The head of the Roman Catholic church in England and Wales has spoken of his fear that the church might have to withdraw from a range of social activities.

His comments follow yesterday’s decision by the government that Catholic adoption agencies will not be given an exemption from rules which protect gay and lesbian people from discrimination.

The Sexual Orientation Regulations will make it illegal to discriminate on the grounds of sexual orientation in the provision of goods and services.

The regulations are already law in Northern Ireland and are expected to come into force in Britain in April.

Cardinal Cormac Murphy-O’Connor told BBC Radio 4 that he fears the Labour government are trying to create a new moral climate in which people with strongly-held religious views will be increasingly isolated.

The government has given adoption agencies until the end of 2008 to adjust to the new rules.

After that they will legally be obliged to consider gay and lesbian couples as potential adoptive parents.

“Here the Catholic Church and its adoption services are wishing to act according to its principles and conscience and the government is saying: ‘No, we won’t allow you to … you have no space, you have no place in the public life of this country.,'” said the Cardinal.

“Now that seems to me to be just one step and there will be further ones.

“Some legislation, however well intended, in fact does create a new kind of morality, a new kind of norm – as this does,” he said.

“The government has a right to legislate and homosexual couples are also able to adopt in other agencies but we want to hold onto this principle.”

The decision to deny Roman Catholic agencies an opt-out was broadly welcomed by Labour MPs and Cabinet ministers who were concerned that the church was putting pressure on Mr Blair and Communities Secretary Ruth Kelly, who is a devout Catholic.

All eyes are now on the Scottish Roman Catholic Church, who have yet to respond to the government’s decision.

Archbishop of Glasgow Mario Conti had threatened to defy the law and refuse gay couples the services of Catholic-run adoption agencies, saying he would force the authorities to close them down.

He also threatened to instruct priests to raise the issue at Mass in an attempt to influence the outcome of the elections for the Scottish Parliament in May.

Labour are in danger of losing control of the 129-member parliament to the Scottish Nationalists, who have vowed to allow an opt-out for Catholic adoption agencies.