Church leaders are concerned that they could soon face financially crippling civil lawsuits.
This follows the increase in abuse cases involving members of the Church in Britain, and the growth of compensation actions in the United States and Canada which have cost millions.
A working party headed by the Bishop of Plymouth, the Rt Rev Mgr Christopher Budd, is examining the problem of child sexual abuse by priests and drawing up recommendations on insurance and compensation. Three Catholic priests have been convicted of sexual abuse in the last year and two more are awaiting trial.
The potential problem of compensation was highlighted last week in the BBC's Everyman programme, which revealed that the Archbishop of Birmingham, the Most Rev Maurice Couve de Murville, is being sued by the parents of two children who were sexually abused by a priest.
The priest, Fr Samuel Penney, was convicted in March and jailed for seven years. The parents claim the archbishop was told about the abuse several years before police were called in.
The working party, which met for the first time this month, includes representatives from the police and social services. Experts on insurance will also be consulted. The findings, which will include recommendations on all aspects of child abuse, will be presented to the annual bishops' conference in November.
Bishop Budd said: 'With the higher profile child abuse now has, I think people who were abused in the past may come forward. It seems likely that we will get families taking out legal proceedings and suing - we need to be ready for this scenario.
'Statistically only a very small minority of people within the Church have been involved in abuse, but it must be dealt with.'
A confidential briefing document called 'Child Sexual Abuse By Priests' compiled for the group said: 'Advice should be sought on the future likelihood and patterns of civil compensation.'
It also recommended: 'Advice should be sought on questions of insurance policies to cover possible liabilities.'
The report warns: 'Given the estimate that about 10 per cent of people are thought to have suffered some degree of abuse as children, and the incidence of priestly abuse in cultures not vastly dissimilar (USA, Canada) it is reasonable to assume that the present troubles are not just a passing phase . . . New episodes are bound to continue to occur since preventative measures are likely to be slow in their effect.'
At least 20 US priests have been imprisoned on child abuse charges in the past six years. Between 1983 and 1987, some 200 US priests or brothers were publicly accused of molesting youngsters. An estimated dollars 400m has been spent in legal and medical fees and settlement payments. Thomas Mrozka was one of the most successful US litigants. Twelve years after he was first sexually abused by a parish priest, a jury awarded him dollars 1.2m and fined the Catholic Church dollars 2.5m.
TV review, page 20