"The only complete solution to this religious liberty problem is for HHS (Department of Health and Human Services) to rescind the mandate of these objectionable services," the US Conference of Catholic Bishops said in a statement.
The government's decision to guarantee women access to contraceptives "remains a grave moral concern," they said.
On Friday, Obama said his government would no longer require religious organizations to offer free contraception on employee health plans and decried opponents he said had turned the issue into a "political football."
But he stuck by the principle that all women should have free access to such services, putting the onus on insurance firms to approach women working for religious employers like Catholic hospitals to offer them birth control.
The fight erupted when the administration decided not to exempt religious employers from a requirement under its health reform law that work-based insurance plans offer women coverage for contraception.
Officials argued that a woman who worked, for example, as a nurse at a Catholic hospital might not share their employer's religious opposition to contraception and should have the same rights as female workers elsewhere.
Roman Catholic leaders were outraged -- even though houses of worship were exempt -- and Republicans used the row to whip up a social issues storm, firing up their conservative political base in an election year.
After the compromise was announced on Friday, New York Archbishop Timothy Dolan described it as a "first step in the right direction."
But the later statement from all the bishops said they will continue to object because of Obama's decision "to retain HHS's nationwide mandate of insurance coverage of sterilization and contraception."
"We will continue -- with no less vigor, no less sense of urgency -- our efforts to correct this problem through the other two branches of government," the bishops said.
However, many other organizations, including Catholic ones, welcomed the compromise.
The Catholic Health Association said it was "very pleased" with the White House announcement, arguing that the decision "protects the religious liberty and conscience rights of Catholic institutions."
The American Association of University Women insisted that the decision was "not a compromise on women's health."
"Instead, it's an accommodation for people who are truly concerned about religious liberty," the association said.