The Church of England has weighed in on the public debate on whether the Catholic Church should be exempt from a gay-rights law that would force 12 Catholic adoption agencies to place children with same-sex couples or close their doors.

In a letter to Prime Minister Tony Blair, the Archbishop of Canterbury, Dr Rowan Williams, and of York, Dr John Sentamu, said “rights of conscience cannot be made subject to legislation.”

They warn against the danger of the row escalating to the point where some might question the ability of people with a strong faith to be in government. They also warn that the argument over the Sexual Orientation Regulations has reached damaging proportions and that “much could be lost”.

“Many in the voluntary sector are dedicated to public service because of the dictates of their conscience,” they wrote. “In legislating to protect and promote the rights of particular groups the Government is faced with the delicate but important challenge of not thereby creating the conditions within which others feel their rights to have been ignored or sacrificed, or in which the dictates of personal conscience are put at risk.

“It is vitally important that the interests of vulnerable children are not relegated to suit any political interest,” they continued. “And that conditions are not inadvertently created which make the claims of conscience an obstacle to, rather than the inspiration for, the invaluable public service rendered by parts of the voluntary sector.”

The letter comes after the Catholic Archbishop of Westminster, Cardinal Cormac Murphy-O’Connor, wrote to every member of the Cabinet stating that the Catholic Church could not accept a law forcing its adoption agencies to accept gay couples. He said the law would force the agencies to close.

According to The London Times, the move has put Blair in a tough spot. If he accedes to the demands, he will face accusations from the gay rights lobby and from some within his own government of being a “Vatican puppet”. If he stands by the gay lobby, he risks alienating hundreds of thousands of Catholic voters, says The Times report.

But Blair has reportedly signaled his support for the exemption for the Catholic Church despite accusations of blackmail by bishops, threatening with closure, and that he favors a compromise.

However, most other Cabinet ministers believe that compromise is impossible, saying that an exemption would undermine the fundamental position of law.

The prime minister said on Thursday that a decision on the exemption would come sometime next week and that the law requiring homosexual adoption should be put to a vote in Parliament within a month.