"One of the things we're looking at is, is there flexibility in how we apply this law," Gates told reporters aboard a military plane.
The Pentagon boss said he discussed the issue last week with US and that there also has been discussion among senior military and legal counsel about possible changes in how they apply the law, which he described as "very restrictive."
"We're talking about how do we move forward on this, achieve this objective which is changing the policy."
Gates added: "What I discovered when I got into it was it's a very restrictive law. It doesn't leave much to the imagination, or a lot of flexibility."
The defense secretary said one possible modification might be consider the circumstances under which a service member is "outed" in determining whether or not he or she must leave the military.
Gates offered as an example "when we're given information from someone with vengeance in mind or blackmail, somebody who has been jilted.
"If somebody is outed by a third party, does that force us to take action?" he said.
"That's the kind of thing we're looking at -- seeing if there's a more humane way to apply the law until it gets changed."
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