A standoff has emerged over a reference to discrimination on the basis of sexual orientation and gender identity in the budget of the International Labour Organization, pitting a group of mostly Western countries against African and Arab states, according to six sources following the matter.

The impasse over terminology at the ILO's annual meeting in Geneva may hold up - or even prevent - approval of the body's $885 million budget for 2024-2025, said the sources, who include four Western diplomats, an African diplomat and a civil society official. The ILO is one of the oldest United Nations agencies and brings together governments, employers and workers to set labour standards.

The incident is one of several that has broken out across U.N. bodies in recent months, stoking concerns about discrimination based on sexual orientation at a time when LGBTQ rights are being rolled back in places like Uganda.

The situation also represents a difficult dilemma for ILO Director-General Gilbert Houngbo from Togo, the body's first African chief, who took office in October 2022 and is seeking to promote social justice.

An ILO spokesperson did not immediately respond to a request for comment.

The controversial paragraph in the 112-page budget lists various vulnerable groups, committing the ILO to supporting those "affected by discrimination and exclusion, including on the grounds of race, sexual orientation and gender identity; and implementing measures conducive to promoting equality of opportunity and treatment."

A draft motion seen by Reuters backed by some 50 African and Arab countries aims to reject the wording on sexuality and gender saying it uses "non-universally agreed language." Pakistan, speaking for the Organization of Islamic Cooperation, voiced concern that such a reference would have a "misleading normative impact" and create legal conflicts.

A Western diplomat told Reuters that removing the language "basically signals to LGBTQ people in those countries that we (collectively) let them struggle by themselves." Another Western diplomat described the standoff as a game of "diplomatic chicken" and said that caving in could set a precedent for other U.N. bodies such as the World Health Organization where similar debates have occurred.

"It is a concern that there is a differentiation of the rights of LGBTI people from other marginalised groups and consequently international human rights law is being questioned and politicised by member states," Gurchaten Sandhu, director of programmes at the International Lesbian, Gay, Bisexual, Trans and Intersex Association, told Reuters.

Confidential discussions of the ILO's finance committee are ongoing and may have to be resolved through votes. The ILO conference that runs until June 16 is being chaired by Qatar's Labour minister, Ali bin Samikh Al Marri.