"Under our previous policy, some of these expressions of self-identification were not allowed in Gamertags or profiles to prevent the use of these terms as insults or slurs," adds Xbox Live General Manager Marc Whitten.
Although some terms will still not be tolerated, the use of "Gay, Lesbian, Bisexual, Transgendered and Straight" are okay, says Destructoid's Jim Sterling.
"Microsoft had been working with GLAAD and [its own] LGBT community to narrow down the terms. Use of those words in an insulting manner won't be tolerated either, so it seems as if Microsoft has retracted its scorched earth policy and will now be reviewing the use of these words on a case-by-case basis. It may not seem like a big deal to many of you, but it was certainly a big deal to some, and it's very cool that Microsoft has taken the stick out of its arse and decided to judge the use of these words on their own merits. Microsoft doesn't do everything right, but this was definitely a good thing. Well done!," concludes Sterling, via TGDaily.