  We propose a new type of sensor, which uses diamond containing the optically
active nitrogen-vacancy (NV$^-$) centres as a laser medium. The magnetometer
can be operated at room-temperature and generates light that can be readily
fibre coupled, thereby permitting use in industrial applications and remote
sensing. By combining laser pumping with a radio-frequency Rabi-drive field, an
external magnetic field changes the fluorescence of the NV$^-$ centres. We use
this change in fluorescence level to push the laser above threshold, turning it
on with an intensity controlled by the external magnetic field, which provides
a coherent amplification of the readout signal with very high contrast. This
mechanism is qualitatively different from conventional NV$^-$--based
magnetometers which use fluorescence measurements, based on incoherent photon
emission. We term our approach laser threshold magnetometry (LTM). We predict
that an NV$^-$--based laser threshold magnetometer with a volume of 1mm$^3$ can
achieve shot-noise limited d.c.~sensitivity of 1.86 fT$/\sqrt{\rm{Hz}}$ and
a.c.~sensitivity of 3.97fT$/\sqrt{\rm{Hz}}$.
