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The New Zealand Olympic Committee (NZOC) announced that Hubbard will participate in the women's super heavyweight category, along with four other weightlifters.
At 43, she will also become the oldest weightlifter at the games after lifting 628lbs (185kg) in two lifts on the way to qualifying.
Hubbard said in a statement: "I am grateful and humbled by the kindness and support that has been given to me by so many New Zealanders.
"When I broke my arm at the Commonwealth Games three years ago, I was advised that my sporting career had likely reached its end.
"But your support, your encouragement, and your aroha [love] carried me through the darkness.
"The last eighteen months has shown us all that there is strength in kinship, in community, and in working together towards a common purpose.
"The mana [honour] of the silver fern comes from all of you and I will wear it with pride."
Hubbard previously competed as a male athlete before transitioning in 2012 and returning to weightlifting in 2017.
Following a serious arm injury at the Gold Coast Commonwealth Games, she went on to win two gold medals at the 2019 Pacific Games in Samoa, and another in the Roma 2020 World Cup.
Hubbard became eligible to compete at the Olympics when the International Olympic Committee (IOC) changed its rules in 2015, allowing transgender athletes to compete as a woman if testosterone levels are below a threshold.
Last month, Belgian weightlifter Anna Vanbellinghen said it would be 'like a bad joke' if Hubbard were to compete in Tokyo, arguing that, while she supported the transgender community, the inclusion should not be 'at the expense of others'.
Vanbellinghen, who will compete in the same category, added: "Anyone that has trained weightlifting at a high level knows this to be true in their bones: this particular situation is unfair to the sport and to the athletes.
"Life-changing opportunities are missed for some athletes - medals and Olympic qualifications - and we are powerless."
But New Zealand's government and its top sporting body are fully backing Hubbard's inclusion in this year's Olympics, with NZOC chief executive Kereyn Smith saying she would be welcomed to the national team.
Smith said: "As well as being among the world's best for her event, Laurel has met the IWF eligibility criteria including those based on IOC Consensus Statement guidelines for transgender athletes.
"We acknowledge that gender identity in sport is a highly sensitive and complex issue requiring a balance between human rights and fairness on the field of play."
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