I think the church commissioners and the archbishops' council have made a big mistake

Bishop Tom Butler of Southwark

Many areas, such as Liverpool, London and Chester, will lose out, although some, including Sheffield and Norwich, would actually gain.

Bishop Tom Butler of Southwark has accused the Church of making a 'big mistake' by supporting the changes.

The Southwark diocese, which has about 35,000 churchgoers, has estimated it will be �1.5m a year worse off.

Bishop Butler said: "I think the church commissioners and the archbishops' council have made a big mistake in changing their grant allocation formula and it does discriminate against dioceses that have the largest numbers of urban parishes.

"Most of our urban congregations in south London are made up of black and Asian people. In no way are they on the average income of the yuppie.

The views of some of the bishops of dioceses which are likely to receive smaller allocations are already well known

Church spokesman

"It is an utter nonsense. Nevertheless we are faced with �1.5 million a year less - we have to make that amount of cuts or we challenge the dioceses to give extra."

Clergy cannot be sacked - but the next few years may see a steady transfer of priests away from the poorest parishes where they are needed most.

Among the options being considered are a reduction in the number of archdeacons, who act as mentors for priests in difficult parishes, curates and assistant priests and the loss of specialists in areas including education and homelessness

Substantial cuts

The Bishop of Liverpool, James Jones, said the Church was failing in its duty to the poor.

But a Church of England spokesman said: "The views of some of the bishops of dioceses which are likely to receive smaller allocations are already well known.

"The two Archbishops said at the time (when the issue was debated in July) that there was no question whatsoever of the Church of England now or in the future withdrawing from the inner cities."

The Church, under pressure from clergy living longer, has already asked congregations to find an extra �12m a year to meet a shortfall in pension funds.

Lay people are to be asked to train and work as unpaid priests, helping out in their parishes in their spare time.