North Wales police officers hold the rainbow flag in a ceremony marking gay rights in January.
Homophobic hate crime convictions in Wales have doubled in the last three years.
The Crown Prosecution Service (CPS) revealed that there were 58 successful prosecutions last year compared with 29 in 2006.
Statistics released by the four police forces in Wales show there has not been a significant increase in reporting homophobic crime to the police.
But the number of cases taken up by the CPS has been rising steadily.
The majority of homophobic hate crime incidents between 2006 and 2008 were reported to South Wales Police.
It recorded 290 incidents last year compared with 274 in 2006.
Stonewall Cymru, the lesbian, gay and bisexual charity, has been working closely with the police forces and CPS in Wales.
"Report homophobic incidents"
Jenny Porter, community liaison officer for the charity, said: "I hope that this great news will encourage lesbian, gay and bisexual people across Wales to report homophobic incidents to the police.
"And to have confidence in the criminal justice system that they will follow through to the end."
Chris Woolley, group chair for the Wales CPS, said: "These statistics show we are moving in the right direction.
"Although we are still some way short of ensuring that all lesbian, gay and bisexual people feel confident enough to report these very damaging crimes."
Ms Porter said the gap between the number of homophobic hate crime incidents reported to the police and the number of convictions exists because many cases fail to secure enough evidence for prosecution.
"Anonymous reports, for example, can't always be followed up," she said.
Mr Woolley added that the CPS will continue to work with its partners in the police and Stonewall Cymru "to improve the conditions for lesbian, gay and bisexual people to come forward".
Since 2005 the CPS has offered specialist witness care units for those reporting homophobic hate crimes.
The CPS can also apply to the court for special measures including the protection of anonymity and the option of giving evidence by video link.