The Bishop of Lancaster Patrick O'Donoghue said Catholic Caring Services would not have the church's support if it went against teachings.
From January 2009 it will be illegal to discriminate against gay applicants.
The charity said it will continue to respond to the plight of the neediest of children who require adoptive homes.
Bishop Patrick O'Donoghue announced it would be with "great sadness and regret" to ask the service to remove the word Catholic from its title and confirm it accepted it would be acting independently of the Lancaster Diocese.
He said: "Clearly as Trustees you cannot act contrary to the law of the land but as Trustees you also have a legal obligation to look at all possible means of ensuring that Catholic Caring Services acts in accordance with the faith of the Church, as well as in accordance with the law of the land."
'Vulnerable children'
He added Catholic Caring Services would no longer be able to promote the Church's "moral teaching that a marital setting is better for children rather than being placed with a same-sex couple".
A spokesperson for the Catholic Caring Services said the charity had always been compliant with the law and was confident compliance with the new equality legislation would not compromise its determination and moral responsibility to retain the best interests of the child.
In a statement, the charity said that the trustees, including Bishop Patrick O'Donoghue, would always hope to attract committed, married couples as adopters and foster carers of vulnerable children.
It went on to say that the trustees recognised, however, that there were committed couples who were not married as well as single people who have provided magnificent, long term and permanent homes for children.
Jim Cullen, chief executive of the charity, said: "We have been an important contributor to the Church's work in the world of social welfare since 1934. The trustees and staff have all overwhelmingly agreed that this long-standing contribution to the community as a social care charity must be maintained.
"We will remain a catholic charity, operating the same services, with the same staff, same values and same ethos.
"We are confident that this course of action is the only transparent and certain way to preserve our services for some of society's most vulnerable children and adults."
Courtesy of the BBC

