John McCain's top adviser from the presidential campaign urged fellow Republicans on Friday to warm up to gay rights and warned that the GOP risks becoming the "religious party" with its opposition to same-sex marriage. 

Steve Schmidt, in his first political appearance since the election, spoke at the Washington, D.C., convention for the Log Cabin Republicans -- a grassroots group for gay and lesbian Republicans. 

He urged Republicans, in the near-term, to endorse civil unions and stop using the Bible as rationale for gay-marriage opposition. 

"If you put public policy issues to a religious test, you risk becoming a religious party," he said. "And in a free country a political party cannot be viable in the long-term if it is seen as a sectarian party." 

Schmidt, whose sister is a lesbian and who supports same-sex marriage, said he understands the Republican Party probably won't reverse its resistance to same-sex marriage anytime soon. 

But he suggested that the party will be increasingly marginalized if it sustains that opposition long-term. 

"If the party is seen as anti-gay, then that is injurious to its candidates" in Democrat-leaning and competitive states, he said. 

President Obama also stops short of supporting gay marriage -- he supports civil unions -- but states across the country are moving toward extending such rights to gay couples. 

Schmidt predicted gay marriage will create a bigger and bigger divide between the GOP and the electorate in the years ahead. He said that as young voters age, they may adopt conservative views on the economy and national security -- but they will not abandon liberal, social beliefs. 

This would put the Republican Party at odds with a swath of voters, Schmidt said. 

"I believe Republicans should re-examine the extent that we are being defined by positions on issues that I don't believe are among our core values," he said, while still calling social conservatives an "indispensable part of the conservative coalition." 

Schmidt's position is not new. Schmidt recently asserted his support for same-sex marriage rights in March during an interview with the Washington Blade, a newspaper that covers gay and lesbian issues. 

But Schmidt's advice to his party took a different tone than the social platform trumpeted Thursday by McCain running mate Sarah Palin -- the Alaska governor gave an out-of-state political speech for the first time in months Thursday, to an anti-abortion group in Indiana. 

There she chastised Obama for supporting abortion rights and defended her abortion opposition. 

Schmidt also said Friday that Republicans need to reach out, not only to gay voters, but young voters and Hispanics. 

"The rapid growth of the Hispanic-American population for instance could soon cost Republicans the entire southwest if we don't recover our previous share of the vote," he said. 

FOX News' Mosheh Oinounou contributed to this report.