Catholic adoption agencies have assured they are "still very much in business" despite Prime Minister Tony Blair's announcement earlier in the week that there can be no exemptions for faith-based adoption agencies from the new Sexual Orientation Regulations.

In a statement released Monday afternoon, Mr Blair said he had listened to the "strongly-held" views on all sides but that he started from a "firm foundation" that there was no place in society for discrimination.

Gay couples should be able to apply to adopt like any other couple, he said, outlining instead his plans for a 21 month period of independent assessment.

The Catholic adoption agencies said in a statement released by the Catholic Communication Network, "As widely documented over the past weeks, our services are in demand and greatly valued.

"During this time we will continue to provide all our existing adoption services and be evaluating the best way forward to ensure that the well being and interests of children remain at the heart of all future development plans for the agencies."

The Archbishop of Canterbury, Dr Rowan Williams, meanwhile, has said he would like to see "more serious debate" on limits to the "state's power to control and determine the actions of voluntary bodies within it, in pursuit of what are quite proper goals of non-discrimination.

"I hope there'll be a debate about that," he said.

Cardinal Cormac Murphy-O'Connor triggered a row over gay adoption last week when he said that the Catholic Church's adoption agencies would close rather than be forced to place children with gay couples.

His letter last week to Mr Blair on the issue won the support of the Archbishops of Canterbury and York, while staunch Catholic communities secretary Ruth Kelly stood by her support for an opt-out for the Catholic adoption agencies.

Mr Blair said the new rules would not come "fully" into force until the end of 2008 and that until that time there would be a "statutory duty" for religious agencies to refer gay couples to other agencies.