Tatchell was born in Melbourne, Australia. His father was a lathe operator and his mother worked in a biscuit factory. His parents divorced when he was four and his mother remarried soon afterwards. Since the family finances were strained by medical bills, he had to leave school at 16 in 1968.

To avoid conscription into the Australian Army, Tatchell moved to London in 1971. He had accepted being gay in 1969, and in London became a leading member of the Gay Liberation Front (GLF) until its 1974 collapse. During this time Tatchell was prominent in organising sit-ins at pubs that refused to serve "poofs" and protests against police harassment and the medical classification of homosexuality as an illness. With others he helped organise Britain's first Gay Pride march in 1972.  In 1973, he attended the 10th World Youth Festival in East Berlin on GLF's behalf. His actions triggered opposition within and between different groups of national delegates including the Communist Party of Great Britain and National Union of Students. He was banned from conferences, had his leaflets confiscated and burned, was interrogated by the secret police (the Stasi) and threatened and assaulted by other delegates, mostly communists.  Tatchell later claimed that this was the first time gay liberation politics were publicly disseminated and discussed in a communist country, although he noted that, in terms of decriminalisation and the age of consent, gay men had greater rights in East Germany at the time than in Britain and much of the West.  Describing his time in the Gay Liberation Front, he wrote in The Guardian that:  [The] GLF was a glorious, enthusiastic and often chaotic mix of anarchists, hippies, leftwingers, feminists, liberals and counter-culturalists. Despite our differences, we shared a radical idealism - a dream of what the world could and should be - free from not just homophobia but the whole sex-shame culture, which oppressed straights as much as LGBTs. We were sexual liberationists and social revolutionaries, out to turn the world upside down. [...] GLF's main aim was never equality within the status quo. [...] GLF's strategy for queer emancipation was to change society's values and norms, rather than adapt to them. We sought a cultural revolution to overturn centuries of male heterosexual domination and thereby free both queers and women. [...] Forty years on, GLF's gender agenda has been partly won. [...] Girlish boys and boyish girls don't get victimised as much as in times past. LGBT kids often now come out at the age of 12 or 14. While many are bullied, many others are not. The acceptance of sexual and gender diversity is increasing.

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