President Barack Obama will sign an executive order on Monday barring federal contractors from discriminating on the basis of sexual orientation or gender identity, the White House said on Friday.
The order does not include new exemptions for religious organizations, a fact that was cheered by gay rights activists.
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Some religious leaders had pressed Obama for added flexibility in executing the rules, but senior administration officials said that had not been granted.
'With the strokes of a pen, the president will have a very real and immediate impact on the lives of millions of LGBT people across the country'- Human Rights Campaign, LGBT activist organization
Instead, protections already allowed for religious entities from previous non-discrimination rules were left in place but not expanded.
Religious organization would be barred from making hiring decisions based on sexual orientation or gender identity, but exceptions would be allowed for ministers, and groups would be allowed to favor individuals of a particular religion.
"We're so proud today of the decision made by the Obama administration to resist the calls by a small number of right-wing conservatives to insert religious exemptions into civil rights protections," said Heather Cronk, director of GetEqual, an activist organization.
The officials, who spoke on condition of anonymity, told reporters on Friday that Obama's action would update two previous orders about discrimination already on the books.
One-fifth of U.S. workforce to be affected
It would update an order by President Lyndon Johnson by adding sexual orientation and gender identity to a list of protected categories for federal contractors.
It would also update an order by President Richard Nixon from 1969, adding gender identity to a list of groups that are protected from being discriminated against as federal employees.
The order already banned discrimination on the basis of race, color, religion, sex, national origin, disability and age. It was updated in 1998 by President Bill Clinton to include sexual orientation.
A senior administration official said the order would affect 24,000 companies that employ some 28 million workers, roughly a fifth of the nation's workforce.
Obama has pressed Congress to pass legislation that would ban such discrimination for all companies, but it has failed to gain traction with Republican lawmakers.
The White House believes the order will help improve productivity by reducing fears among employees that they could be fired for being gay, bisexual or transgender.
"This is another case where doing what is right also helps businesses improve their bottom line," one official told reporters on a conference call.
Gay rights groups welcomed the move.
"With the strokes of a pen, the president will have a very real and immediate impact on the lives of millions of LGBT people across the country," said Human Rights Campaign, a leading LGBT activist organization.