The charity wanted to take advantage of an exemption in section 18 of the Equality Act (Sexual Orientation) Regulations 2007, which allows charities to discriminate when acting in accordance with their objectives or governing documents.
Catholic Care, which operates in the diocese of Leeds, had wanted to use this exemption to stop homosexuals from adopting through its adoption services, which have been running for more than 60 years.
But the Charity Tribunal, on hearing the appeal, said the charity would fall foul of other equality regulations by discriminating against same-sex couples.
Catholic Care chief executive Mark Wiggin said: "As the charity cannot provide unrestricted services without being in breach of our obligations to act in accordance with the tenets of the Roman Catholic Church, it seems likely that we will now have to consider the need to close our adoption service."
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