The development, which will alarm the Archbishop of Canterbury, Dr Rowan Williams, follows a 28 per cent jump in the amount that the diocese has been asked to contribute.

The Bishop of Willesden, the Rt Rev Peter Broadbent, who is leading the
London diocese's campaign, said the Church needed to carry out a
fundamental independent review of its bureaucracy and make significant cuts.

Six other large dioceses, including Southwark, Oxford and Chichester,
are understood to be sympathetic and could follow suit, further
undermining the Church's finances.

A number of dioceses have been struggling with large deficits and
several, particularly in the north of England, face bankruptcy. The
London diocese itself has had to cut a number of clergy and other posts
to stave off imminent collapse.

The row is expected to surface at the General Synod, which began a
four-day meeting in York yesterday and is to debate the budget of the
Archbishops' Council, the Church's managing body.

It will also undermine criticism by bishops that evangelical parishes
that cap their quotas in protest at the Church's policy on homosexuality
are using money as a weapon.

The London diocese voted by a large majority at its diocesan synod last
week to give the Bishop of London, the Rt Rev Richard Chartres, the
authority to cap its 2005 contribution to central funds to £1.7 million.

It also asked the council to share out the cost of administering the
Church more fairly.

Bishop Broadbent said that while wealthier dioceses should support
poorer ones, the balance had been lost and the Church had ignored his
complaints for years.

"The current formula hits us below the belt, and because they haven't
been listening to us, we've had to issue this threat," said the bishop.

He said that while the central bureaucracy had controlled its spending
in recent years, it needed to make further cuts to services it offered
that could be carried out by dioceses.

Among the services paid for by the centre are the selection and training
of future clergy, working on social issues such as education, supporting
chaplaincies and supporting the General Synod and the media office.

A Church insider said that the six wealthiest dioceses encompassed 28
per cent of the population of England, and the apportionment placed on
them was about 30 per cent.

He said the council's budget had been frozen for three years, and had
effectively reduced its sum by £1 million.

A spokesman for the council said: "The council views this development
with considerable concern.

"Dioceses were consulted as usual on the proposed national budget at a
meeting of diocesan representatives in May, before the council approved the budget, but this issue was not aired at that stage."

END