Scottish adoption charity St Margaret’s Children and Family Care Society has been warned that if it does not start accepting applications from gay couples it will lose its charity status.

St Margaret’s policy states that “We expect applicants to have been married for at least two years”.

Following a complaint by the National Secular Society (NSS), the Office of the Scottish Charity Regulator (OSCR) ruled that since same-sex marriage is not currently legal in the UK, the policy was excluding gay couples from their adoption system.

This was deemed to be unlawful discrimination.

Leeds-based adoption charity Catholic care have been involved in a legal battle to continue to exclude gay couple from adoption since 2008. In November, the charity lost its fourth appeal, but said they would continue to protest the decision.

NSS spokesperson for Scotland Alistair McBay said: “After the ruling in England by the Charity Commission, backed by the courts, that Catholic adoption agencies there were in breach of the Equality Act by denying their services to gay couples, it is logical that the Scottish charity regulator has reached the same decision about St Margaret’s.

“Sectarian decision-making has no place in adoption arrangements, and the regulator also found that St Margaret’s was discriminating against non-Catholic couples who applied to adopt. This kind of crude discrimination is no longer acceptable in our society – and that goes double where the discrimination is, in effect, being largely financed by the public purse.

“Arguably more important than depriving gay couples of adoption is that St Margaret’s policy restricts the pool of adoptive parents, including gay parents, some of whom the Regulator acknowledges have special skills that would be especially appropriate with hard-to-place children.”

Mr McBay added: “If St Margaret’s wishes to continue to provide services, it must remove these provisions from its constitution – this will be in the children’s best interests. In England, some of the Catholic agencies complied and are now providing their services to everyone without prejudice. Those doing so have generally been faced with the Catholic Church heartlessly withdrawing its co-operation and forcing them to break their link with the Church. Other agencies felt that they could not comply and have closed.

“We hope that St Margaret’s will continue to fulfil its valuable role, even if it has to sever its connection with the Catholic Church. We certainly hope it will not take the same route as Catholic Care (Diocese of Leeds) which pursued a long, expensive and, in the end, fruitless appeal with the Charity Commission. They charity’s funds can be better spent in the interests of children than being wasted in legal fees to delay the inevitable.”

The chair of the UK’s Equality and Human Rights Commission said in 2012 that religious groups must conform to the public laws of the state.