The Department of Justice filed a brief in an upcoming Supreme Court case, urging the court to allow such discrimination if rooted in religion.
The action was a protest against parenting rights for same-sex couples.
The bill, now signed into law by Gov. Bill Lee, lets faith-based agencies receive public funds even if they discriminate and protects them from lawsuits.
Ken Paxton and a Texas Catholic archdiocese want foster and adoption agencies to be able to turn away LGBTQ people and still receive federal funds.
The Republican administration said last week adoption services could refuse to place childen with rainbow families.
The couple and their sons fled Russia, which does not allow same-sex couples to adopt.
The federal judge contends an adoption agency that won't serve LGBTQ parents doesn't really discriminate because it sends them elsewhere.