A STORY THURSDAY ON NEW JERSEY'S NEW ADOPTION POLICY FOR GAY AND LESBIAN COUPLES MISSTATED THE LAW ON THE ISSUE IN THE DISTRICT OF COLUMBIA. UNDER A 1995 COURT RULING, UNMARRIED COUPLES ARE ALLOWED TO JOINTLY ADOPT CHILDREN IN D.C. THE STORY ALSO FAILED TO MAKE CLEAR THAT THE ISSUE OF GAY MARRIAGES IN HAWAII HAS NOT BEEN RESOLVED, WITH THE STATE SUPREME COURT EXPECTED TO HAND DOWN A FINAL RULING ANY DAY, AND VOTERS FACING A REFERENDUM ON THE ISSUE NEXT YEAR. (PUBLISHED 12/ 20/97)

New Jersey yesterday became the first state in the nation to allow gay partners to jointly adopt children on the same basis as married couples.

Immediately characterized as an important benchmark in gay rights, the new policy resulted from the settlement of a class-action lawsuit brought by a gay couple in New Jersey who sought to adopt a child from the state's foster care program.

While its practical effect extends only to children in the custody of the state of New Jersey, gay rights advocates said that it places all unmarried couples in the state on equal footing with married couples for the first time, and will vastly streamline the adoption process for gays seeking to adopt.

The conservative Family Research Council deplored the ruling. Robert Knight, the council's director of cultural studies, called the settlement "a victory for homosexual activism and a defeat for children already bruised in life and in need of an intact, committed husband-and-wife family."

Gay men and lesbians have been working on several fronts to win legal recognition for their personal and family relationships, seeking "domestic partnership" legislation, equality with heterosexual couples for health and life insurance benefits, and equal opportunity to adopt and obtain custody and visitation rights. The Hawaii legislature amended the state constitution in July to bar same-sex marriages after the state Supreme Court had found the ban unconstitutional.

Already, a handful of states and the District of Columbia allow gay couples to adopt children in a complex and expensive two-step process, in which first one parent is allowed to adopt and then the second can petition for joint rights.

But the practical effect in New Jersey of allowing both adults to adopt together is that, at the outset, they obtain the same legal rights and responsibilities for the child. That issue is important for several reasons. It's a signal from the state that a gay couple can act as a family unit. More critically, it could determine a child's fate if something happened to one parent.

In addition, married couples tend to have an advantage over single people in seeking adoption rights. With New Jersey law now allowing gays as well as unmarried heterosexual couples equal adoption rights, the automatic advantage of married couples would disappear.

The case involved a couple, Michael Galluccio, 35, and Jon Holden, 34, of Maywood, who had been caring for a 2-year-old foster child since he was 3 months old. The child, Adam, was addicted to cocaine and exposed to HIV when he was born.

When the couple attempted to adopt him jointly, they were informed that Galluccio would have to go through the adoption process first, and then Holden. This would take time and cost extra money.

The couple sued, charging that the state was violating their rights to equal protection under state and federal law.

"I have been the psychological father all along to my son," Holden said yesterday. "It was important not to be a legal stranger to him."

"We are on equal footing now, with all couples, straight and gay," said Galluccio. "There are a lot of people who want to become families. This makes one more piece of it easier. It's also important for the kids out there, to be able to have all the rights and protection that any family can have."

Eight million to 13 million children are being raised by gay parents, according to the ACLU, but most of them are the biological children of one of the parents.

Two states, New Hampshire and Florida, bar outright the adoption of children by gays, officials said.

Gay rights groups hailed the settlement as a landmark step.

"Today's ruling is a victory for the concepts of family and fairness, said David Smith of the Human Rights Campaign, the nation's largest gay rights group. "Gay couples wishing to adopt children should be judged by the same standards as nongay couples in determining suitability to adopt children." Staff writer Joan Biskupic contributed to this report. CAPTION: Jon Holden, 34, left, and partner Michael Galluccio, 35, hold 2-year-old Adam in Newark after settlement of lawsuit.