The Australian Capital Territory has passed a water-down version of a bill which creates civil unions for gay and lesbian couples, but without a provision that would allow for couples to have ceremonies after the federal government it would veto the bill if the section remained in the legislation.

The federal government of Prime Minister Kevin Rudd said that the ACT bill would contravene a federal law limiting marriage to opposite sex couples. The law was enacted by the former Liberal government of John Howard and Labor's Rudd has refused to consider repeal.

The territorial government maintained that ceremonies were a matter of equality, but faced with a veto pulled the bill last week and removed the clause.

The amended version, which was worked out with the federal government passed the territorial legislature on Friday.

A similar bill passed in 2006, but was overturned by Howard.

The Civil Partnerships legislation will give same-sex couples most of the rights married couples have under territorial law, but would not include federal marriage rights.