Community advocates learned of the news during a closed-door meeting with two top Obama aides, Valerie Jarrett and Cecilia Munoz, who told the group that the White House would instead lead a multi-pronged effort to urge companies, federal agencies and others to oppose discrimination.

It was a stinging setback for the lesbian, gay, bisexual and transgender movement, a key piece of Obama’s political base that had scored major victories from this White House — namely the repeal of the military’s Don’t Ask Don’t Tell policy, and the administration’s reversal of its position on whether to defend the federal Defense of Marriage Act. Those actions were widely viewed as having triggered an outpouring of financial support from gay donors for Obama’s reelection campaign.

The liberal Center for American Progress, closely aligned with the White House, issued an unusually critical statement Wednesday calling the decision “disappointing.” Joe Solmonese, president of the Human Rights Campaign, an advocacy group heavily courted by Obama and his aides, said he was “extremely disappointed.” Heather Cronk, managing director of the advocacy group GetEqual, called the decision “mysterious,” noting that “this is the president who as a candidate embraced this executive order.”