The country remains deeply conservative about matters of sexual identity and is less tolerant of LGBT rights than some other parts of Asia, with many gay and transgender Koreans living largely under the radar.

The soldier -- a staff sergeant in her 20s whose name has been withheld -- voluntarily enlisted before having gender-reassignment surgery in November in Thailand.

She had expressed her desire to remain in the army but a military panel ruled on Wednesday that she will be compulsorily discharged.

The case "corresponded to one of the reasons for being unable to continue service", the army said in a statement, without giving specifics.

A defence ministry spokesman said the soldier has been undergoing tests at a military hospital, which classified the loss of male genitals as a mental or physical handicap, prompting the panel review.

The military statement added that it was determined to avoid "unfair discrimination and treatment".

South Korea has a conscript army to defend itself against nuclear-armed North Korea, with all able-bodied male citizens obliged to serve for nearly two years.

International rights groups have expressed concern about the way South Korea treats gay soldiers, who are banned from engaging in same-sex acts and can face up to two years in prison if caught -- even though such actions are legal in civilian life.