London's High Court on March 17 exempted a Catholic adoption charity from laws that ban discrimination based on sexual orientation in the provision of public services.
The court said Leeds-based Catholic Care can refuse to consider gay couples as parents.
The charity had threatened to stop placing children if it had to abide by antidiscrimination laws.
Leading gay rights group Stonewall denounced the decision, which ordered the Charities Commission to reconsider Catholic Care's request for an exemption in light of the court ruling.
"It's unthinkable that anyone engaged in delivering any kind of public or publicly funded service should be given license to pick and choose service users on the basis of individual prejudice," said Stonewall spokesman Jonathan Finney. "It's clearly in the best interests of children in care to encourage as wide a pool of potential adopters as possible."
According to the court, Catholic Care argued that it is prevented from behaving legally by Roman Catholic teaching that "the Holy Family of Nazareth" is the only correct "model for family life."
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