Catholic adoption agencies should not be able to opt out of new gay rights laws, ministers have insisted.
Ms Kelly has said the law will come into force in April
Constitutional Affairs Secretary Lord Falconer and environment minister Ben Bradshaw both rejected the suggestion of exemptions to the law.
The Independent on Sunday claims Communities Secretary Ruth Kelly is battling to allow Catholic adoption agencies to turn away same-sex couples.
Her department said "no decisions" had yet been taken on the detailed rules.
A Department of Communities and Local Government spokesman said: "We are absolutely committed to bringing forward proposals that provide effective protection from discrimination on the basis of sexual orientation.
"We will bring forward regulations shortly and people will be able to judge them on the facts, not speculation or guesswork."
He said there were strong views on all sides but no decisions had been taken and there was "no question of preferential treatment for an individual faith".
The Equality Act bans discrimination in the provision of goods, facilities and services on the basis of sexual orientation in a similar way to rules on sex and race discrimination.
Ms Kelly, herself a devout Catholic, told the Commons last October the new law, which had been expected to come into force then, would now be ready in April.
She said it was delayed because of the 3,000 responses to a consultation - and also said her own religion would not prevent her from doing her job of tackling discrimination of all types, including that against homosexuals.
Asked about the Independent on Sunday report, Lord Falconer told BBC One's Sunday AM: "We have introduced laws which prevent discrimination against people on the basis of their sexual orientation; those laws should be given full effect.
"We do take the view in this country that you shouldn't be discriminated against on that basis and think that applies to everybody, whatever your religion."
Mr Bradshaw told the BBC's Politics Show he would be very surprised if the Government was thinking of "bowing to pressure from conservative Catholics."
He added: "This Labour Party has an excellent record on equality. We've got rid of most of the discriminatory laws against lesbians and gay people.
"I think that this is an issue of equality. It's exactly the same as saying you can't have a child for adoption because you're black or because you're a woman or because you're disabled," he also said.
Northern Ireland Secretary Peter Hain, who has already brought the law into force there, told ITV's Sunday Edition the cabinet had not yet made a decision, but banning discrimination on any grounds was "a fundamental principle".
The Independent reported that Ms Kelly had the backing of Prime Minister Tony Blair but was facing stiff opposition from other senior colleagues.
A recent attempt in the House of Lords to overturn the law in Northern Ireland failed by 199 votes to 68.