Washington (CNN) -- President Barack Obama signed an executive order Monday banning federal contractors from discriminating against employees on the basis of sexual orientation or gender identity.
Despite calls from religious leaders, faith-based groups will not be exempt.
"Thanks to your passion and advocacy and the irrefutable rightness of your cause, our government -- a government of the people, by the people and for the people -- will become just a little bit fairer," Obama said.
Gay federal workers are already protected from workplace discrimination by a Clinton-era order and Obama's action extended the protections to shield workers from gender identity-based discrimination.
Americans United for Separation of Church and State, which joined a coalition of nearly 100 civil rights and LGBT groups urging Obama to reject calls for a religious exemption, thanked him for taking action. It said he made the "right call" for not tagging any religious exemptions to the document.
"Faith-based groups that tap the public purse should play by the same rules as everyone else and not expect special treatment," the group's executive director, Rev. Barry Lynn, said in a statement. "No forms of discrimination should be supported with the taxpayer dime, period."
Rea Carey, executive director of the National Gay and Lesbian Task Force, was in the room as Obama signed the order and said it was an emotional moment.
"There are now millions of LGBT people and their families who are just going to sleep a little bit easier tonight knowing that they can't be fired from their jobs as federal contractors," she said.
During the ceremony, which comes 50 years after President Lyndon Johnson signed the Civil Rights Act of 1964, Obama also recalled the history of executive actions and legislation to ban discrimination in the workplace and "make sure we the people applies to all the people."
But Obama's signature on Monday did not touch a 2002 executive order signed by President George W. Bush that allows religious groups to weigh prospective employees' faith in hiring decisions.
This gave some opponents of the order hope that they could continue to consider sexual orientation in hiring decisions.
One of those opponents, Stephen Schneck, director of the Institute for Policy Research & Catholic Studies at The Catholic University of America, said he was disappointed by Obama's decision regarding the religious exemption. But he suggested that religious groups could still rely on the 2002 order.
"I believe the administration has left open a path that religious groups can work with," Schneck said.
Russell Moore, president of the Ethics & Religious Liberty Commission of the Southern Baptist Convention, had stronger words for Obama and worried that the Bush-era executive order would leave out some faith-based groups.
"While we don't know the full implications of this executive order, I am disappointed that this administration persistently violates the freedom of conscience for religious organizations that provide necessary relief for the poor and endangered," Moore said. "The ones hurt will be the most vulnerable in our society."
Obama's executive action extends protections against sexual-based discrimination to employees of federal contractors operating outside of the 21 states and the District of Columbia that enacted their own non-discrimination legislation.
Obama also noted that a majority of Fortune 500 companies have policies in place against discrimination based on sexual orientation.
The action is not the first time Obama has used his presidential powers to benefit the LGBT community. In 2010, he signed an order extending benefits to same-sex partners of executive branch employees already provided to opposite-sex partners.
But on the federal legislative level, LGBT groups have struggled to enact similar legislation.
The Senate passed a bill barring LGBT discrimination in the fall. But the measure, which exempted religious groups from the would-be-law, did not make it to the House floor where Republicans opposed it.
And attendees greeted Obama's call to continue applying pressure to "resolve this problem once and for all" with one resounding word: "Amen."