Liberal senator Sue Boyce will defy her party and support legislation outlawing discrimination against homosexual and transgender people seeking access to commonwealth-funded aged care homes.

The Coalition is opposing the last minute amendment to a broader sexual discrimination bill, saying it is rushed and sets a precedent under which religious organisations could lose their exemption from anti-discrimination laws. It says it will vote against the bill if the government does not withdraw the amendment.

Boyce agreed the process had been "rushed and ridiculous" but told Guardian Australia: "I will support the amendment. It has been rushed but I don't think that should stop us from legislating to prevent discrimination against homosexual couples and people with intersex identify moving into the nursing homes of their choice.

"I do not think that the religious organisations can have it both ways. They cannot say, 'We don't discriminate' or 'We respect the individual', and at the same time say, 'But we don't want any legislation that affects the way we treat people'."

Liberal senator Dean Smith reportedly intends to abstain from the vote on the amendment, which limits the religious exemption by preventing any aged care provider from discriminating against people because of sexual orientation, gender identity or intersex status.

But shadow attorney-general George Brandis said the Coalition had always insisted religious organisations be exempted from anti-discrimination laws and it would not shift from this view.

"We say that the right of freedom of religious practice and the right of freedom of religious worship must always be respected," Brandis said.

"And if we are to respect it, then the right of religions which conduct social institutions, whether they be schools or churches or aged care facilities or hospitals, to conduct those institutions in accordance with the tenets of their faith, should always be respected. That is a very fundamental value."

Brandis told the senate that "the Australian Catholic Bishops Conference, the Salvation Army, Catholic Health Australia, the Presbyterian Church of Australia and a number of smaller religious denominations, both Christian and non-Christian, which provide aged care services" had indicated the amendment would be "problematic for them because it might intrude upon their capacity to conduct and govern their institutions in accordance with the precepts of their respective faiths".

The senate legal and constitutional affairs committee recently found it was "fundamentally important that all older Australians maintain the right to access aged care services on an equal basis".

"In some areas of Australia there is very limited choice of aged care service providers," the committee found, rejecting the argument that people would "always be able to choose a non-religious service provider should they so wish".

Minister for ageing Mark Butler said the amendment would ensure older couples and individuals need no longer worry about experiencing discrimination when seeking access to aged care services.

"While most aged care service providers are accepting of residents regardless of sexual orientation, gender identity or intersex status, we think there should be legal protection that ensures such discrimination cannot occur," he said.

"When such services are provided with taxpayer dollars, it is not appropriate for providers to discriminate in the provision of those services."

The senate committee heard allegations that some elderly gay and lesbian people had been forced to conceal their sexuality to secure aged care services.

Council of the Ageing strongly supports the amendment.

Chief executive Ian Yates said he was "surprised" the coalition was opposing it and had as yet received "no explanation".

He said all the church-based aged care providers had backed the move.