Ministers are expected to announce plans allowing same-sex couples to register civil partnerships in church, removing a key legal distinction between the ceremony and marriage.

The move, likely to be announced by Lynne Featherstone, the equalities minister, would lift the ban on civil partnerships taking place in religious settings in England and Wales. Same-sex couples are currently not allowed to use hymns or Bible readings in civil ceremonies, but it is unclear whether this would change or whether civil partnership ceremonies in places of worship could formally be described as marriages.

The Home Office said: "The government is currently considering what the next stage should be for civil partnerships, including how some religious organisations can allow same-sex couples to register their relationship in a religious setting if they wish to do so."

The move, likely to come as early as next year, would mean historic reforms of marriage laws, according to newspaper reports over the weekend. However, it will cause ructions among churches strongly opposed to formal gay unions.

Critics of the current system argue that existing law is discriminatory. Gay rights campaigners have urged the government to go further and allow homosexual couples to marry and heterosexual couples to enter into civil partnerships. Such partnerships, granting similar rights to same-sex couples as marriage does, have been legal in Britain for six years.

Michael Hutchinson, acting recording clerk for Quakers in Britain, said: "We look forward to examining the proposals to give effect to the provision of the Equality Act."

"We ourselves see no distinction between heterosexual or homosexual in terms of commitment and wish to move further to allow legal marriage for same-sex couples, but this is a welcome step along the way to full equality."

The government's reported proposals follow an amendment to the Equalities Act by Lord Alli, a Labour peer, passed by the House of Lords before the general election last year. But his amendment, which would not force religious venues to accept same-sex couples, would require a further ruling from ministers to be implemented.

The human rights campaigner Peter Tatchell said: "It's outrageous that the government is delaying the implementation of a law that was passed almost a year ago. Parliament voted to allow civil partnerships in places of worship.

"It's great if the government is planning to end discrimination against heterosexual couples by allowing them to have a civil partnership. It follows that the government should allow gay couples civil marriages."

The Church of England, which has said it will not allow any of its churches to be used for civil partnerships, said the reported proposals could lead to "inconsistencies" and "confusion".

A spokesman said the church had yet to see the plans, but added: "The proposal as reported could also lead to inconsistencies with civil marriage, have unexplored impacts, and lead to confusion, with a number of difficult and unintended consequences for churches and faiths. Any change could, therefore, only be brought after proper and careful consideration of all the issues involved, to ensure that the intended freedom for all denominations over these matters is genuinely secured."

However, the Archbishop of York, Dr John Sentamu, gave the news a guarded welcome. He told the BBC1's Andrew Marr Show that he "believes in a liberal democracy, and actually wants equality with everybody", but he did not want churches to be told what to do.

The Catholic church and Islam sanction marriage only as a union between a man and a woman.

Earlier this month, eight couples, four gay and four heterosexual, filed a joint application in the European court of human rights asking to overturn the prohibition on gay civil marriages and on heterosexual civil partnerships.