The Leeds-based charity, which arranges about five adoptions a year, had appealed against a ruling in the charity tribunal that it could not restrict its service to heterosexual couples.
But the Hon Justice Sales, sitting alone, ruled that the lower tribunal’s decision was correct. He wrote in his judgment: "Notwithstanding some criticisms that can be made about the first tier tribunal’s reasoning, I am satisfied that the conclusion it came to is correct in law and that this appeal should be dismissed."
The charity had argued that its desire to restrict its services was in line with section 193 of the Equality Act 2010. The section allows discrimination on the grounds of sexuality if this is "a proportionate means of achieving a legitimate aim".
But the first-tier tribunal found that there must be "particularly weighty" reasons to justify discrimination on the basis of sexual orientation.
The charity argued that donors would stop supporting it if it allowed same-sex couples to use its adoption service, but the tribunal ruled that the charity had not demonstrated that this would be the case.
The charity first appealed in 2008 against an initial decision by the commission that it could not change its objects.
The Charity Commission said in a statement: "We welcome the ruling of the upper tribunal dismissing the appeal against the judgment of the first-tier charity tribunal. That judgment upheld the commission's decision not to agree to a change of charitable objects of Catholic Care to restrict its adoption services to heterosexual prospective adoptive parents.
"The Commission has always recognised the sensitive nature of this issue and considered all the evidence and arguments carefully."
Catholic Care said in a statement: "Without the constitutional restriction for which it applied, Catholic Care will be forced to close its adoption service. In doing so, it will be joining many other faith-based adoption services that have been forced to close since 2008."
It added that it will now take some time to consider the decision and decide whether to appeal or not.