Prime Minister Scott Morrison has attacked a Cricket Australia decision the highest level as "heavy-handed" and "mystifying".
The sport's national governing body has released an elite-level policy and guidelines for community cricket that allows players to compete in line with their gender identity, rather than the sex they were born with.
But Mr Morrison believes local sport should be driven by community clubs.
"I think it's pretty heavy-handed to put it pretty mildly," he told 2GB Radio on Friday.
"I think it's pretty heavy-handed to put it pretty mildly," Mr Morrison said. Source: AAP
"There are far more practical ways to handle these issues than these heavy mandatory ways of doing it, and I'm sure these issues have quite carefully and practically managed at a club level already.
"So why there's a necessity to get the sledgehammer out on this is mystifying me, but I think we need to get the issue in perspective and ensure we manage it calmly."
In announcing the policy on Thursday, Cricket Australia CEO Kevin Roberts said transgender and gender diverse players will be supported to participate in top-flight cricket, subject to certain criteria.
Those looking to compete in the female-elite category must demonstrate a concentration of testosterone in serum less than 10 nanomoles per litre continuously for 12 months or more.
"Discrimination of any sort has no place in the game," Roberts said.
Mr Roberts said the Australian policy closely matched the International Cricket Council's Eligibility on the Basis of Gender Recognition.
Cricket Australia CEO Kevin Roberts. Source: AAP
Mr Roberts also said the guidelines for grassroots level cricket will help clubs, players, administrators, coaches and other volunteers to deliver a "safe, welcoming and inclusive environment, free of harassment and discrimination for gender diverse players."
