, the lesbian, gay and bisexual campaign group, has been working with officials to compile the guidelines.
But some gay rights groups say the guidance, due to be published in early 2009, could be ignored because it lacks legal compulsion, as with racist bullying guidelines.
Nigel Tart, a spokesman for the campaign group Schools Out, said the guidance had to be made statutory in order to be taken seriously.
"The Welsh Assembly government must show strong leadership and make the guidance compulsory, otherwise schools will not see it as a priority," he said.
"It has the opportunity to lead the way and include transphobia in its guidance. But they're missing the point if they think they can solve the problem simply by issuing guidance on bullying.
The need for new guidance in Wales became clear after the suicide of 13- year-old Laura Rhodes in September 2004. An inquest heard she had been a victim of homophobic bullying as a pupil at Cefn Saeson School in Neath.
Despite many reported incidents, only 6 per cent of schools in England and Wales include homophobic bullying in their anti-bullying policies. There is also a call for more research in Wales on the extent of homophobic bullying in schools - particularly within the Welsh language and culture.
Jonathan Charlesworth, executive director of the campaign group Educational Action Challenging Homophobia, runs training courses for schools in England and Wales on lesbian, gay, bisexual and trans-sexual issues.
He said clear protocols - similar to those in the existing guidance on racist bullying - would help teachers to deal with homophobic language and name-calling.
"It's the starting point for more serious homophobic bullying," he said. "If staff let it go by, it gives a powerful message that it's OK."
The new advice will replace guidance published in 2003. It will also include advice on racist, special educational needs and cyber-bullying. Current advice says schools should include sexual orientation in anti- bullying policies, discuss homophobia on staff Inset days and guarantee confidentiality for pupils and staff.
But although research by Stonewall found 65 per cent of gay young people at school have experienced homophobic bullying, teachers have no fixed protocols for dealing with the problem.
The Assembly's guidance will come more than a year after the Department for Children, Schools and Families published Safe To Learn, which makes anti-bullying a basic focus in English schools.
A spokesperson for the Assembly government said: "Any form of bullying is not acceptable."