A fresh constitutional row erupted last night after it emerged that Cabinet minister Ruth Kelly has plans to force Scotland to U-turn its groundbreaking law allowing gay couples to adopt children.

Communities and Local Government minister Ruth Kelly is set to clash with fellow Labour MPs in Scotland and England over her attempts to put a block on gay people adopting children from church-based adoption agencies, reports Scotland on Sunday.

MSPs brought in gay adoption north of the border just over a month ago when they passed the Adoption Act despite furious opposition from conservatives and church groups.

But Kelly, a devout Catholic, has now threatened to overturn the Holyrood legislation with an amendment to her own hugely controversial proposals to outlaw sex discrimination in the business and services industry. Tony Blair is believed to be in support of the proposed exemption which would enable faith-based agencies to refuse to place children with gay couples.

Sources close to Kelly have confirmed she wanted to see all elements of the Sexual Orientation (Provision of Goods and Services) Regulations apply throughout the UK, meaning they would take precedence over the Scottish Parliament's own laws.

Her proposed exemption has already met opposition, days before she was due to drop announce the amendment on Cabinet colleagues.

"Whatever one thinks of the issue itself, it is clear Westminster should not be able to overrule the Scottish Parliament on a subject where MSPs have made their views perfectly clear," an SNP spokesman said. "This is another example of why we need more powers for the Scottish Parliament, to decide our own policies rather than being under Westminster."

Kelly has been deeply concerned by the widespread opposition to the new regulations, which are aimed at preventing businesses from discriminating against homosexuals. Christian, Jewish and Muslim leaders united in condemnation of the proposals, due to come into force in April, claiming they will have a damaging impact on charities and faith schools.

Catholic Church leaders warned they would prefer to shut down their seven adoption agencies - which found homes for over 200 children last year - rather than be forced to place children with gay couples.

A source close to First Minister Jack McConnell said he was not yet aware of any plans by Westminster to legislate for Scotland on this issue. He said: "The Scottish Parliament has voted on this subject and made its will clear."

Kelly, who is a member of conservative Catholic sect Opus Dei, has already floated her views to members of the Cabinet's domestic affairs committee, which is attempting to produce a workable version of the contentious sexual orientation regulations.

She was due to send a letter outlining her plans for the exemption to Cabinet last week but, as one senior colleague explained, she "bottled it", reported Scotland on Sunday.

She is now expected to present her blueprint to colleagues on Thursday, and provoke a furious debate over the government's commitment to equal opportunities.

A spokesman for the Roman Catholic Church in Scotland last night welcomed suggestions of a reprieve for the adoption agencies.