Bethany Christian Services in Michigan, USA said its policies will meet a legal requirement that agencies handling state contracts do not turn away homosexual couples.
Civil rights campaigners had claimed the Grand Rapids-based organisation was unfairly discriminating against same-sex couples wanting to adopt.
They took state officials to court over their decision to award contracts to Bethany Christian Services - and another agency, St Vincent Catholic Charities.
Settling the lawsuit, Michigan Attorney General Dana Nessel said all agencies working with the state must adhere to a 2015 law which prohibits discrimination against gay prospective parents.
Great news. Bethany Christian Services is reversing it's policy on discrimination in adoption. https://t.co/iQruQKpXsc
— Jeff Irwin (@JeffMIrwin) April 20, 2019
Thank you to the ACLU, the Attorney General, and their employees who helped drive this change.
Bethany Christian Services said: "We are disappointed with how this settlement agreement has been implemented by the state government.
"Nonetheless, Bethany will continue operations in Michigan, in compliance with our legal contract requirements."
Bob Wheaton, a Michigan Department of Health spokesman, said "the department is pleased that the department will be able to continue its long-standing partnership with Bethany in providing services to children and families."
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