The Obama administration is planning to issue a sweeping decree telling every public school district in the country to allow transgender students to use the restrooms that match their gender identity, the New York Times reported on Thursday.

The letter to school districts that will go out on Friday describing what they should do to ensure that none of their students are discriminated against is signed by officials of the Justice Department and Education Department, according to the Times.

It does not have the force of law but contains an implicit threat that schools that do not abide by the Obama administration's interpretation of the law could face lawsuits or a loss of federal aid, the newspaper said.

"No student should ever have to go through the experience of feeling unwelcome at school or on a college campus," Education Secretary John King Jr. said in a statement, according to the Times.

"We must ensure that our young people know that whoever they are or wherever they come from, they have the opportunity to get a great education in an environment free from discrimination, harassment and violence," he said.

The move comes as the Obama administration and North Carolina battle in federal court over a state law passed in March that limits public restroom access for transgender people.

By passing the law, North Carolina became the first state in the country to ban people from using multiple occupancy restrooms or changing rooms in public buildings and schools that do not match the sex on their birth certificate.