Richard Marles instructed Defence that the previous directive, unofficially known as the 'morning tea ban', be lifted immediately allowing staff to hold local activities to recognise upcoming Wear it Purple and R U Okay Day.

The association of LGBTI-identifying Defence members, veterans and their families were celebrating the shift as "a great win" on Tuesday, as were the public sector union. Both groups had sought to have the ban overturned from the moment it was issued.

Rachael Cosgrove, DEFGLIS president, said it was an exciting day for their members to know they can bring their whole self to work while performing their trade.

While there was still "lots of learning" needed within Defence, the new announcement was "a step closer to understanding that there is a journey, and we are on it, and we're moving in the right direction," she said.

Top Defence officials, now allowed to resume some staff inclusion activities, say a diverse workforce is "essential to Defence's capability and effectiveness".

In a memo to staff on Tuesday, Chief of the Defence Force Angus Campbell and departmental secretary Greg Moriarty said the organisation would now explore a wider range of events that Defence would participate in next year.

"Many of these events contribute to our inclusive culture by acknowledging and promoting awareness of our diverse workforce," they wrote.

The expanded view of cultural events would demonstrate Defence's commitment "to all of our people", the two leaders said.

"People will always be our most important asset, and Defence is focussed on building inclusive and capable teams, underpinned by our unified Values and Behaviours. We recognise a diverse workforce supported by an inclusive culture is essential to Defence's capability and effectiveness."

These efforts would "build capability through fostering a diverse and inclusive workforce to deliver on Defence's mission."

Defence will also finalise its next 'Pathway to Change' culture strategy this year, they said - the third successive plan for cultural change and reinforcement in Defence and the ADF following a series of scandals and reviews centering around preventing sexual assault and other forms of abuse.

But Defence's decade-long efforts to attract new recruits and skilled workers with a culture of inclusion was met with resistance from Mr Dutton on taking over the ministry last year, saying "I will not tolerate discrimination, but we are not pursuing a woke agenda."

Mr Dutton's order specifically banned events where staff celebrate by wearing particular clothes, such as Wear it Purple, where supporters wear purple accessories to celebrate diversity and young people from the LGBTIQ community, and rainbow pins on International Day Against LGBTQIA+ Discrimination.

Staff were instructed last year to "at all times" be focused on their primary mission to protect Australia's national security interests. "We must not be putting effort into matters that distract from this," Mr Moriarty and General Campbell wrote at the time.

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CPSU, the public sector union, organised morning tea protests to back Defence LGBTI staff. CPSU national president Melissa Donnelly said Mr Dutton's ban last year "was an outrageous attack by a government minister on its own workforce."

Mr Dutton's office did not respond when contacted on Tuesday.

Major events Defence recognises as significant include Australia Day, Anzac Day, and Remembrance Day, but also participates in other commemorative and government events, the Invictus Games, and the Sydney Mardi Gras, while Defence Recruitment participates in sporting and cultural events in every state and territory across Australia.

Existing guidelines for Defence's participation in events will remain, following the principles of impartiality, selectivity, reputation, inclusivity, and readiness, while local activities can be approved by commanders and managers at a level appropriate to their size and significance.

Defence has planned to significantly increase its workforce size by 2040, but insiders have warned that growth expectations may be stymied by skill shortages and strong competition for workers from other industries.

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