Evidence for the decline of the Church in national life is unequivocal. The number of children baptised last year fell by more than a third on the previous decade and only 8 per cent of adults in Great Britain now go to church.

Even clergymen reluctantly admit that Britain is now a secular society.

Attendance at Anglican services has fallen to below a million and the number of children attending Sunday school is just a fifth of those studying at church schools.

Yet Tony Blair is planning to give existing church schools pound;42 million of taxpayers money over the next two years to cover capital costs, and to put more money into new religious schools.

The Prime Minister, whose sons attend the Roman Catholic London Oratory, wants “education with character”, where schools have a “sense of mission”.

But his own mission - to spread the ethos and academic success of church schools - comes as the Church of England faces not only loss of popularity but a major financial crisis.

Nearly three-quarters of dioceses are in the red and using up reserves, according to an investigation by the Church Times. Just 14 expect to break even. Many of the 29 dioceses showing a deficit for 2000 are reducing the number of clergy and staff as well as cutting grants for clergy housing. “There is a real irony here,” said the Reverend David Jennings, a member of the Church of England diocesan synod for Leicester and rector of Burbage. “We are in financial crisis, clergy are being cut and there are parishes with no full-time clergy for the first time in a century. Yet we are looking at a proliferation of church schools. What’s going on? I am not convinced about the need for church schools in today’s society.”

Richard Bentley, priest in charge, at St Peter, Petersham, Surrey and chaplain of HM Prison Latchmere House, also questioned the supposed effectiveness of church schols. “Why the Government has gone overboard for church schools is beyond me. Church schools were founded to help the poor, but we have ended up pursuing money for schools that now exist for the more fortunate in society.”

There are some 560 Anglican or Roman Catholic secondaries in England. Muslim, Sikh and Greek Orthodox schools have been brought inside the state system and Labour has increased the number of Jewish schools. It now aims to “welcome” more schools provided by the churches and other faith groups where there is clear local demand.

Mr Blair’s crusade coincides with a Church of England drive to open 100 secondaries in the next five years. Ministers welcomed the initiative, recommended by Lord Dearing, who is widely seen as the Government’s “Mr Fix-it” for education.

Lord Dearing said: “If children aren’t coming to us, we must go to them and that means not only through church schools but in community schools.”

Major cities or towns without Anglican secondaries include Newcastle-upon-Tyne, Sheffield, Sunderland, Plymouth, Gloucester, Ipswich, Norwich, Bournemouth and Brighton.

Ministers plan not only to cut the contribution from governors for capital costs in church schools from 15 to 10 per cent but to fast-track funding for premises work.

The Rt Rev Alan Chesters, bishop of Blackburn and chairman of the Anglican board of education, said: “We are delighted at the Government’s affirmation of the contribution we make.

“The recent spate of building primary schools to cut class-sizes has put a considerable strain on the voluntary sector ... so the extra funding will be extremely welcome.”

The National Secular Society, however, called for an independent survey of whether parents wanted church schools. It suspects that what they really want is just good schools.

Meanwhile Graham Lane, education chair of the Local Government Association, said: “If the Church of England thinks this is going to increase church attendance then it’s going to have a big disappointment.”