The reigning Miss World and Miss Universe, Yukta Mookhey and Lara Dutta, are both Indians.
The 61st annual Miss Universe Canada Pageant will be held in Toronto on May 19.
Controversy over pageant rules is not new for Trump, who owns and controls the Miss Universe franchise.
"The Miss Universe Organization made the right decision and has taken an important first step, " the group said.
After Talackova's disqualification, social media users flooded the Facebook page of Miss Universe Canada with comments criticizing the decision.
The Indian entrant narrowly lost the Miss Universe title in 1993, but the potential fired up the local glamour industry.
That could open the way for an independent, Irene Saez, a former Miss Universe who is now mayor of a Caracas neighbourhood.
The charity has been associated with a number of beauty pageants such as Miss Wales and Miss Universe and now runs Miss GB International.
It has hosted wedding receptions and even a Miss Universe contest.
Talackova could compete provided "she meets the legal gender recognition requirements of Canada, and the standards established by other international competitions, " the Miss Universe Organization said.
The New York tabloids follow every step of his love life, which has included a dalliance with pop diva Mariah Carey and a current liaison with Miss Universe Lara Dutta.
Best related how a room service waiter found him in bed with a Miss Universe with money scattered around the room and then uttered the now famous line.
They are expected to be joined early next year by Irene Saez, the Miss Universe of 1981 and now mayor of Chacao, an upmarket part of greater Caracas.
"The Miss Universe competition is designed to find the one person in the world whose human qualities make them worthy of the Miss Universe crown and title, " Allred said.
Talackova was one of the 65 finalists selected to contend for the title of Miss Universe Canada and the honor of representing her country in the Miss Universe competition.
For the record, Webb was Miss Alabama USA 2012 and is a 2011 graduate of Auburn University with a degree in business management and administration, according to her Miss Universe biography.
It is that will to win that keeps new hopefuls arriving in the modeling academies daily, each convinced by the flattery and praise of parents or peers that she, too, can become Miss Universe.
"For more than two weeks, the Miss Universe Organization and Mr. Trump made it clear to GLAAD that they were open to making a policy change to include women who are transgender, " said GLAAD spokesman Herndon Graddick.
CNN: Miss Universe pageant ends ban on transgender contestants
Vasco travels over the ocean and over the rainbow, where he meets Judy Garland and the Tinman, to say nothing of Miss Universe perched on the moon in a gorgeous light (the part was gorgeously sung by Janice Felty).
Talackova, a 23-year-old Vancouver resident, also called on Donald Trump, who owns the Miss Universe competition, to state "in plain words" whether she will be able to compete and go forward to the Miss Universe final if she wins her country's contest.
Discussions between the pageant and GLAAD began last month after news reports that Talackova had been disqualified from the Miss Canada Universe competition after winning a regional title, the joint statement said.
CNN: Miss Universe pageant ends ban on transgender contestants
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