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.

Byun Hee-soo, a staff sergeant in her 20s, enlisted voluntarily in 2017, and went on to have 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.

Byun waived her previous anonymity to appear at a press conference, wearing her fatigues and saluting the gathered journalists and cameras.

"I'm a soldier of the Republic of Korea," she said, her voice breaking.

Serving in the military had always been her childhood dream, she said, but she had suffered from depression due to gender dysphoria, prompting her to undergo the sex-change surgery.

"Putting aside my sexual identity, I want to show everyone that I can be one of the great soldiers defending this country," said Byun, fighting back tears. "Please give me that chance."

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

A defence ministry spokesman said Byun had undergone tests at a military hospital, which classified the loss of male genitals as a mental or physical handicap, prompting the panel review.

Her case "corresponded to one of the reasons for being unable to continue service", the army said in a statement, without giving specifics and saying it sought to avoid "unfair discrimination and treatment".

The Military Human Rights Center for Korea, an advocacy group in Seoul, said the army had ordered Byun to be effectively discharged when she leaves hospital on Thursday.

"It shows the military's determination to not allow a transgender in the army even for one second," said the organisation's head Lim Tae-hoon. "It is truly cruel."

It is the first case of its kind in the South.

International rights groups have expressed concern about the way the country 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.