In an open letter to Tony Blair, the Archbishop of Westminster Cardinal Cormac Murphy-O'Connor urged him to exempt Catholic adoption agencies from new anti-discrimination legislation.
The cardinal warned that such a move would "significantly" reduce the potential resources of adoptive families for the 4,000 children currently waiting for adoption placements.
He said the Catholic Church would have "serious difficulty" adhering to the law which is due to come into effect in April and which outlaws discrimination on the grounds of sexual orientation.
"We believe it would be unreasonable, unnecessary and unjust discrimination against Catholics for the Government to insist that if they wish to continue to work with local authorities, Catholic adoption agencies must act against the teaching of the Church and their own consciences," the cardinal wrote.
He said it would be "an unnecessary tragedy if legislation forced the closure of these adoption services".
Homosexual Christian lobbyists accused the cardinal of bowing to pressure from the Vatican and making threats.
"The Vatican is raising the pressure here in its war against gay people," Reverend Martin Reynolds, spokesman for the Lesbian and Gay Christian Movement, said.
"We are horrified that the Catholic Church appears to be holding the Government to ransom. They are obviously not putting the best interest of these children first."
The Equality Act outlaws discrimination in the provision of goods, facilities and services on the basis of sexual orientation.
The 12 Catholic adoption agencies in England and Wales handle around a third of voluntary sector adoptions.