Michigan will no longer provide funding to adoption agencies that turn away prospective LGBTQ parents due to religious objections, following a new legal settlement.

The settlement, announced Friday, was reached by the office of Attorney General Dana Nessel (D) and lawyers for the American Civil Liberties Union (ACLU), according to The Associated Press.

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Michigan's Department of Health and Human Services is now required to maintain nondiscrimination provisions in its adoption agency contracts and end contracts with agencies found to have discriminated against LGBTQ couples or individuals.

The settlement stems from an ACLU lawsuit filed in 2017 on behalf of two lesbian couples and a woman who was in Michigan's foster care system when she was a teenager.

The couples claimed in the suit that they were turned away by Bethany Christian Services and Catholic Charities because of their sexual orientation.

A law passed in 2015 by a Republican-controlled legislature allowed Michigan adoption agencies to turn away members of the LGBTQ community if they cited a conflict with their religious beliefs.

However, the law’s provisions did not extend to agencies that contracted with the state's Department of Health and Human Services, the suit states, according to The Detroit Free Press.

A lawyer representing the Becket Fund for Religious Liberty, which got involved with the case on behalf of other faith-based agencies, told The Associated Press that the result of the agreement announced on Friday “will be tragic.”

"Thousands of children will be kept from finding the loving homes they deserve. This settlement violates the state law protecting religious adoption agencies,” attorney Lori Windham told the news agency in a statement.

Kristy and Dana Dumont of Dimondale, two of the plaintiffs in the case, told the AP they are hopeful the new settlement “will mean more families for children, especially those who have been waiting years for a family to adopt them.”

"And we can't wait to welcome one of those children into our family,” they added.

"Discrimination in the provision of foster care case management and adoption services is illegal, no matter the rationale," Nessel told the AP in a statement. "Limiting the opportunity for a child to be adopted or fostered by a loving home not only goes against the state's goal of finding a home for every child, it is a direct violation of the contract every child-placing agency enters into with the state."