The US Federal Reserve bank’s decision to fly the gay pride rainbow flag outside the headquarters of the Richmond Federal Reserve in Virginia has sparked a row in a state where homosexuality is still technically illegal.

The gay pride flag has been flown below the Stars and Stripes at outside the Federal Reserve in Virginia’s capital, Richmond.

State officials and politicians objected to the decision to fly the flag during June to show the organisation’s acceptance of diversity in the workplace.

Virginia state Delegate Robert G Marshall wrote that homosexuality “adds significantly to illness, increases health costs, promotes venereal diseases, and worsens the population imbalance relating to the number of workers supporting the beneficiaries of America’s Social Security and Medicare programs.”

“I do not believe that a celebration of ‘gay pride’ has anything to do with the mission of the Federal Reserve under the Federal Reserve Act passed by Congress.

“This is a celebration of a behaviour that is still a class six felony in Virginia. How can the American people trust the judgement of the Federal Reserve as an institution when its spokesperson celebrates an attack on public morals?”

Although Mr Marshall is correct in stating that homosexuality is illegal in Virginia, a 2003 US Supreme Court ruling found that anti-sodomy laws prohibiting private sexual acts between gay couples were unconstitutional. Virginia has not prosecuted anyone for sodomy since the ruling.

Sally Green, the bank’s vice president and chief operating officer, said: “We are flying the pride flag as an example of our commitment to the values of acceptance and inclusion.” The bank confirmed that it had no plans to cave into the demands of homophobic politicians.

Equality Virginia Executive Director James Parrish said: ‘The Federal Reserve Bank of Richmond should receive accolades for its decision to recognize and celebrate its LGBT employees, customers and vendors during Pride month.”

Last year, a Virginia politician claimed that the introduction of body pat downs at airports was part of a “homosexual agenda”.