An official statement from Downing St says that a final decision has not been made on whether or not Roman Catholic adoption agencies will be allowed to refuse to consider gay or lesbian couples as potential parents.

It has been widely reported this morning that the Prime Minister has caved in to pressure from many Labour MPs and Cabinet ministers who argue that granting exemptions to any group betrays the spirit of anti-discrimination legislation.

Roman Catholic and Anglican leaders have written to Mr Blair in the last week to protest that the Sexual Orientation Regulations will mean that Catholic adoption services will have to close rather than consider gay couples.

The regulations are due to come into force in April, and are designed to protect gay, lesbian and bisexual people from discrimination when accessing good and services, which includes adoption agencies.

The No 10 statement from Mr Blair reads:

“There is one last aspect within the new regulations to resolve and it concerns adoption.

“I have always personally been in favour of the right of gay couples to adopt. Our priority will always be the welfare of the child.

“Both gay couples and the Catholic agencies have a high level of success in adopting hard-to-place children. It is for that reason we have taken time to ensure we get these regulations right.

“How do we protect the principle of ending discrimination against gay people and at the same time protect those vulnerable children who at the present time are being placed through, and after-care provided by, Catholic agencies, who everyone accepts do a great job with some of the most disturbed youngsters?

“We will announce a decision next week and then vote, probably next month. I am committed to finding a way through this sensitive and difficult decision.”

Gay rights organisation Stonewall have already welcomed media reports, quoting “cabinet sources,” that the government has conceded that there will be no exemptions in the regulations.

Ben Summerskill, Stonewall chief executive, said: “This is a triumph for 21st century tolerance over 19th century prejudice. We’re absolutely delighted that the Government seems to have decided against an opt-out.

“The exemptions which Cardinal Cormac Murphy-O’Connor and others were demanding would have denied some of Britain’s most vulnerable young people a loving home, as well as stigmatising lesbian and gay parents and the many children raised in stable, loving families by them.”

The official statement from Downing St says the Prime Minister is still working to find a solution that balances his desire to “end discrimination against gays while protecting vulnerable children receiving help with adoption from Catholic agencies.”