Boys attending Greenside High School in Johannesburg may soon be allowed to grow their hair long and wear stud earrings.
The school also plans to create a gender-neutral toilet and for transgender pupils to take part in competitive sport.
The proposals could be included in a code of conduct if parents endorse them at an annual meeting this month.
The gender policy was drawn up by Michelle Beukes, a teacher at the school. She is part of a working group set up by the department of basic education in April to look at ways of making schools socially inclusive, particularly for transgender pupils.
The group was established after the mother of a transgender pupil in Gauteng asked the department why there was no policy on gender identity.
Beukes proposes that transgender pupils choose male or female uniforms.
The proposal says that hair that touches a pupil's shoulders (boy or girl) should be tied back to avoid falling in the pupil's face.
"All rules regarding the length or style of hair that originates from a learner's gender will be removed," according to the proposal.
It says staff should avoid using gender- specific language by replacing "girls and boys" with "learners".
"Staff should also reconsider the need to divide learners into groups based on gender. As far as possible, during educational tours, transgender learners should be allowed to sleep in dorms appropriate with their gender identity," according to the proposal.
Beukes said schools were "very gendered spaces" where, for example, class registers contained the male and female gender.
"The group is looking at what we can do in those spaces to create environments where learners feel they are represented and valued. A lot of schools don't allow learners to dress in the uniform for the gender they identify as."
Greenside High headmistress Nicky Whyte said she had not examined the proposed policy in detail but that there would be full consultations and that it would have to be ratified by the governing body, where a vote would be taken.
"We have to balance the rights of individuals but we've got to also think about the school holistically and the survival of the school.
"If one just gets gung-ho and says we are going to be progressive, we might not even anticipate the kind of backlash that might come our way," said Whyte.
She said there were about 1,000 pupils, including many from conservative backgrounds.
The Gauteng education department confirmed it was finalising approval of all schools' amended codes of conduct. School governing body elections were held in March and governing bodies had three months from that date to submit their school uniform policy for approval.
In an effort to make schools more inclusive, the national department's chief director for social inclusion and partnerships in education, Patricia Watson, who heads the working group, asked members to comment on the 2006 school uniform draft guidelines.
The University of Pretoria's Centre for Child Law, which is also represented on the working group, said the rights in the school uniform guidelines "do not appear to be infused with children's best interests".
Anjuli Maistry, a senior attorney at the centre, said the guidelines should be focused on the benefits that the continued use of uniforms had for children.
The mother of a transgender pupil at Pinelands North Primary School in Cape Town said her child told her classmates when she was in Grade 1 that she was born a boy but identified as a girl.
"She is very popular and everyone treats her like a normal girl. The school makes special arrangements for her when the class is changing. She's allowed to change separately if she wants to."
She took part in a school play recently where she was a ballerina.
The Pinelands school is building six gender-neutral toilets for R150,000 that are expected to be ready in a week's time.
Leigh Ann van der Merwe, a transgender woman activist, said that for transgender pupils the school uniform was not just a piece of clothing but "part of the affirmation of who they are as human beings".
Van der Merwe, 36, who was born a male but identifies as a female, said her matric dance was "the worst night of my life" as she could not wear a ball gown because "it would have been frowned upon".
She was not allowed to play netball while she was at Ugie High in the Eastern Cape because "boys need to stick to boys' sports".
"There was that part of the day that the government required me to be a boy through school policies and I did that. When I got home, I put curlers in my hair."
The department of basic education did not respond to questions...