How do I soften the edges of a transparent Plane texture

I use transparent Planes in my scene. Each Plane has a transparent texture applied to it with the built-in shader **Transparent/Cutout/Diffuse**. Here's the properties of the material: ![alt text][1] **The problem** is that the edges of my transparent texture are sharp and not smooth as you can see in this picture: ![alt text][2] Can any one help me figure out how to **soften the edges** so they are rendered nicely on top of my background? [1]: http://puu.sh/4l5KP.jpg [2]: http://puu.sh/4l5Gm.jpg