The government has said there will be no opt-out for Catholic adoption agencies when it comes to anti-discrimination laws but has given them 21 months to prepare for implementing the legislation. But what is the controversy over?
Which proposals are causing the row?
Parliament has approved two-thirds of the Equality Act 2006 - forbidding schools, businesses and other agencies refusing services on the basis of age, disability, gender, race or religion.
The final third of the act, yet to be approved, extends the same protection to lesbian, gay and bisexual people.
The act, which will come into force in April, establishes the Commission for Equality and Human Rights to replace several other equality bodies.
Who objects to the Equality Act?
Religious groups - and particularly the Catholic Church - oppose the law.
The cardinal said Catholic adoption agencies would have to close
Cardinal Cormac Murphy-O'Connor, head of the Church in England and Wales said in a letter to the Cabinet: "Marital love involves an essential complementarity of male and female."
Catholics run several adoption agencies in the UK and the prelate says they would not be able to consider applications from homosexual couples because it would go against the Church.
Why do ministers want the act enforced?
The government wants to give gay people the same protection under the law that people from religious groups or ethnic minorities already get.
"We don't want to live in a society where people can say 'I don't like blacks and so they have to travel on the back of a bus,'" Labour MP Angela Eagle said.
Ministers also want to streamline the equal rights system with one watchdog for all forms of discrimination.
Who supports the legislation?
Gay rights groups such as Stonewall and Outrage have lent their support to the government over the act.
"If there are going to be laws against discrimination they should apply equally to everyone," Outrage campaigner Peter Tatchell said.
The proposals have also been backed by human rights campaigners and the Liberal Democrats. The Conservatives say their MPs have a free vote on the sexual discrimination aspect.
What is the government doing?
Downing Street has said there will be no exemption from anti-discrimination laws for Catholic adoption agencies.
But Tony Blair's official spokesman said they would be given 21 months to prepare for the new laws.
The proposed measures are expected to face a vote in parliament next month before coming into effect on 6 April.