The Irish government will advance a bill to close a loophole in equality law that permits religious employers to discriminate against gays.

Justice and equality minister Aodhán Ó Ríordáin announced today that he is seeking to repeal a portion of the Employment Equality Act.

Section 37(1) of the Employment Equality Act currently exempts religious institutions from the law, allowing discrimination “where it is reasonable to do so in order to maintain the religious ethos of the institution”.

It specifically mentions church-run “educational and medical institutions” do not have to follow the law.

Mr Ó Ríordáin, the TD for Dublin Central, said: “In its current form, this section of this Act allows religious institutions to discriminate against employees who may contradict their ethos. This has been of particular concern to those in the education and health sectors where many schools and hospitals are funded by the state, but run by a religious order.

“The consequence of this Act can have a chilling effect on concerned workers who are divorced or are single parents, as well as members of the LGBT Community, as it can mean that they cannot be open about their status in their workplace.”

Teachers’ unions in the country have long campaigned for the change, arguing that the provision is effectively a license to discriminate against gay people for church groups.

A spokesperson for the Teachers Union of Ireland said: “[TUI] has vigorously campaigned for an amendment of the act in order to remove the cloud of fear and intimidation which hangs over many of our members because of its continued existence.

“It should go without saying in 2014 that nobody should be discriminated against on the basis of their sexual orientation or family status. The Minister’s statement is very welcome news.”

The bill was first rumoured in June, but was subject to cabinet approval at the time.