Kelly in new storm over gay law

Ruth Kelly is trying to water down new anti-discrimination laws to let Catholic adoption agencies turn away gay couples.

Backed by Tony Blair, the embattled Communities secretary is at the centre of a full-scale cabinet row over the new gay rights laws.

She was forced to postpone a formal letter setting out the exemption late last week because of opposition by her senior colleagues, The Independent on Sunday has learnt.

But Ms Kelly, a devout Catholic and member of the Opus Dei sect, remains determined to include a loophole for her church in the Equality Act 2006 which comes into force this April. A spokeswoman for Ms Kelly, who has overall responsibility for equality, said the minister wanted to "protect the pool of prospective parents" and would be trying to find a "pragmatic way forward" this week.

The Catholic church has threatened to close its seven adoption agencies rather than comply with laws that forbid them to discriminate against gay couples.

Ms Kelly, already at the centre of controversy after admitting sending her son to private school earlier this month, insists she is acting in the best interests of the thousands of children placed for adoption each year.

The Prime Minister is supporting her efforts to water down new laws that are supposed to guarantee gay people equal rights to goods and services.

But Ms Kelly faces a humiliating defeat on the issue as senior ministers queue up to oppose what they regard as an unworkable and unfair loophole.

Alan Johnson, the Secretary of State for Education, who refused Mr Blair's request to grant the exemption when he was responsible for the issue last year, has been joined by Jack Straw, David Miliband, Des Browne and Peter Hain. Blairite loyalists such as Tessa Jowell and Lord Falconer have expressed their dismay.

Angela Eagle, the vice-chairman of the Parliamentary Labour Party, said that the exemption would drive a "coach and horses" through laws designed to end anti-gay discrimination. Chris Bryant, MP for Rhondda, said the move would have the effect of denying vulnerable children "a loving home".

Same-sex adoption was made legal in England and Wales in 2002 but Catholic agencies were allowed to turn away gay couples on the grounds that they were not married.

Of the 2,900 children put up for adoption last year, the agencies placed around 4 per cent. But they found homes for around a third of the "difficult-to-place" children. Ms Kelly argues it is these children that would suffer if Catholic couples were no longer encouraged to adopt by church-run agencies.

Gay campaigners argue, however, that gay parents are themselves more likely to adopt the most vulnerable children and nothing should be done to bar them from the system.

Ms Kelly refuses to say whether she regards homosexuality as a sin. She has defended failing to vote for civil partnerships or gay adoption on the grounds that they are "issues of conscience".