The following correction was printed in the Guardian's Corrections and clarifications column, Saturday 27 March 2010

Two articles about a Catholic adoption agency's fight for an exemption from equality regulations said it had won the right in the high court not to consider homosexual couples as parents. In fact it won a decision that could eventually lead it to be able to do this. The agency, Catholic Care, went to court to challenge a Charity Commission refusal to grant it an exemption from equality regulations. A high court judge ordered the commission to reconsider the case in the light of principles set out in his judgment.

A Catholic adoption society today won the right in the high court not to consider homosexual couples as parents.

Mr Justice Briggs, sitting in London, has allowed the society's appeal for an exemption from the sexual orientation regulations – opposed by the Charity Commission – which means the society can continue operating as it has always done.

Catholic Care, serving the dioceses of Leeds, Middlesbrough and Hallam in South Yorkshire, warned it would give up its work of finding homes for children, as many Catholic adoption societies have already done, rather than comply with the legislation, which would have barred it from refusing to consider same sex couples.

The verdict was welcomed by the society and by the Catholic church authorities, but provoked dismay among gay rights campaigners.

The Bishop of Leeds, Right Rev Arthur Roche, said outside the court: "Our case has not been brought on an anti-gay agenda of any sort. We respect, and would not want to diminish, the dignity of any person."

However, the judgment was condemned by the gay rights charity Stonewall. Jonathan Finney, its head of external affairs, said: "It's unthinkable that anyone engaged in delivering any kind of public or publicly funded service should be given licence to pick and choose service users on the basis of individual prejudice.

"It's clearly in the best interests of children in care to encourage as wide a pool of potential adopters as possible."

In a statement, Bishop Roche said: "The judgment today will help in our determination to continue to provide this invaluable service to benefit children, families and communities.

"We look forward to producing evidence to the Charity Commission to support the position that we have consistently taken through this process: that without being able to use this exemption children without families would be seriously disadvantaged.

"Catholic Care has been providing specialist adoption services for over 100 years. We have helped hundreds of children through the recruitment, assessment, training and support for prospective adoptive parents, as well as offering ongoing and post-adoption support to families that give such security and love for some of the most vulnerable children in our society."

Caritas Social Action Network, the umbrella group for Catholic care agencies, said an extremely important principle in co-operation between faith-based agencies and public authorities had been upheld.

"By requiring the Charity Commission to review its decision, the court has upheld the legitimate freedom of charities to organise themselves in such a way that their activities reflect their religious ethos when justified in the public benefit, as we believe is the case in this instance," it said.

The agencies have had a 21-month transition period to consider their future operations, before they would be compelled to comply with the new regulations.

Catholic Care was the last of the adoption societies to maintain the fight to continue its traditional practices. Some formerly Catholic agencies are breaking their formal links with the church in order to comply with the new rules. Others, including the Catholic Children's Society in London, are abandoning work with new adoptions. In Birmingham, the Father Hudson's Society is forming a new separate charity in order to continue its work, after its own appeal to the Charity Commission failed.

Briggs also ordered the Charity Commission to pay Catholic Care's legal costs, estimated at over £100,000. The law firms involved, solicitors Bircham Dyson Bell and barristers Christopher McCall QC and Matthew Smith, also worked pro-bono for the adoption society, a contribution estimated at £55,000.