The leaders of a mainline Protestant Christian denomination in the US have urged Indiana to veto a contentious religious freedom bill, citing concerns of discrimination.

The Christian Church (Disciples of Christ) has said it may pull out from holding its General Assembly in Indianapolis in 2017. Church leaders wrote to Governor Mike Pence on Wednesday asking him to reconsider signing the bill into law, which he is expected to do today.

"The recent passage in the state legislature of the RFRA [Religious Freedom Restoration Act] bill is distressing to us," the leaders wrote.

"Purportedly a matter of religious freedom, we find RFRA contrary to the values of our faith – as well as to our national and Hoosier values. Our nation and state are strong when we welcome people of many backgrounds and points of view. The free and robust exchange of ideas is part of what makes our democracy great."

The letter states that members of the denomination have a wide-range of views, "but we share a value for an open Lord's Table".

"Our members and assembly-goers are of different races and ethnicities, ages, genders and sexual orientations. They have in common that they love Jesus and seek to follow him. We are particularly distressed at the thought that, should RFRA be signed into law, some of our members and friends might not be welcome in Indiana businesses – might experience legally sanctioned bias and rejection once so common on the basis of race."

The Religious Freedom Bill was passed by 63 votes for to 31 against in the Indiana House of Representatives on Monday. Pence has announced his support of the legislation. "[It] is about respecting and reassuring Hoosiers [residents of Indiana] that their religious freedoms are intact....I look forward to signing the bill when it reaches my desk," he said earlier this week.

The bill would stop local government from "substantially burden[ing] a person's exercise of religion" and would allow business owners to refuse services according to their religious beliefs

Critics are concerned that it would result in increased discrimination, particularly against same-sex couples, who are legally allowed to marry in the State, and House Speaker Brian Bosma received 10,000 letters urging him to reject the bill. According to the Indianapolis Star, Minority Leader of the Indiana House, Scott Pelath, said the legislation would make certain groups of people feel "second-rate".

"It basically says to a group of people you're second rate, you don't matter, and if you walk into my store, I don't have to serve you," Pelath said on Monday.

However, supporters of the legislation said increased protections were vital for those trying to live out their faith with integrity. "God's word tells us to do all things unto the Lord," Republican Representative Bruce Borders said.

"If we truly are doing things unto the Lord, our business can be...a church or sanctuary. People deserve protection in their businesses as well, not just on Sunday morning."

The bill is modelled on the Religious Freedom and Restoration Act, a 22-year-old federal law that played a vital role in last year's Hobby Lobby case. The court ruled that closely-held businesses can uphold religious objections that allow them to opt out of contraceptive health law requirements, which was hailed as a victory for religious freedom by campaigners.

Religious freedom is a growing issue in the US, where several cases have made headlines recently. A bakery in Indianapolis achieved international notoriety last year after the Christian owners declined to fulfil an order for a gay couple. The bakery has since closed, though the owners said it was not due to loss of business.

But Jenn Wagner of Freedom Indiana, which is campaigning against the legislation, said the bill will not help religious freedom.

"It creates unintended consequences. It raises a lot of questions about how the law could be used against LGBT Hoosiers, and we simply don't need it," she told WIBC.com.

"What if [we] start talking about an EMT who doesn't want to provide service to someone who is gay and having a health care emergency? What if [we] are talking about a school counsellor who doesn't want to help a kid?"

The Disciples of Christ has had its headquarters in Indianapolis for nearly a century. According to its Yearbook, it had over 625,000 members in 2012, in more than 6,600 congregations. The church has hosted its annual convention – with a usual attendance of around 6,000 people – in Indianapolis twice before, in 1989 and 2009, but said it may reconsider if the bill is passed.

Todd Adams, the associate general minister and vice president of the denomination, told the Indianapolis Star: "Our perspective is that hate and bigotry wrapped in religious freedom is still hate and bigotry."

The conference organisers would look for a city that is "hospitable and welcome to all of our attendees," he added.

Gen Con, Indianapolis' largest annual convention, and music event VisitIndy have also threatened to pull out if the bill becomes law.