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This creates a vicious circle, with victims preferring to remain "invisible" rather than being open about their sexual orientation or reporting abuse to authorities, the study showed.
"From their early years, the derogative words used for gays and lesbians at schools teach them to remain invisible," said the study, published on Tuesday.
"They often experience harassment and discrimination in the workplace (and) in many countries they cannot secure their relationships to one another as legal partners."
The study recommended anonymous reporting of homophobic crime to combat the problem, highlighting pilot projects in the Netherlands, Denmark and Slovenia as good examples.
Some serious cases of discrimination involved asylum authorities, with people denied refuge because officials did not believe they were fleeing persecution due to their sexuality.
In terms of health care, discrimination can mean people avoid seeking help and in some cases were treated as if their sexual orientation were a "disturbance or sickness".
East more hostile
The report, which brought together research from 27 countries, said over half of EU citizens thought discrimination on the grounds of sexual orientation was widespread in their country.
Bulgaria, Estonia, Latvia, Poland and Romania were singled out for being hostile towards "gay pride" rallies and people from countries in the region were generally less comfortable with having a homosexual as a neighbour, for example.
Only three EU states – Belgium, the Netherlands and Spain – gave full marriage rights to lesbians, gay men, bisexuals, transsexuals and transgender people, while most of the other countries do not award any rights at all.
In the Netherlands 82 percent were in favour of same-sex marriage versus 11 percent in Romania and 12 percent in Latvia.
The study showed acceptance was also good in France, Austria, Sweden and Spain, where politicians and religious figures took part in pride demonstrations to raise awareness.
But open-mindedness tended to fade when people were asked if they think homosexuals should be allowed to adopt children.
While media representations of homosexuality slightly improved, stereotypes prevail, with eroticised images often used to illustrate articles, enforcing the idea that sexual orientation is about sex alone, the study said.
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