Ministers are expected to publish plans to enable same-sex couples to "marry" in church, the BBC has learned.
Equalities Minister Lynne Featherstone is to propose lifting the ban on civil partnerships taking place in religious settings in England and Wales.
There are no plans to compel religious organisations to hold ceremonies and the Church of England has said it would not allow its churches to be used.
Gay rights campaigner Peter Tatchell said the change was "long overdue".
Civil partnership ceremonies are currently entirely secular.
It is not clear whether the proposals will suggest that civil ceremonies in religious surroundings could incorporate elements such as hymns or Bible readings or be formally described as marriages.
It is thought this might be part of a consultation process.
Marriage between people of the same gender is not legal in the UK but civil partnerships were introduced in 2005 to give couples the same legal protection as if they were wed.
The proposals were welcomed by gay rights campaigners but may raise the ire of many churchgoers.
Mr Tatchell said: "Permitting faith organisations to make their own decision on whether to conduct same-sex civil partnerships is the democratic and decent thing to do.
"The current law prevents them from doing so, even if they want to. No religious institution will be forced to perform civil partnerships if they do not wish to do so."
The Archbishop of York, Dr John Sentamu, gave the news a guarded welcome.
He told the BBC's Andrew Marr Show he "believes in a liberal democracy, and actually wants equality with everybody" but did not want churches to be told what to do.
"You mustn't have rights that trump other rights," he added.
A Church of England spokesman said: "Given the Church's view on the nature of marriage, the House of Bishops has consistently been clear that the Church of England should not provide services of blessing for those who register civil partnerships."
He added the worry was that any changes could "lead to inconsistencies with civil marriage, have unexplored impacts, and lead to confusion, with a number of difficult and unintended consequences for churches and faiths".
"Any change could therefore only be brought after proper and careful consideration of all the issues involved, to ensure that the intended freedom for all denominations over these matters is genuinely secured," he said.
The Sunday Telegraph claims the decision to push ahead with the legislation is a victory for Mrs Featherstone and her fellow Liberal Democrats.
The Roman Catholic Church has long held that homosexuality is a "deviation" and is not expected to agree to same-sex ceremonies.
The legislation would also cover synagogues and mosques although homosexual relationships are forbidden under Islam and Orthodox Judaism.
Rabbi Yitzhak Schochet, from Mill Hill Synagogue in north London and a columnist for the Jewish News, told the BBC: "Same sex marriages have no place in any house of religious worship.
'Divine value system'
"To suggest that advocating such a position is homophobic is unconscionable. The Bible is not homophobic anymore than it is incest-phobic, adultery-phobic or necrophilia-phobic.
"There is a divine value system which religious people subscribe to and which is very much their entitlement.
"That it doesn't conform to liberal idealism doesn't mean that its proponents should be written off as narrow-minded or worse, bigoted."
But Quakers, Unitarians, and liberal Jews are thought to be more sympathetic to the idea, says the newspaper.
In February last year several senior Anglican clergymen wrote to The Times calling for the law to be changed.
The group of clerics, which includes the Bishop of Salisbury, the Dean of Southwark and five former bishops, said: "Straight couples have the choice between civil marriage and religious marriage. Gay couples are denied a similar choice."
The move follows an amendment to the Equality Act by Lord Alli, a Labour peer.
That amendment, which would not force religious venues to accept gay couples, has not yet been implemented and would require a standing order.
The BBC understands Mrs Featherstone has been consulting with gay and lesbian groups and churches about this issue and is expected to make an announcement within the next few weeks.
According to reports, the government plans would also see straight couples being allowed to become civil partners.
On Friday, the Protection of Freedoms Bill included plans to lift a ban on night-time weddings and also gave gay men the right to clear their name by removing out-of-date convictions for consensual acts.
A Home Office spokesman said: "The government is currently considering what the next stage should be for civil partnerships, including how some religious organisations can allow same-sex couples to register their relationship in a religious setting if they wish to do so.
"Ministers have met a range of people and organisations to hear their views on this issue. An announcement will be made in due course."
The Office Of National Statistics reported in May 2010 that 26,000 same-sex couples had undergone civil partnerships.
BBC News website readers have been sharing their thoughts on the issue:
I think this is a great idea. I am bisexual and I would love to have the right to marry my girlfriend in the future in a church just like a straight couple. Helen Louise Nicholls, North Shields
We are falling behind a number of EU countries that have actually moved from a formal partnership to a marriage. Why doesn't the UK be one of the trend-setting innovators to allow gay marriages in religious settings; church, mosque or temple. Craid Chadwick, Leeds
Same-sex loving people have suffered for a long time due to bigotry, perverted and hardened hearts of people from generation to generation. Yes gays should be allowed to celebrate their love in the Church and not be prejudiced against because they are different. We need to research the scripture diligently, seeking spiritual knowledge and understanding. And above all let us all have the mind of Christ. For Christ will never discriminate against gay children of His but love and welcome them with holy hands because he knows they are the work of His hands too. Victory Iwaloye, Manchester
I don't see a problem with it as I know gay and lesbian people - they can't help what they like. However religious views are different, being religious myself too, but I don't really care if someone is gay. They are still human and they should be allowed to get married. Religions will argue against, possibly because marriage is a religious thing. John, Bristol
No, not in a Christian church. It goes against the Christian belief. Why should Christians compromise? I'm not even sure if I agree with civil marriages, but that aside, this is all going too far. E James, Newcastle
The church has to move with the times or die painfully over a long period. There should be no distinction between couples, as long as they are happy and are willing to commit to each other then why marginalise gay couples. This form of apartheid has gone on for long enough and the Church should open its mind to higher and more important values. Mark Woolfson, Leeds
The BBC is reporting this all wrong. Gay activists aren't celebrating this news at all. Gay activists don't see civil partnerships as marriage. Marriage isn't about where or who you marry, that's irrelevant. The majority of gay people don't mind not being married in religious places. They worry that by having a civil partnership, you're tattooing your sexual orientation on your forehead for all too see. It's a tool used for discrimination, in both services and employment. Spencer, Stoke-on-Trent
No. It would devalue the institute of marriage and undermine moral standards as a society. Civil partnerships are a good idea but should never be compared to marriage and should not be conducted in a church. The Equality Act should not be used as an excuse to force a change in policy. A M Potter, Newport, Shropshire
My wife and I divorced previous spouses and were not allowed to marry in church. We were fortunate that after discussions with elders we were married at our local Quaker meeting. It was a joyful and faithful day and was a wonderful start to a strong and developing loving relationship. The Church forgives murderers, hides paedophiles and yet have no mercy for unhappy couples. All people should have the right to affirm their love in church, mosque or temple as their belief in God dictates, but I cannot see it happening in reality. David Butterfield, York
I am pleased to to see legislation promoting a more tolerant society. There is more genuine love in some gay relationships than in some straight ones. Live and let live and any persons or organisations displaying prejudice should face the wrath of the Law. Sue Lyon, London
If you are a Christian, you believe that homosexuality is immoral. Why any church would allow a gay couple to get married in their church is beyond belief as it's a contradiction of what the Bible tells Christians. If you read the article carefully however, the title is very misleading. Most churches are not allowing the marriage of gay couples. Only the very liberal and left wing churches are considering it. Scott, Walsall, West Midlands
Men and women the world over just live together without ceremony of any kind: why can't same sex couples do the same? It's far easier to walk away from the relationship too. We can't help who we love but it is again the minority we hear from bleeting and baaing about what they want. Get on with living together and shut up. The law of God and the Bible will not be rewritten for you - having a ceremony of whatever kind is hollow in the grand plan - can't you just live your lives? Kathleen Steward, Leicester