Gillard was due to address the Australian Christian Lobby's meeting in October but pulled out over the "offensive" and "inappropriate" comments about homosexuality.
It followed ACL chief Jim Wallace, whose ultra-conservative group lobbies for Christian principles and ethics, on Wednesday making the claim during a debate on same-sex marriage.
"I think we're going to owe smokers a big apology when the homosexual community's own statistics for its health - which it presents when it wants more money for health - are that it has higher rates of drug-taking, of suicide, it has the life of a male reduced by up to 20 years," he said.
"The life of smokers is reduced by something like seven to 10 years and yet we tell all our kids at school they shouldn't smoke."
After the debate, Wallace said the figures saddened him.
"But what I'm saying is we need to be aware that the homosexual lifestyle carries these problems and ... normalising the lifestyle by the attribution of marriage, for instance, has to be considered in what it does encouraging people into it."
Gillard, an atheist who opposes legalising gay marriage, said debate about the issue should be "respectful and responsible".
"I believe yesterday's comments by Jim Wallace were offensive," she said in a statement.
"To compare the health effects of smoking cigarettes with the many struggles gay and lesbian Australians endure in contemporary society is heartless and wrong.
"Although everyone is entitled to their own view, these statements reiterated again today on behalf of ACL are totally unacceptable.
"In light of this, I believe my attendance at the conference would be inappropriate."
Marriage is covered by federal legislation in Australia which defines it as between a man and a woman, so while civil same-sex unions are recognised in several states, the couples are not considered "married" by the national government.
Same-sex couples have, however, the same rights as heterosexual couples in areas such as pension schemes and medical benefits.
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I am no fan of Gillard nor do I hold with her pseudo social and politically correct impositions on an unwilling Australian electorate. Nor do I go into bat for the "gay" lobby with their enforced social agenda. However I feel that Gillard made the correct call in not engaging with those to whom Christianity is a weapon to attack and belittle sections of society that do no harm to them, and if they were to be in a position of power, as occurs in the American political scene, they would impose their narrow and rigid values on a society that had long outgrown them.
I have read what Mr Wallace has said and I do not find it offensive in any way. His remarks have deliberately been taken out of context. What I would like to see debated is not who has been offended (or more to the point who chooses to portray that they have been offended), but is what Mr Wallace said true or is it false. I do not know the answer to this but the madia seem to have outstanding abilities to investigate issues and maybe this would be a good one for them to get there teeth into. If what Mr Wallace says is not true then it should be demonstrated that it is not true, however if what he says is true then we should thank him for bringing the matter to our attention. I note that the PM is quoted as saying "that every one has a right to their opinion" however in the same sentance she says that ACL's opinion is "totally unacceptable" I find that this is a bit of a contradiction. The question remains is Mr Wallace's comparison true or is it false?????