The governing body of the Church of England threw out proposals to strip Tony Blair and the Queen of their powers to appoint bishops yesterday, warning the plans could lead to the disestablishment of the church.
Members of the General Synod voted out a call from the Bishop of Woolwich, the Right Rev Colin Buchanan to adopt a "more participatory and open" procedure.
He had argued it was "marginally scandalous" that the Prime Minister should have patronage over the appointment of religious leaders.
But yesterday a succession of speakers argued against the change. Chancellor Sheila Cameron, Vicar General of Canterbury, said the present system was firmly rooted in the Reformation and should not be changed.
The move would have implications for the established status of the Church, just as Downing Street prepares to announce the new Archbishop of Canterbury, who is widely expected to be the present Archbishop of Wales, Rowan Williams.
Dr Buchanan had argued that changing the present arrangement and removing the role of the Prime Minister and the Monarch would not threaten the status of the Church.
But acting secretary general Richard Hopgood said it might be impossible to "unpick" one aspect of establishment without threatening the whole position of the Church, and such a change would be a "significant change in the self-understanding" of the Church.
"Establishment is a complex interlocking web of arrangements," he said. "While further evolution in the nature of establishment must be possible, can this one threat be unpicked without adverse consequences for the whole?"
Simon Hughes, Liberal Democrat spokesman on religious affairs, urged the Church to move from its dependency on "the political masters of the day", adding: "A mature Church should be fearless in preaching the gospel and should not be linked to the Establishment. Progress may have to come in stages, but the Church should take the first steps and begin to choose its own leaders."
Keith Porteous Wood, executive director of the National Secular Society, said a loosening of ties between church and state was long overdue. "No organisation worth its salt would tolerate an outsider appointing its senior managers," he said. "The C of E should have the courage to indicate it wants to start the process of disestablishment. No other Western democracy gives bishops seats in their parliament as of right."
Mr Blair's official spokes-man said the Prime Minister believed the arrangements for appointing bishops worked well, and, despite speculation, the official Downing Street announcement of the next Archbishop of Canterbury was still "some weeks" away.
Earlier, the synod approved rises in the cost of marriage and funeral services despite warnings the market for such ceremonies was was becoming "increasingly competitive". The cost of a Church of England marriage service will increase by £10 to £162, and that of a funeral service in church from £72 to £78. The cost of being buried in a churchyard after a church service will rise from £133 to £139.
The Bishop of Gloucester, the Right Rev David Bentley, who is chairman of the deployment, remuneration and conditions of service committee, said: "The Church's share of this market is already diminishing and we need to be extremely cautious before we proceed with a very large increase in parochial fees."
Today, synod members debate a report that recommends some divorced people can be remarried in church while their former partner is alive.
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