The Anglican Church in Tasmania has been ordered by the Supreme Court to stop its proceedings against the Bishop.

In its 2017 report, the Royal Commission into Institutional Responses to Child Sexual Abuse highlighted failures of the church in Tasmania and criticised Bishop Newell, who allowed a now-convicted paedophile to stay in the church.

The commission referred to evidence he had been made aware in 1987 that now-convicted paedophile Louis Daniels had sexually abused three boys.

He allowed Daniels to stay in the church, and promoted him to a high-ranking position two years later on the basis he "amend his life".

The church instituted disciplinary proceedings after the commission's criticisms but last year, shortly before the Diocesan Tribunal was to begin hearing the case, Bishop Newell applied to the Supreme Court for a stay of proceedings based on ill-health.

The Bishop of Tasmania Dr Richard Condie said he had been advised that application was successful and that the court had prohibited any further proceedings against Bishop Newell.

"We're very sad for survivors of sexual abuse who were hoping for closure in this matter and many others who are disappointed in the outcome," Bishop Condie said.

"The royal commission findings were very critical against Bishop Newell and those findings are uncontested as far as I'm concerned and those findings are the reason why we entered into this discipline process."

Bishop Condie said there was no avenue for the church to appeal against the decision.

Beyond Abuse spokesman Steve Fisher said abuse survivors were feeling "angry and totally disillusioned with the process that the Anglican Church unfortunately had to comply with."

"Today is a very sad day for survivors of child sexual abuse, perpetrated by priests within the Anglican Church, who were unfortunate enough to have been abused whilst Bishop Phillip Newell was in charge [of the Diocese]," he said.

"The only thing that gives us any comfort is that if the medical evidence is true, his final years will be spent with very little quality of life."

Philip Newell was Bishop of Tasmania from 1982 to 1999.

He is no longer able to exercise in the ministry, having resigned his licence to conduct services in 2016.

As a result of the court decision, Bishop Newell will retain his title.

The church tribunal process was the only way to strip Bishop Newell of his holy orders.

Disciplinary options, such as a letter of admonition or a permanent ban from the ministry, would also have been available to the church.