In a dramatic shift in tone, a Vatican discussion document has stated that homosexual people have "gifts and qualities to offer".
It asks if Catholicism could accept them, and recognise positive aspects of same-sex couples.
Roman Catholic gay rights groups around the world hailed the paper as a breakthrough, but Church conservatives called it a betrayal of traditional family values.
The Vatican document, prepared after a week of discussions at an assembly of 200 bishops on the family, said the Church should challenge itself to find "a fraternal space" for homosexuals without compromising Catholic doctrine on family and matrimony.
While the text did not signal any change in the Church's condemnation of homosexual acts or gay marriage, it used less judgmental and more compassionate language than that seen in Vatican statements, prior to the election of Pope Francis.
It says "Homosexuals have gifts and qualities to offer the Christian community: are we capable of welcoming these people, guaranteeing to them a further space in our communities? Often they wish to encounter a Church that offers them a welcoming home."
New Ways Ministry, a leading US Catholic gay rights group, called it a "major step forward", praising it for being devoid of the "major gloom and doom and apocalyptic horror" that accompanied past Vatican pronouncements on homosexuals.
Irish lobby group Gay and Lesbian Equality Network (GLEN) also welcomed the news.
“Today’s comments from the Vatican suggest a change in the tone of the Catholic Church’s approach to gay people, and are welcome,” said Kieran Rose, GLEN Chair.
“The Vatican document provides an opportunity for the Catholic Church to change the way it treats lesbian and gay people.
“It is a welcome change to hear the Vatican talk about ‘accepting and valuing’ people’s sexual orientation, and builds on the comments of Pope Francis who last year when talking of gay people said: ‘Who am I to judge?’
“The Vatican document also recognises that across the world lesbian and gay couples are parenting children and acknowledges that the ‘needs and rights’ of their children should be give priority.
“We hope that the Vatican and the Irish Catholic Church will take the opportunity to support current proposals by the Irish Government to bring legal certainty and security to these families.
“If the positive approach indicated today is adopted by the Synod, it holds out the possibility of a new engagement by the Catholic Church on civil rights issues, such as on civil marriage for lesbian and gay couples.
“Irish people, the majority of whom are Catholic, support efforts to ensure the full participation of lesbian and gay people in all aspects of Irish society. We see this in the warm welcome for civil partnerships all across the country and in the widespread public support for access to civil marriage for lesbian and gay couples.
“The Irish Catholic Church’s response to forthcoming referendum on civil marriage will demonstrate the practical effects that this new openness from the Vatican is having.”