Roman Catholic schools have been reprimanded for refusing to give priority places to vulnerable children.
The official admissions body has ordered three Catholic schools in Merseyside to accept children in the care of local social services before all other pupils.
St Helens council had said that finding schools for disadvantaged children should always take priority over religious beliefs. But the three schools claimed that church-going families would suffer if "even a small number" of non-Catholic pupils from care homes were given places.
Now Dr Alan Billings, of the Office of the Schools Adjudicator, has backed the council and ordered the three to alter their admissions policies.
"Although I sympathise with the desire of the schools to remain true to their mission I cannot believe that this would be unduly compromised by the occasional admission of a looked-after child who is not of the Roman Catholic faith," he said.
De La Salle secondary, St Cuthbert's community high and St Bartholomew's primary are all full and had argued that priority should be given to Catholic families. They said that places should not be granted to children from local care homes unless they were baptised Catholics. "If such children are admitted they will displace Roman Catholic children," said the schools.
Voluntary-aided faith schools can set their own admissions policies, often guided by the national church and local diocese.
Dr Billings said guidance set out by the Archdiocese of Liverpool, which said schools should give "due priority to a vulnerable group whilst not disadvantaging" Catholics, lacked clarity and was easily misinterpreted by local schools. He said any discrimination against children in care contravened the Government's school admissions code of practice.
Rod Irving, head of St Cuthbert's, admitted the school had made a mistake.
"We are truly inclusive - I am very embarrassed by this," he said.
A spokesman for the Catholic Education Service said it was not known how many of its 2,000-plus schools in England exercised the same rule.
Last year four Catholic schools in Essex were ordered to stop discriminating against pupils who failed to list them as their first choice on application forms.
Earlier this year the adjudicator failed in a High Court challenge to overturn a ruling which allows church schools to interview prospective pupils.