David Cameron expressed his personal support for the new regulations Monday but promised fellow Tory MPs a free vote on this issue, which he said was a matter of conscience, The Guardian reports.
His announcement came the day after shadow home secretary David Davis said he was in favour of allowing Catholic adoption agencies to opt-out on gay adoption, saying over the weekend he would "almost certainly" vote for an exemption when the issue reaches the Commons next month.
The leader of the Catholic Church in England and Wales, Cardinal Cormac Murphy-O'Connor, triggered the row when he warned last week that the Church's agencies would close rather than accept rules that required them to place children with gay couples.
Communities secretary Ruth Kelly - a staunch Catholic - has been one of Labour's most prominent supporters of an exemption. She has come up against strong opposition from her colleagues including John Reid, Lord Falconer, Alan Johnson and Peter Hain. Tony Blair meanwhile withdrew his support for an exemption last week under pressure from backbenchers and senior ministers.
The Tory leader broke his silence on the issue Monday when he said it was "right" to have clear rules against discrimination.
But he proposed a compromise solution which would give the Catholic agencies three or four years to find a way of dealing with the regulations - perhaps by developing twinning arrangements with other adoption services, The Guardian reports.
"I shall vote for the regulations, because I think it is right to have in this country clear rules against discrimination," said Mr Cameron.
"On the issue of the Catholic adoption agencies, I don't think personally that it is right to give them a block exemption from the law, because otherwise we will have other people wanting block exemptions from the law."
But he added: "We really need to find a decent compromise, because we want to keep the Catholic adoption agencies. They do a fantastic job in placing hard-to-place children.
Tony Blair has said the Government will announce its preferred option for a way forward, which must be approved by both Houses of Parliament before coming into effect on April 6.