BUDAPEST, July 21 (Reuters) - Hungarian Prime Minister Viktor Orban on Wednesday stepped up a culture war with the European Union by announcing a referendum on legislation that limits schools" teaching about homosexuality and transgender issues. The European Commission last week began legal action over the measures, which have been included in amendments to education and child protection laws. If successful, Brussels could hold up funding for Hungary while the restrictions are maintained. But Orban appeared ready to raise the stakes. "The future of our children is at stake, so we cannot cede ground in this issue," he said in a Facebook video. "In the past weeks, Brussels has clearly attacked Hungary over its child protection law. Hungarian laws do not permit sexual propaganda in kindergartens, schools, on television and in advertisements." The European Commission did not immediately comment. At a summit last month, other EU leaders lambasted Orban over the legislation, which they say discriminates against gay and transgender people. Dutch Prime Minister Mark Rutte told him to respect EU values or leave the bloc. Orban, who has been in power since 2010 and faces an election next April, portrays himself as a defender of traditional Christian values against Western liberalism. He owes some of his electoral success to a hard line against immigration, but as that subject has ceased to dominate the agenda, he has nailed his colours to issues of gender and sexuality. "There are practically no migrants in Hungary, while there are a lot of LGBTQ people, and people who are sensitive to this issue," said Zoltan Novak, an analyst at the Centre for Fair Political Analysis think tank. The new amendments, which have caused anxiety in the LGBT community, ban the use of materials seen as promoting homosexuality and gender change at schools, ostensibly as a measure to prevent child abuse. Orban gave no date for the referendum but said it would contain five questions. Hungarians will be asked whether they support the holding of sexual orientation workshops in schools without parents" consent, and whether they believe gender reassignment procedures should be promoted among children, Orban said. They will also be asked whether content that could affect sexual orientation should be shown to children without any restrictions, and whether gender reassignment procedures should be made available to children. As Orban unveiled his plans, Budapest mayor Gergely Karacsony, vying with other opposition candidates to become Orban"s challenger at next year"s election, announced a plan to try to hold a referendum by April on key government policies. These include plans to build a Chinese university in Budapest, and the award of a 35-year concession to manage about 2,000 km (1,200 miles) of motorways and public roads.