The Anglican Diocese of Tasmania has rejected the proposed finding against Bishop Newell, who was the church's Tasmanian bishop from 1982 until he retired in 2000.

Its lawyer Neil Clelland, QC, called on the commission to extend Bishop Newell a greater level of "understanding" which it had granted other church officials.

The landmark Royal Commission into Institutional Responses to Child Sexual Abuse held public hearings in Hobart earlier this year.

Under the microscope was the diocese and the Church of England Boys' Society (CEBS) -- a scout-like organisation connected to the Anglican Church.

One of Tasmania's worst paedophiles Lou Daniels, a former Burnie archdeacon, was a prominent member of CEBS.

Ms Sharp said evidence showed he colluded with high ranking CEBS official Bob Brandenburg to molest at "least two of the same boys".

Adelaide-based Brandenburg killed himself in 1999 after being charged with nearly 400 child abuse offences.

Ms Sharp said Daniels was an associate of fellow Tasmanian paedophile priest Garth Hawkins and both men were aware of each other's predilection for boys.

In further evidence of the paedophile ring, prolific child abuser, priest John Elliott, organised for a 13-year-old to travel to Tasmania from interstate and stay with Daniels, who abused the boy.

Ms Sharp urged the commission to find that in 1987 Bishop Newell did not encourage three boys, who had confided in him about Daniels' abuse, to go to police.

Seven years later the Bishop responded to the allegations by merely sending Daniels a letter of "solemn admonition".

"The letter ... had the effect of covering up the allegations. Bishop Newell's approach had no regard for the need to protect children from further sexual abuse from Mr Daniels," she said.

Mr Clelland said there was no evidence the letter perpetuated a cover up.

"It can be accepted that the approach adopted failed in [protecting the boys] but to contend that Bishop Newell had no regard for the need to protect children is not supported by the evidence and is manifestly unfair," he said.

Ms Sharp said it was open to find former governor-general Peter Hollingworth had misled a church inquiry when saying he believed an allegation against serial paedophile priest John Elliot was "a single, isolated and distant occurrence".

Elliot was later convicted of more than 30 child sex offences.

The commission will consider Ms Sharp's proposed findings before handing down its final report.