A Sunday newspaper reported that Ms Kelly, a member of the Opus Dei sect, wanted the church's adoption agencies to be able to continue to turn away same-sex couples.
The Equality Act bans discrimination in the provision of goods, facilities and services on the basis of sexual orientation in a similar way to the rules on sex and race discrimination.
Catholic adoption agencies have said they fear they may be forced to allow gay couples to adopt under regulations due to be published soon.
The newspaper said that Ms Kelly had the backing of Prime Minister Tony Blair but was facing stiff opposition from other senior colleagues.
A spokesman for the Department of Communities and Local Government said: "We are absolutely committed to bringing forward proposals that provide effective protection from discrimination on the basis of sexual orientation."
The Department "fully recognised" the value of same sex parents, he said.
"No decisions have yet been taken about the content of the regulations.
"We will bring forward regulations shortly and people will be able to judge them on the facts, not speculation or guesswork."
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Fred Peitzsche, Innisfail,Alberta,Canada (21/01/2007 at 17:37)
Gay people ,in my opinion ,are probably less inclined towards abusing children than anyone else.How terrible it must be to long to raise a child to te best of your ability only to be told that the law or some religious fanactic blocks you at every point.
I am not an expert on gay affairs but I recognise that they are human beings the same as me,with all my hopes and fears.They love as I love and the reatest love of all is for the young and innocent.
Get with it all you bigots.