Obama Still Hopes to Repeal Military Ban on Gays

* Obama says ban could be repealed before year-end

* Legal confusion after court rulings

* Obama says lifting ban must be done in "orderly fashion"

By Ross Colvin

WASHINGTON (Reuters) - President Barack Obama said Wednesday he still hoped to end the ban on gays serving openly in the military, despite big electoral gains by Republicans, many of whom oppose repealing the restrictions.

Many gay voters were disappointed with Obama's failure to overturn the controversial "don't ask, don't tell" policy and pulled back on financial support for Democrats in the campaign for Tuesday's congressional elections, in which Republicans won control of the House of Representatives.

Obama pledged at a White House news conference to deliver on a promise he first made when running for president in 2008.

"It's time for us to move this policy forward," Obama said, adding the rule could potentially be repealed in the short session of Congress after the elections, when fellow Democrats will still control both houses.

Since 1993, homosexuals have been allowed to serve in the U.S. military as long as they hide their sexual orientation. They are expelled if it becomes known. Polls have said most Americans support lifting the ban.

The House has voted to change the law but unless the Senate takes it up in the final weeks of the "lame-duck" legislative session, it will effectively die.

Democrats retained control of the Senate in Tuesday's elections, but Obama will still have to work with resurgent Republicans who will be demanding a bigger voice in issues such as "Don't Ask, Don't Tell."

Obama is under pressure to act after a series of court decisions created confusion for the Pentagon.

A federal appeals court Monday ordered the ban to remain in place while the Obama administration challenges a lower-court opinion declaring the policy unconstitutional.

Obama said he was awaiting a Pentagon review, due in December, on the impact of lifting the ban on the military and would study it carefully.

"I've said that making this change needs to be done in an orderly fashion," he said, adding it was important not to do anything that would be disruptive to "good order and discipline" in the military.

But, he stressed, "we need to change this policy."

He said allowing gays to serve openly should not be a partisan issue.

"This is an issue, as I said, where you've got a sizable portion of the American people squarely behind the notion that folks who are willing to serve on our behalf should be treated fairly and equally," he said.

Many Republicans, including Senator John McCain, who lost to Obama in the 2008 presidential election, have said they oppose voting on a repeal of the policy before the Pentagon review is done. (Editing by Peter Cooney)