Statecraft: A Secular Church?

I don’t know what you think of the Roman Catholic and Anglican rebellion over the freedom of Catholic Adoption Agencies to refuse homosexual couples the right to adopt children from their clinics - it seems based upon an interesting mix of biblical warrant, natural law ethics, and established tradition/ practice. I guess I’m not so concerned about this one particular issue as about a wider concern, voiced by Cardinal Murphy O’Connor and Bishop Tom Wright, as they accused the government of ‘imposing a new morality’. I fear the Cardinal and Bishops are right it is becoming increasingly difficult for Roman-Catholic, Anglo-Catholics, Evangelical, Orthodox, Charismatic, mainstream Christians to maintain the faith they inherited. I’m sure that some will find it worrying that the State has decided to legislate against the devout beliefs/ convictions of many mainstream Christians.
It is not the first time the state has legislated against Christian convictions, but in the past on issues such as abortion, individual Christians have been allowed the right to object on moral grounds. Sadly, no such right has been afforded Catholic Adoption Agencies.
I guess we are now seeing the separation of the Church and the State, we are learning what has always been true: the State and Church are living competing narratives! Over 1600 years ago, St Augustine wrote De civitate Dei and revealed the confrontation between the City of God and the City of Man. Claiming that the secular state is just a false imitation of the City of God, the Church. William Cavanaugh expounds this truth by writing ‘the modern state is “founded on certain stories of nature and human nature, the origins of human conflict, and the remedies of such conflict in the enactment of the state itself”’. In contrast, the Church is founded upon the story of creation, fall, and redemption.
It seems clear that the State is setting itself up as a source of alternative salvation. In other words, ‘the modern state seeks to replace the church by itself becoming a soteriological institution’. I guess now it may be appropriate to declare that the State is in the hands of anti-Christ – a false copy of the Body of Christ, the Church. In an academic setting these words feel comfortable, couched in philosophical, intellectual language, but today these ideas feel deeply disturbing- what do you think?

Note: quotes taken from James K.A. Smith's 'Introducing Radical Orthodoxy; Mapping a Post-Secular Theology' (Grand Rapids, Baker Academic, 2004) pp.132-133