Peter and Hazelmary Bull were ordered by a judge in January to pay £3,600 in damages to civil partners Steven Preddy and Martyn Hall.

The court ruled that the Bulls' policy of reserving double rooms for heterosexual married couples only broke equality laws.

When deciding upon the level of damages, the judge had taken the Bulls’ Christian beliefs into consideration.

Preddy and Hall were represented in their case by the taxpayer-funded Equality Commission, which had been seeking an increase in the damages on the grounds that Christian beliefs should hold no sway over the level of compensation.

However, the Commission withdrew the legal action, saying its bid had been an “error of judgement”.

According to the Christian Institute, which represented the Bulls, legal director of the Commission John Wadham said: “This morning we withdrew our cross appeal in this case.

“It was filed initially because of an error of judgement on the part of our legal team. They submitted the cross appeal in an attempt to clarify the law around how damages are calculated in cases such as this.

“This resulted in it appearing that Steve Preddy and Martyn Hall were seeking to increase the amount of damages they receive because Mr and Mrs Bull’s Christian beliefs had led them to break the law.

“This was not our intention and it was certainly not the intention of Steve and Martyn.

“I would like to confirm that public money will not be spent funding a claim for increased damages in this case.”

In a joint statement, Preddy and Hall said: “We brought this case to clarify the law, not to make money. We have always believed that the original award was a fair one, and are not seeking any further compensation.”

The Christian Institute welcomed the decision to withdraw the action, saying it had been “heartless” to seek more compensation from the Bulls.

Mike Judge, of the Christian Institute, said: “We are pleased that the Commission has seen sense and withdrawn their demand for a stiffer penalty against Mr and Mrs Bull.

“However, this u-turn has come only after negative publicity.

“Last week the Commission had to apologise for saying children may be at risk from being ‘infected’ with the moral values of Christian foster parents.

“The Commission’s approach to these equality cases has seriously damaged Christians’ confidence in the Commission, which ought to be acting as an impartial defender of everyone’s human rights.

“A great deal of damage has been done.”