Tony Blair last night acknowledged the difficulties Catholics, Anglicans and Muslims had over gay adoption but hoped his compromise plan would find a way through a deeply controversial issue and be accepted.

Tony Blair last night acknowledged the difficulties Catholics, Anglicans and Muslims had over gay adoption but hoped his compromise plan would find a way through a deeply controversial issue and be accepted.

As the Catholic Church in Scotland and in England expressed its "deep disappointment" at his decision not to exempt faith-based groups from the new equality law, the Prime Minister took to the airwaves to explain his decision.

"These situations are always difficult," he said. "They are bound to be because they involve very profound issues of conscience for people. But I think we've found a way through and I hope that people will welcome it and back it."

Asked why it was necessary to have a 21-month lead-in before the rules came into force fully, he said: "The reason I think it's important that we have a long transition is because the Catholic adoption agencies do excellent work, they do it often with some of the most hard-to-place children because they've all sorts of emotional difficulties and we don't want that work to stop.

"So, we've got to make sure that at the same time as we're protecting the principle that we don't want to discriminate against people, we're also protecting the children who need to go into loving homes and for whom the Catholic Church adoption agencies do great work."

Jack McConnell, who revealed he had spoken to the Prime Minister about the issue at the weekend, gave what appeared to be a somewhat guarded response to Westminster's compromise plan.

"Adoption is all about improving the lives of children. My priority is to find a way that will allow faith-based adoption agencies in Scotland to continue finding new parents for some of our most vulnerable children."

He added: "This is undoubtedly a difficult issue but the Prime Minister's announcement is a step forward. Above all, I hope it enables faith-based agencies to continue the valuable work they do with children in Scotland."

Mr Blair made a point of mentioning the First Minister by name, noting how Mr McConnell had made "sure the Scottish perspective is heard in this decision".

Labour chiefs in Scotland will be hoping that the contentious issue does not now provoke a sustained political row that could seep into the May 3 poll and harm their party's chances.

Church sources denied suggestions Catholic priests would use their Sunday sermons to urge people not to vote Labour in the forthcoming Scottish parliamentary elections but acknowledged the issue could become a hot topic of debate during the campaign.

They again stressed the two Catholic agencies in Scotland would try to operate the best way they could "until someone comes and knocks on the door", meaning they would not close voluntarily but would effectively defy the law until they were shut by the local authorities.

No 10 recognised Mr Blair's decision "might not satisfy everyone" but insisted it hoped it was one "everyone can live with". Certainly, ministers on either side of the argument welcomed the move.

Ruth Kelly, Communities Secretary and a devout Catholic, described it as a "breakthrough", which should be welcomed by everyone, while Alan Johnson, Education Secretary, who forcefully campaigned against any exemption, said it was "the right outcome".

Liberty, the civil rights group, said it applauded the government for "standing firm on equal treatment even when the going appeared tough" and Stonewall, which campaigns for gay rights, warmly welcomed the Prime Minister's decision as "a victory for 21st century tolerance".

Sir Menzies Campbell, Liberal Democrat leader, also welcomed the move, saying: "There is no place for discrimination in a liberal society."

Earlier, David Cameron for the Conservatives called for a similar compromise to Mr Blair's but suggested the Church should have far longer to adapt.