The Hague Centre for Strategic Studies has ranked over 100 armed forces by its inclusion of lesbian, gay, bisexual and transgender personnel.
The study, which was based on around 20 policies and practices, put New Zealand at number one while the UK shared second place with the Netherlands.
The UK armed forces received top scores for putting the gay community at the forefront of all policies and practices around admission, tolerance, inclusion, exclusion and persecution.
The ranking comes weeks after the MoD won the most improved employer award in Stonewall’s Workplace Equality Index.
The Army made it into the top 100 for the first time, sharing 79th place with the Royal Navy, while the RAF was 108th.
Defence Minister Anna Soubry said: “This is more good news and reward for the hard work the department has made to create a positive working environment for its lesbian, gay and bisexual military and civilian employees.
“It builds on the excellent result in this year’s Stonewall Index. The single services want to create a workforce, both regular and reserve, that is drawn from the breadth of the society we defend, that gains strength from that society’s range of knowledge, experience and talent and that welcomes, respects and values the unique contribution of every individual.”