsexuals legal rights in the interest of fairness.

"We want to treat them fairly and are sympathetic to their situation," said one.