A group of foster parents and one of Pennsylvania's largest Catholic charities are suing Philadelphia after the city attempted to cut them off from foster care because of their religious beliefs.

Philadelphia regulators announced they would no longer place children through Catholic Social Services over Church teaching on sexuality. The new policy came as the city's Department of Human Services warned of a "crisis" as it faced a shortage of 300 foster homes. The shortage will only grow worse if it continues to bar 120 foster families associated with Catholic charities from taking in new children, according to the suit filed by the Becket Fund, one of the nation's top nonprofit religious liberty firms.

"Even though no LGBT couple has filed a complaint against Catholic Social Services, and the agency would not stand in the way of any couple who wished to foster a child in need, the City has decided to penalize the agency because the City disagrees with its religious beliefs," the suit says. "The City is penalizing both the foster parents who wish to continue working with Catholic Social Services and the children they would serve."

The suit argues that the city is discriminating based on religious beliefs in violation of the U.S. and Pennsylvania constitutions. Mark Rienzi, president of the Becket Fund and counsel for the foster parents, said Democratic mayor Jim Kenney and his administration are putting their political ambitions before the needs of children.

"The City is leaving homes empty, in order to pick this culture war for political reasons," Rienzi told the Washington Free Beacon. "It's really mind blowing to think they'd do this to kids. That's just vindictive."

Sharonell Fulton has been a foster mother for more than 25 years and taken in 40 children during that time, two of whom currently live with her. She said the city only hinders the generosity of its resident by "taking stable, loving homes away from children." She joined the suit in the hopes of continuing to serve her city and observe her faith.

"If the City cuts off Catholic Social Services from foster care, foster moms like me won’t have the help and support they need to care for special-needs kids," she said in a statement. "I have relied on Catholic Social Services for support for years, and the City is taking away this help and causing harm and heartache to countless families like mine."

Other states, such as Illinois, have barred religious charities from participating in adoption over religious objections to gay marriage. The case represents the first major legal challenge to such policies. It could carry significant public policy implications for the future of religious liberty, according to Rienzi.

"Here the city is violating both state and federal law," he said. "It is discriminating in a way it can't or shouldn't be allowed to do."

Philadelphia said its policy is designed to prevent discrimination. It declined to comment on the suit, but said it appreciated "the services that Catholic Social Services provides."

"Those services must be provided in a manner consistent with certain core City principles, including our non-discrimination rules," the city said in a statement. "As Catholic Social Services works on the City’s behalf, we cannot allow discrimination against qualified couples who are ready to take on this important role, simply because of who they are."