Religious employers are likely to lose the opt-out that enables them to refuse to employ homosexual employees, as the European Commission is putting pressure on the government to reverse exemption clauses in Employment Regulations.
The move follows a complaint from the National Secular Society lodged in 2004, which said the opt-outs granted to religious bodies go further than is permitted under the directive, and have created 'illegal discrimination against homosexuals'.
The exemption means religious groups are allowed to refuse a job to a homosexual applicant to avoid 'conflicting with the strongly-held religious convictions of a significant number of the religion's followers'.
But the EC has written to the government expressing its concern that the UK has incorrectly implemented the EU directive, which prohibits discrimination on the grounds of a person's sexual orientation. The government will now have to re-draft anti-discrimination laws.
Keith Porteous Wood, executive director of the National Secular Society, said: "If a significant number of followers of an organised religion didn't like it, there was no protection for a gay employee.
"It is ironic that the employers with the highest proportion of gay employees - religious organisations - are the ones most determined to strip them of any rights at all."
EU equal opportunities commissioner Vladimir Spidla said: "We call on the UK government to make the necessary changes to its anti-discrimination legislation as soon as possible so as to fully comply with the EU rules."