The independent report, compiled by former federal court judge Antony Whitlam QC, found former Armidale Bishop Henry Kennedy failed to act on repeated allegations against the former priest, known by court order only as "F".

F was abruptly moved from the Moree parish to East Tamworth in 1984, though no contemporary records explaining his departure have been found.

While F was taken to see psychologist Gary Boyle in East Tamworth, Mr Whitlam claimed he "was never given any version of the circumstances surrounding F's removal from the parish in Moree except by F himself".

F was arrested in 1987 and charged with sexual assault offences. Although the charges were dismissed, Bishop Kennedy did not launch an internal investigation in a move described by Mr Whitlam as "utterly inexplicable".

"Even if the allegations against F were false, these matters required attention in order to understand how they could be made," Mr Whitlam found.

Bishop Kennedy later arranged to transfer F to the Merrylands parish in Sydney, but failed to inform then Bishop of Parramatta Bede Vincent Heather of the full extent of the priest's history.

Mr Whitlam found that, had Bishop Heather "been given a full and accurate picture of F's background, he would never have agreed to take him on." 

In a statement released yesterday, current Bishop of Armidale Michael Kennedy acknowledged the findings of the report and expressed his sympathies to the victims of sexual abuse.

"One of my predecessors failed, in this instance, in his duty of governance of the diocese and, more importantly, in his duty of care of the pastoral care of its people," he said.

"I abhor the sexual abuse of children as a grave crime crying out to God for justice. I assure you of my resolve to help victims receive justice, healing and peace, and of my resolve to ensure that this terrible scourge be forever removed from our midst."

The report found Bishop Kennedy's successor, Kevin Manning, took greater action against F, stripping him of all pastoral responsibilities. He received no financial support from the diocese after 1993.

Despite allegations aired last year about a cover-up by three senior members of the clergy - Brian Lucas, John Usher and Wayne Peters - during a meeting with F in 1992, the report found no evidence of "sinister" conduct.

NSW Police received the report last month, but will not be taking any criminal action against the priest based on the information it contains.