(CNN) Federally funded child welfare agencies in South Carolina can refuse to perform services that conflict with their religious beliefs, the US Department of Health and Human Services said Wednesday.

The announcement came in response to Gov. Henry McMaster's request for a waiver for faith-based groups that contract with the state for foster care services, such as child placements and screenings of prospective families.

Citing the Religious Freedom Restoration Act, McMaster requested an exemption from federal regulations enacted by the Obama administration that forbid discrimination based on sexual orientation, gender identity and religion -- among other identities -- in HHS programs and services.

States and grantees must comply with federal regulations to receive HHS funding.

McMaster said the requirements forced faith-based providers to choose between their religious beliefs or a license to contract with the state, potentially forcing agencies to close their doors. McMaster also objected to how the requirements were put in place, saying it conflicted with existing regulations.

Civil rights organizations and child welfare advocacy groups decried the decision, calling it state-sponsored discrimination that would affect non-Christians, the LGBTQ community, or anyone who doesn't meet an agency's "religious litmus test." Above all, they said the waiver would harm children in foster care.

McMaster named one organization in particular in his waiver request. Miracle Hill Ministries, whose services include foster care, said the state Department of Social Services threatened to revoke its license if it continued to only recruit Christian families.

Miracle Hill made headlines in 2018 when it turned away a Jewish woman, who sought to mentor children in foster care, because she did not share the organization's religious beliefs. Read more via CNN