The letter from Haringey council came as a shock. Gosia Shannon, a Polish immigrant, had been running a flourishing centre for isolated Eastern European families with pre-school children in the North London borough. But the council was threatening to withdraw all funding and close the group by the end of this month.

A fortnight earlier the group had made the mistake of voting to include the word “Christian” in its name, and the council discovered that it had a habit of singing songs about Jesus. In particular, a council official said that “Gosia’s attitudes toward gay parents worry me”. To keep its funding, the group would have to stop all religious activity and pledge to be open to Eastern Europeans regardless of their sexual orientation.

Ms Shannon insists that she welcomed the one lesbian couple who visited. “We don’t promote homosexuality but we welcome homosexuals. They are trying to impose their own culture on us, not the culture the community wants. Christianity is part of who we are.”

What Haringey council is trying to enforce with its purse strings, the Government is attempting through legislation. Religious groups are outraged that, from next April, it will be illegal to discriminate against homosexuals or transsexuals when providing goods and services. The clash between religion and secular liberalism is stirring high passions and has even brought threats of civil disobedience.

The row has been rumbling on since the law was proposed last year, but exploded this week when the Government laid down the Sexual Orientation Regulations for Northern Ireland, to come into force from January 1. It provoked a political storm in the Province, while a group of black pentecostal churches took out a full-page advertisement in The Times in protest that the rest of Britain would follow.

The Catholic and Anglican churches have said that their adoption agencies, youth clubs and hospices might have to close. Christian bed-and-breakfast owners say they would shut rather than be forced to allow gay couples to sleep together in their house. The churches claim that Christian printers could be sued if they refuse to print gay literature, and that Christian bookshops could be sued for stocking denunciations of homosexuality.

This is the latest conflict in a wider war. Religious groups have been emboldened by their successes in forcing British Airways to drop its ban on a worker wearing a cross, and in getting the Government to backtrack on its threat to faith schools.

Andrea Williams, of the Lawyers Christian Fellowship, which has led the campaign against the gay law, said: “This is truly a clash of fundamental human rights. It would seem that, when these rights clash, the homosexual person’s rights trump the religious person’s rights.”

The campaign to bring in the Sexual Offences Regulations was led by Ben Summerskill, chief executive of the gay rights group Stonewall. Mr Summerskill reels off examples of anti-gay discrimination he encountered when he took up the job: “We were dealing with lesbians who were denied smear tests, and gay people being struck off GPs’ lists. Household insurance was refused. Older people were not being allowed to share rooms in a care home. These weren’t exceptions.”

So when the Government was legislating to introduce a commission for human rights, he persuaded the gay Labour peer Lord Alli to tack on an amendment to make it illegal to discriminate against gays when providing goods or services. The Government put it out to consultation and held a series of often embarrassing meetings with church leaders and gay lobbyists. It got such a huge response that the legislation was delayed by six months. A long official silence followed, only broken with the Northern Ireland decision last week.

Vincent Nichols, the Roman Catholic Archbishop of Birmingham, has threatened to withdraw co-operation over schools and adoption agencies. Catholic priests are being urged to preach to their congregations and ask them to write to the Government.

In the Church of England, the Right Rev Michael Nazir-Ali, the Bishop of Rochester, has said that church youth clubs and welfare projects may have to close. “In these proposed regulations there is no clear exemption for religious belief, even though it is widely known that several of the faiths in this country will have serious difficulty.”

But the strongest reaction came from Britain’s conservative black church groups, who took out the Times advertisement. One of the leaders behind it, Alfred Williams, of the Christ Faith Tabernacle in New Cross, said: “People think it is better to die than to sin against their God.There will be a spontaneous reaction. There will be civil disobedience.”

The Gay and Lesbian Humanist Association urged “massive resistence to this religious pressure”. George Broadhead, its secretary, said: “This is a truly poisonous campaign by a large number of Christian organisations. They are seeking to rob gay people of their basic right to protection from unjust treatment.”

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