"No citizen within the EU should have less protection or less equality than others," said Boris Dittrich, advocacy director of the Lesbian, Gay, Bisexual and Transgender Rights Programme at Human Rights Watch.
"An inclusive directive will be a vital step to end discrimination against the millions of lesbian, gay, bisexual, and transgender people living in the European Union."
Gay EU citizens would be entitled to equal treatment in the areas of social protection, including social security and health care, education and access to and supply of goods and services, under the proposal from the European Commission.
It provides for protection from discrimination on the grounds of age, disability, sexual orientation and religion or belief.
All goods and services which are commercially available to the public, including housing, will be covered by the directive. All forms of discrimination at work are already covered by previous legislation.
EU directives require member states to, for example, deal with discrimination, but leaves it up to the states to decide on the best course of action to take.
"The right to equal treatment is fundamental, but millions of people in the EU continue to face discrimination in their everyday lives," said Vladimír Špidla, Commissioner for Employment, Social Affairs and Equal Opportunities.
"At present, there is an inequality in Community legislation itself because people are protected from discrimination outside the workplace only on grounds of gender and race or ethnic origin. We must ensure equal treatment for all grounds.
"The measures we propose are proportionate and reasonable; they give legal certainty to businesses and to users of goods and services while respecting the specific requirements of various sectors as well as national traditions."
However, member states will remain free to "maintain measures ensuring the secular nature of the State or concerning the status and activities of religious organisations."
Now that the Commission has proposed a directive across all strands does not mean the directive will emerge at the other end of the process intact.
"The 27 member states will argue for their bits of exemption, followed by all the different industry lobbies, not to mention groups like the Roman Catholic Church, which has full time lobbyists in Brussels," a European Parliament source told PinkNews.co.uk
"Then there are the trades union people - it all gets fought through.
"Then member states have the derogations, where they say ‘OK you can put it in but it doesn't apply to us.’
"Nowadays the European Parliament has a right to get involved.
"And then the next phase, once the directive is actually passed, you start the process of putting it into law.
"The sexual orientation employment regulations came into force in 2003 and were duly implemented in the UK, but I don't think you'll find all 27 states follow it. So it's a long process."
The International Gay and Lesbian Association broadly welcomed the new discrimination directive but said that gay and lesbian people who want to get married will still face discrimination.
Juris Lavrikovs, a spokesman for the group, said he was pleased that education is to be included in the new directive.
"We really appreciate that the proposed directive covers all grounds of discrimination – something we've been working on for months. It's very positive," he told EUobserver.
"There is no reference to differential treatment regarding marriage.
"This maintains unequal treatment of same-sex couples."
The Commission said that marriage is in the "competence" of the member states.
"Marriage is not considered a service," spokeswoman Katharina von Schnubein said.
France’s Presidency of the EU means the discrimination directive is as a priority for the next six months and they will seek to conclude it at the Council of Ministers meeting in December.
Stonewall said that while many of the protections set out in the discrimination directive are already law in the UK, there is still a need for the UK to support them.
"Stonewall believes equality for UK citizens should not stop at the Channel," said spokesman Derek Munn.
“We are also mindful for the need to entrench such protections in the future."