The ruling has cleared the way for one teenager who is transitioning from female to male to undergo a double mastectomy as a treatment for gender dysphoria.
It also means parents who agree with the treatment will not be subject to the expense, stress and possible delay of going to court.
The ruling builds on an earlier decision, in a separate case last year.
In that case, the Full Court determined it had no role in determining whether a child diagnosed with gender dysphoria should begin stage two — non-surgical treatment.
Stage two treatment involves the use of either oestrogen to feminise the body in those who have a female gender identity, or the use of testosterone to masculinise the body in those who have a male gender identity.
In the latest case, the 16-year-old given the pseudonym Matthew was born genetically female but identifies as a male.
His parents asked the court to find he is competent to consent to stage three — surgical treatment.
The court found its consent was not necessary, because his doctors and parents agreed he suffered gender dysphoria, that the surgery was therapeutic and Matthew was competent to decide whether to have the treatment.
The court heard evidence from a doctor who said the treatment could be life-saving. He said the effect of denying the treatment to Matthew “would likely be extreme distress, low mood and the potential for worsening suicidal ideation”.
Another doctor told the court the surgery often had “immediate and profound therapeutic benefit”.
“The individual is able to wear clothing that is congruent with their gender, has much less fear of being misgendered as a female or having their transgender status unwantedly discovered by others, and can move freely and participate in a broad range of desired social and sporting activities.”
Children in state care and those whose parents object to their hormone treatment will still have to go to court.