Is it "race discrimination" for a Jewish school to employ religious standards in admission?

Apparently so, in the United Kingdom.  MOJ-friend Aidan O'Neill sent in a note, a few weeks back, with this report:

a Jewish school is held to be not permitted to apply Orthodox rabbinical standards as to who is  Jew in its admissions policies.    Application of the requirement that prospective pupils require to have mother born a Jew, or dully converted to Orthodox Judaism, is held to constitute direct race discrimination.

At least one commentator finds the decision extremely troubling.  In this piece ("Our human rights culture has now become a tyranny"), Charles Moore writes:

The court is effectively saying that a religion's way of defining its own membership, practised over 3,500 years, is illegal. This is an acute problem for Jews, who are at great pains to maintain their own rules while respecting the law of the land. It will also be used by anti-Jewish groups, which are growing in strength, to bolster their argument that Judaism is racist and that the state of Israel is the equivalent of apartheid South Africa. So the Race Relations Act, set up to help minorities, ends up punishing them.

I would argue that the judgment goes wider still. It is part of a current idea of equality and of human rights which, in the name of freedom, is beginning to look like tyranny.

When you set out general principles about equal treatment for all, regardless of race, religion, sex, age etc, people will tend to agree with them. It is a liberal principle that all are equal before the law, and a Christian principle that all are equal in the sight of God.

But when you frame endless laws according to these universal principles, you run into difficulties. It may be "discriminatory" for a Jewish/Catholic/Muslim school to prefer to employ Jewish/Catholic/Muslim teachers, but isn't it also reasonable? Isn't it fair and natural that a religious school should be free to prefer to admit children from the relevant faith, in order to maintain the ethos which is so important to its success as a school? By what morality are such things wrong? . . .