The Catholic Church in Scotland last night denounced Tony Blair's decision not to grant an exemption from gay rights laws for faith-based adoption agencies and made clear its two offices now faced closure.

The Prime Minister's "sensible compromise", as Downing Street described it, would - from April when the new UK-wide equality law is due to come into operation - give adoption agencies until the end of 2008 to adapt themselves to the new legislation or close.

During this 21-month transition period, agencies which do not cater for homosexual couples will have a statutory duty to pass them on to another agency.

While Mr Blair's decision was welcomed by cabinet ministers, MPs, civil rights groups and gay rights campaigners, a spokesman for Mario Conti, Archbishop of Glasgow, described the offer of delayed implementation as meaningless. He added: "It will be no easier for Catholic agencies to act contrary to conscience in 21 months' time than it is now."

The spokesman said Mr Blair's decision - taken, explained No 10, after widespread consultation with government colleagues, the Scottish Executive, Church leaders and gay rights groups - could compel religious organisations either to renounce their activities or be removed from public life.

"The UK government has chosen to undermine the best efforts of the Scottish Executive, ignore the appeals of Catholic, Anglican and Muslim leaders and threaten the future of some of the most effective adoption agencies in the country to placate a powerful lobby group," he added.