Catholic church condemn gay adoption decision as "devastating"
The grandparents wanted to care for the five-year-old boy and his four-year-old sister because their mother was unable to look after them.
But it was reported today that the children, from Edinburgh, are now to be adopted by a gay couple.
And the grandparents claim they have been warned they risk never seeing the youngsters again if they continue with their opposition to the same-sex adoption.
Peter Kearney, a spokesman for the Catholic Church in Scotland, said: "This is a devastating decision which will have a serious impact on the welfare of the children involved.
"There is an overwhelming body of evidence showing that same-sex relationships are inherently unstable and reduce the life expectancy of those involved.
"With this in mind, the social work department has deliberately ignored evidence which undermines their decision and opted for politically correct posturing rather than providing stability and protection.
"It is impossible to see how this decision is in the best interests of the children."
The mother is a recovering drug addict and is unable to look after her own children.
The grandparents, aged 59 and 46, had looked after the youngsters almost from birth, according to the Daily Mail newspaper.
But they said concerns about their age and health had led to social workers considering them unsuitable to look after the children.
Council chiefs in Edinburgh took them to court to remove their rights to care for them, the paper said.
The youngsters have been in foster care while the legal action took place over the last two years.
The grandparents said they eventually gave up their legal fight because of rising costs.
Now it has emerged that social workers have placed the brother and sister with a gay couple.
The grandfather told the Daily Mail: "It breaks my heart to think that our grandchildren are being forced to grow up in an environment without a mother figure.
"We are not prejudiced but I defy anyone to explain to us how this can be in their best interests.
"The ideal for any child is to have a loving father and loving mother."
No-one was available for comment from Edinburgh City Council.