In a dramatic shift in tone, a Vatican document said that homosexuals had "gifts and qualities to offer" and asked if Catholicism could accept gays and recognise positive aspects of same-sex couples.
Roman Catholic gay rights groups around the world hailed Monday's paper as a breakthrough, but Church conservatives called it a betrayal of traditional family values.
The 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.
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
While the text did not signal any change in the Church's condemnation of homosexual acts or gay marriage, it used less judgemental and more compassionate language than that seen in Vatican statements prior to the 2013 election of Pope Francis.
The document was read at a closed-door gathering in the presence of Pope Francis.
"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," said the document, known by its Latin name "relatio".
"Are our communities capable of proving that, accepting and valuing their sexual orientation, without compromising Catholic doctrine on the family and matrimony?" it asked.
It said that the 1.2 billion-member Church should see the development of its position on homosexuals as "an important educational challenge" for the global institution.
New Ways Ministry, a leading US Catholic gay rights group, called the document 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.
The London-based Catholic gay rights group QUEST called parts of it "a breakthrough in that they acknowledge that such unions have an intrinsic goodness and constitute a valuable contribution to wider society and the common good."
But John Smeaton, co-founder of the conservative group Voice of the Family, said: "Those who are controlling the synod have betrayed Catholic parents worldwide."
He called it "one of the worst official documents drafted in Church history".
The Vatican document will be the basis for discussion for the second and final week of the bishops' assembly, known as a synod. It will also serve for further reflection among Catholics around the world ahead of another, definitive synod next year.