After a case in the High Court in May, the regulator was told to reconsider its original decision, which rejected a bid by the charity to change its constitution so it could use an exemption to equality legislation.
But in a decision published yesterday, the commission said it was in the interests of children waiting to be adopted that the pool from which prospective parents is drawn was as wide as possible.
It said the High Court judgement had noted that respect for religious views could not be a justification for discrimination on the grounds of sexual orientation in this case.
The charity had argued that if it could not discriminate against gay prospective parents, it would have to close its adoption service in order to keep its connection with the Roman Catholic Church and the funding this entailed.
The commission’s report said local authority evidence suggested that if the charity closed its adoption service children who would have been placed by the charity were likely to be placed through other channels.
The commission ruled in December 2008 that the charity could not change its objects to say it provided adoption services for heterosexual parents only. Catholic Care had hoped to take advantage of a section of the Equality Act (Sexual Orientation) Regulations 2007 that allows charities to discriminate on the grounds of sexual orientation if it is stipulated in their constitutions.
The commission’s ruling not to allow the change was upheld by the charity tribunal in June 2009 after Catholic Care challenged the decision. But in March this year, the High Court overturned the tribunal’s ruling and said the commission must reconsider its original decision.
A statement from Catholic Care said: "The charity is very disappointed with this decision as in the view of the charity this will reduce the number of people recruited as adoptive parents.
"Catholic Care will now consider whether there is any other way in which the charity can continue to support families seeking to adopt children in need."