The Office of the Scottish Charity Regulator will not appeal a court ruling quashing its decision to revoke charitable status from a Catholic adoption agency which discriminates against same-sex couples.

St Margaret’s Children and Family Care Society had been told in January 2013 by the OSCR that it was to lose its status over its refusal to place children with same-sex couples.

But the ruling was overturned by the Scottish Charity Appeals Panel (SCAP) last month.

Terry Sanderson, president of the National Secular Society, said the decision kicked a hole right through the Equality Act.

The Equality Act 2010 states that it’s illegal to refuse to provide goods and services based upon a person’s sexual orientation and gender identity.

Mr Sanderson said that St Margaret’s should not be allowed to maintain its charitable tax status because it discriminates against same-sex couples.

However, the OSCR announced on Monday that it would not be appealing the ruling in favour of the charity.

It said in a statement on its website that its decision not to appeal was based on the fact that an appeal would be expensive, unlikely to succeed and have limited wider implications, especially given the recent passing of equal marriage legislation in Scotland.

“The SCAP made its decision having heard additional evidence from the charity, which was not available to the OSCR when it took its decision to issue a direction to the charity,” it stated.

The regulator also said that the SCAP’s decision “includes a number of comments on wider aspects of charity regulation which OSCR finds difficult to follow”.

A spokesman for St Margaret’s said it was “relieved and glad” at the OSCR’s decision not to appeal.

“The decision in favour of St Margaret’s was a unanimous one, and the OSCR rightly acknowledge that it is unlikely that the Court of Session would decide to revisit it and an appeal would therefore be unlikely to succeed,” he said.