US President Barack Obama has promised to repeal the law that effectively bans gays from the army.
The ''don't ask, don't tell'' policy allows gay people to serve in the military only if they do not reveal their sexual orientation.
''For nearly 30 years, you've advocated for those without a voice,'' Obama said during his address at the dinner for the Human Rights Campaign. ''Despite the progress we've made, there are still laws to change and hearts to open.''
Obama's speech came as gay rights activists continued to lose patience over the lack of change to key issues for the gay community -- including the Pentagon's ''don't ask, don't tell'' policy. It comes on the eve of a major gays-rights rally in Washington.
''This fight continues now and I'm here with the simple message: I'm here with you in that fight,'' Obama told the applauding crowd.
On the military issue, he said the US could not afford to lose those people who had much needed skills for fighting.
''We should not be punishing patriotic Americans who have stepped forward to serve the country,'' Mr Obama said.
''We should be celebrating their willingness to step forward and show such courage.''
Mr Obama did not give a timetable for repeal of the policy, passed by Congress in 1993, under which thousands of service members have been discharged.
The US president has repeatedly pledged to tackle issues important to the gay community.
One issue causing disquiet among the US gay community is the issue of gay marriage, the BBC's Rajesh Mirchandani in Los Angeles says.
Mr Obama has been criticised for not delivering on his promise to repeal the Defense of Marriage Act, which limits how local and federal bodies can recognise gay partnerships and determine benefits.
In his speech, Mr Obama did call on Congress to repeal the act and he also called for a law that would extend benefits to domestic partners.
The Human Rights Campaign issued a statement praising the speech, saying it was a ''historic night when we felt the full embrace and commitment of the president of the United States. It's simply unprecedented.''