Spongebob is popular among adult gay men
Focus on the Family and other groups say the video - a remake of the Sister Sledge hit, We Are Family - is a vehicle for pro-gay propaganda.
The video's makers plan to mail it to US schools in the spring to promote tolerance and diversity.
They say the attack is based on a misunderstanding.
The video also features children's favourites like Bob the Builder, along with characters from Sesame Street and The Muppet Show.
We see the video as an insidious means by which the organisation is manipulating and potentially brainwashing kids
Paul Batura
Focus on the Family
But James Dobson, founder of right-wing Christian group Focus on the Family, singled out SpongeBob at a black-tie dinner in Washington in the run-up to President Bush's inauguration, the New York Times said.
SpongeBob - who appears on the children's cable channel Nickelodeon - is seen as an icon for adult gay men in the US, apparently because he regularly holds hands with his sidekick Patrick.
His creators deny that he is gay, but he is not the first such character to cause controversy.
In 1999 conservatives claimed handbag-carrying Teletubby Tinky Winky, an import from the UK, was a bad role-model.
'Easy lesson'
Nile Rodgers, who wrote the song and is founder of the We Are Family Foundation (WAFF) which released the new video, says it is intended to help teach children the values of co-operation and unity.
"We believe that this is the essential first step to loving thy neighbour," he said. "And the fun and exciting format makes it a lesson that's easy for children to learn."
But conservatives say it sees the video as a cunning attempt to promote homosexuality.
They point to the fact that the WAFF is linked to a pledge being promoted by some liberal groups which includes a recognition of tolerance of sexual identity.
"We see the video as an insidious means by which the organisation is manipulating and potentially brainwashing kids," Paul Batura, a spokesman for Focus on the Family, told the New York Times.
Mr Rodgers said the groups may have confused his foundation with an unrelated organisation with a similar name that supports gay youth.
WAFF spokesman Mark Barondeso told the newspaper that anyone who thought the video promoted homosexuality "needs to visit their doctor and get their medication increased".
Anti-gay groups accuse a music video, with over 100 children's TV heroes such as SpongeBob SquarePants, of being a vehicle for pro-gay propaganda.

The video's makers say the music video - a re-recording of the Sister Sledge hit "We Are Family" - is to promote tolerance and diversity to America's children. 

Dr. James C. Dobson, co-founder of the pro-Family Christian Ministry Focus on the Family, singled out SpongeBob at a black-tie dinner for members of Congress in the run-up to G.W. Bush's inauguration on 2005 Jan 18, according to The New York Times.

Dobson told the guests that the cartoon sponge had been enlisted in a "pro-homosexual video" that was going to be mailed to thousands of elementary schools promoting a "tolerance pledge" that included a reference to "sexual identity."

The video's creator, Nile Rodgers, who wrote the disco hit "We Are Family," told The New York Times that Dobson's objection stems from a misunderstanding. Rodgers said he founded the We Are Family Foundation after the 9/11 attacks to create a music video to teach children about multiculturalism. The video has appeared on television networks, and nothing in it or its accompanying materials refers to sexual identity. The pledge, borrowed from the Southern Poverty Law Center, is not mentioned on the video and is available only on the group's Web site.

Rodgers suggested that Dobson and the American Family Association might have been confused because of an unrelated Web site belonging to another group called "We Are Family," which supports gay youth.