Bishops could face prosecution if they refuse to ordain practising homosexuals under new laws forbidding discrimination on grounds of sexual orientation.
The draft regulations, which are due to be implemented in December, have been drawn up to meet Britain's obligations under an EU directive outlawing discrimination against homosexuals, lesbians and bisexuals. But the Church of England has said that they could lead to a "fundamental" clash between the law and religious belief.
In a firmly-worded submission to the Government, the Archbishops of Canterbury and York demanded that the Church be granted exemptions from the regulations and called for meetings with senior ministers.
Their submission said that the regulations could make it unlawful for the Church to enforce its long-standing doctrines and beliefs on sexual conduct.
"For example, a bishop who denied ordination to someone in a gay or lesbian relationship might be found to be discriminating unlawfully on grounds of sexual orientation," it said.
If unamended, the regulations could prove hugely problematic for the Church, which could face a string of legal actions from homosexual rights groups determined to end its ban on active homosexual clergy.
The Church leaders said that it was "crucial" that the regulations did not encroach on the "freedom which all religious organisations must have to set and enforce their own conduct rules in relation to those who work for and represent them".
They added: "Churches and other faith-based organisations must not find themselves in a position where the law of the land is preventing them from conscientiously applying their own sincerely held doctrines and beliefs on moral issues."
The row is the latest of a series of clashes between the Church and the Government and follows the U-turn by ministers over proposals that churches apply for entertainment licences before staging concerts.
It also comes amid growing tension within the Church over the issue of homosexuality, fuelled by the liberal stance of the new Archbishop of Canterbury, Dr Rowan Williams.
Dr Williams has incurred the wrath of evangelicals by admitting that he has ordained at least one practising homosexual while a bishop in Wales.
However, since becoming archbishop he has made it clear that he will not impose his personal views on the Church. The 1991 House of Bishops document Issues in Human Sexuality allows some active homosexual relationships among lay people but not among clergy.
Government spokesmen said that ministers were still examining the responses to the draft legislation, and it was too early to say whether they might consider making any exemptions.
But they said that the Government had little room for manoeuvre in implementing the EU directive because it had already signed up to it in principle. In their submission, the Church leaders also criticised regulations that would bar Church organisations, charities or schools who hired Christian staff from sacking them if they became atheists or even Satanists.
The Rev Richard Kirker, the general secretary of the Lesbian and Gay Christian Movement, said: "The Government proposals are to be applauded since they demonstrate a greater understanding of the Christian belief in the equality of all people than is shown by the Churches themselves."