Mrs Stroud is one of 10 candidates standing in Sutton and Cheam
Conservative leader David Cameron has defended a Tory parliamentary candidate over reports she founded a church which tried to "cure" homosexuality.
Philippa Stroud is standing in Sutton and Cheam, in south London.
She set up a church which taught that "demons" within gay people vanished through prayers, the Observer alleged.
"She believes in gay equality," Mr Cameron told BBC Asian Network. She had made "a very clear statement to say she was completely misreported", he added.
It was claimed the King's Arms Project was established in Bedford in 1989 and Mrs Stroud was involved with it for about a decade.
Three people who attended the church
were quoted by the Observer
They said they were led to believe the church's teachings could shape the way they handled issues regarding their sexuality.
Mrs Stroud has released a statement saying: "The idea that I am prejudiced against gay people is both false and insulting.
"I make no apology for being a committed Christian.
"However it is categorically untrue that I believe homosexuality to be an illness, and I am deeply offended that the Observer has suggested otherwise."
She said she had spent more than 20 years working "with disturbed people who society have turned their back on and who are often not helped by state agencies".
'Bunch of thugs'
Mr Cameron was also pressed on the issue of immigration during his interview with BBC Asian Network.
He said he was "very proud" that shadow communities secretary Sayeed Warsi "did so well on Question Time to uncover Nick Griffin", referring to the BNP's leader.
And Mr Cameron said the BNP "fill a vacuum where the traditional politicians haven't worked hard enough".
"You've got to get in there, talk to people about problems of tax and housing and education and unemployment," he added.
"Yes, addressing the issue of immigration, but always doing it with care. Do that and we can stop the BNP."
Nine other candidates are standing in Sutton and Cheam. They are:
Kathy Allen, Labour; Paul Burstow, Liberal Democrat; John Clarke, British National Party; Matthew Connolly, Christian Peoples Alliance; Martin Cullip, Libertarian; John Dodds, English Democrats; Brian Hammond, Independents Federation UK; Peter Hickson, Green; David Pickles, UK Independence Party.