Between 1999 and 2015, more than 700 sub-postmasters were prosecuted after the faulty Horizon accounting software made it look as though money was missing from their sites.

Fewer than 100 convictions have been overturned to date in what has been described as the most widespread miscarriage of justice in UK history.

Last week it emerged Ms Vennells was shortlisted to become Bishop of London in 2017 -- the third most senior role in the Church of England after the Archbishops of Canterbury and York -- despite suggestions that sub-postmasters had been wrongly prosecuted having emerged at the time.

Church sources claim the Most Rev Justin Welby, the Archbishop of Canterbury, was personally supportive of Ms Vennells' candidacy.

The late Queen's former chaplain, the Rev Canon Jeremy Haselock, an associate priest at Great St Bartholomew's in the City of London, criticised the alleged endorsement, writing on social media: "Surely this is the point at which Welby must go. Another demonstration of his complete lack of sound judgment."

In the post, seen by The Telegraph, he added: "His backing for this woman for episcopal office shows how completely he fails to understand the nature of that office.

"His total failure to bring pastoral care to the fore during the pandemic and the disastrous decisions he made at that time shows his complete and utter lack of understanding of the Church and its ministry. His has been a terrible primacy and clutching his GCVO [Royal Victorian Order], he should go."

Rev Canon Haselock was appointed Chaplain to Her Majesty the Queen in 2013, a title he held until 2021.

Ms Vennells was ordained as a priest in 2006 and had been an associate minister in the diocese of St Albans while at the same time running the Post Office.

She was interviewed for the role of Bishop of London in 2017. By 2015, the Post Office had already halted prosecutions of sub-postmasters, and in 2017 legal action was launched against it by a group of 555 sub-postmasters following a long-running campaign.

Church sources said the Archbishop of Canterbury was supportive of Ms Vennells' candidacy, with one saying: "I have heard that Welby pushed for her. Apparently the meeting of the Crown Nominations Committee in 2017 was quite fortuitous because Paula had no parish experience and was a self-supporting minister.

"Over the past 10 years the church has become more of a business model, so the whole idea of Paula Vennells being the supposed favourite candidate of Justin Welby links to the whole businessification of the church under his reign."

Another source said the Archbishop was known to be supportive of Ms Vennells, who sat on the church's ethical investments advisory group, adding: "Justin was close to her. He was always very supportive of her when she was a member of the Church of England ethical investment advisory committee."

On Tuesday, Ms Vennells said she would hand back her CBE for services to charity and the Post Office amid the continuing fallout from the Horizon scandal. More than 1.2 million people had signed a petition calling for her to be stripped of it.

In a statement she said: "I am truly sorry for the devastation caused to the sub-postmasters and their families, whose lives were torn apart by being wrongly accused and wrongly prosecuted as a result of the Horizon system."

Lambeth Palace declined to comment.

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