I think its great that you are so supportive!
(to the other answer, well he may be gay, but not necessarily, being transgendered isn't always gay too)
well if you are really serious, and he is really serious about this you could look into getting hormones for him, im not sure where you get them, so be sure to do some research about that.
you can also put him in dresses and skirts, that way his penis will not show and he will feel even more like a girl, maybe for now you could give him a bra and stuff it a little. have fun with him..or maybe I should say her? well anyway do fun girls stuff, makeovers! You may also want to transition to a femalee name too
good luck, its great that you are so open!
seriously people? 5 thumbs down? if her son identified as a femal, it doesn't mean hes a freak, hes just in the wrong body, theres no point in making him suffer, quit being afraid of the unknown.