The Brunei-owned Dorchester hotel has been dropped as a venue for the Police Federation’s bravery awards after widespread condemnation of the country’s introduction of new laws imposing death by stoning to punish gay sex and adultery.

The five-star Mayfair hotel has been shunned by the organisation, which said it could not support “a regime which is so fundamentally opposed to the values of respect, diversity and equality”.

The snub follows the imposition this month of sharia law in the south-east Asian kingdom, which includes punishments such as amputating thieves’ hands.

Brunei’s shift to a more conservative form of Islam has been overseen by the sultan, Sandhurst-educated billionaire Hassanal Bolkiah, who described the introduction of the new laws as a “great achievement”.

However, the move has sparked outcry with celebrities such as George Clooney and Sir Elton John among a chorus of critical voices backing a boycott of the Dorchester Collection chain of hotels. The chain, owned by the Brunei Investment Agency, an arm of the country’s ministry of finance, has three hotels in the UK and two in each of the US, France and Italy.

The Police Federation of England and Wales, which represents 119,000 rank and file officers, said in an online statement: “In light of recent events, we have decided not to host our annual police bravery awards at the Dorchester Hotel and will be seeking an alternative venue.

“We cannot in all conscience support a regime which is so fundamentally opposed to the values of respect, diversity and equality we hold so highly within our organisation and policing as a whole.

“And although the decision is no reflection on the staff of the hotel itself, who have always done their utmost to ensure that the event is a success, we feel it is the right one.”

John Apter, the national chair of the Police Federation, added: “I am confident this year’s event will be as moving and as poignant as it always has been, our brave and dedicated colleagues deserve nothing less.

“Local management at the hotel has reimbursed us after cancelling the deposit and have been incredibly understanding in these circumstances, for which I am grateful.”

The awards ceremony, which celebrates extraordinary feats of courage and is in its 24th year, was due to be held at the London venue on Park Lane on 18 July. The decision to drop the venue comes after the foreign secretary, Jeremy Hunt, cancelled a Conservative fundraiser at the hotel earlier this week. Meanwhile, Deutsche Bank is among major firms banning staff from staying in Brunei-owned hotels.

Brunei, which has a tiny population of 430,000 people, is situated on the island of Borneo and gained full independence from Britain in 1984.

Asked if the hotel’s management was concerned that Brunei’s imposition of anti-LGBT laws was negatively affecting business, a spokesman said: “Yes, we’re deeply saddened by what’s happening right now and the impact it is having on our employees, guests, partners and suppliers in particular.

The spokesman added: “We are grateful that the Police Federation has stated that their decision is no reflection on the staff of the hotel.

“As we have said in a statement on our website, we do not tolerate any form of discrimination; we never have and we never will. We understand people’s anger and frustration but this is a political and religious issue that we don’t believe should be played out in our hotels and amongst our 3,630 employees. Our values are far removed from the politics of ownership.”