Christian groups have announced that they will form a “ring of prayer” around the Occupy London/St Paul’s protest, after church authorities went ahead with a plan to gain a legal injunction against the protest and have it removed.

Spokespeople for several groups, including mild-mannered outfits such as The Society of Reconciliation, and more upfront groups such as the Student Christian Movement, have affirmed their support for the protesters, and their criticism of the St Paul’s authorities, describing their handling of the matter as a “car crash”.

The announcement, made by Christian activist Tanya Paton, comes after a three hour “sermon on the steps” of St Paul’s on Saturday afternoon, involving people from several faiths, as well as agnostics. The participants included some truly venerable types, including Bruce Kent, one of the founders of CND, one of the groups that spawned the worldwide nuclear disarmament movement in the 1950s.

On Sunday Richard Chartres, the Bishop of London, met with protesters on the steps, to talk and field questions, which gained some kudos from the protesters. However, as veteran activist Peter Tatchell noted: “Bishop of London told us nothing of substance. He WILL sanction eviction of #OccupyLondon protesters”.

Chartres was also on the back foot over stories that a report by the St Paul’s Institute, attached to the cathedral, had been suppressed because its survey of city — i.e. bankers — attitudes to their own salaries and the financial crisis, due to the fact that the findings showed them to be, erm, somewhat unChristian.

The meeting came as a second official of St Paul’s resigned, following the departure of Canon chancellor Giles Fraser on Friday, with Reverend Fraser Dyer also announcing that he would resign.

Everyone agrees that the handling of this matter by the Church of England has been a disaster. Chartres himself sounds exactly as you would expect an ambitious politicking C of E bishop to — he talks of being in negotiation with city “players”, and told protesters that “I am involved in ongoing discussion with city leaders about improving shareholder influence on excessive remuneration”.

As a slogan, it’s not really up there with “sell all thou has and give it to the poor”. Indeed no one is really standing up to defend them — even self-styled “fogey” Anglicans, less than enamoured with notions of “social justice” have denounced the Church authorities. Others are simply remaining silent.

But the latest events are something more than bad PR. They represent an unprecedented challenge to the authority of a Church that is part of the British state. Should the Church’s lawyers ultimately cause the police to pour into St Paul’s churchyard, it will be one arm of the state requesting the help of another. If there is a ring of Christians there as the first line of defence, then the Church will have turned on itself.

This has been the unintended consequence of the protests being moved into St Paul’s churchyard, after being denied access to the adjacent Paternoster Square, where the stock exchange is based — it has focused the protest not on the mechanism of capitalism, but on the moral values underlying the society that has made such a style of capitalism possible. This has turned it into a far more powerful challenge to the status quo than any protest at the stock exchange would have been. It has divided the Church against itself, revealing its dual character, as a movement with a radical commitment to universal love and responsibility, and the chaplain to wealth, negotiating for its existence with the “players”.

That the Church would split over this matter — in a way that the city never would — was always likely, though never inevitable. It relied on the people called by conscience to perform a public evensong last week, who forced the cathedral to reopen, its “elf and safety” concerns suddenly allayed. But once the question of conscience was forced, there was little chance the Anglican establishment could regain control.

Therein lies the momentous nature of this encounter. For the bankers et al of the city have any number of thin rationales to sustain their self-belief — from simple individualism, to inherited and barely examined notions of what is “proper”, to various Ayn Rand-Hayek-Gekko mashups. But as Hayek himself noted, the social system he proposed can never ground itself.

The market is inherently nihilistic, and religion — the ultimate simple ground to a meaningful life — becomes a way of fixing the market in place. In the US, the utterly destructive effect of the market has required a doctrine of utter simplicity to undergird — fundamentalism, and the blithe notion that everything is as God intended it.

But elsewhere, such self-indoctrination is impossible. The Anglican Church intersects with power and British life in all sorts of barely visible ways, yet as a Church, rather than a cult, it must carry on a rational dialogue, and body forth something resembling consistency and plain sense in its dealings.

That is what its leading figures, in the past week, have so conspicuously failed to do. So ordinary parishioners have taken it over, and it is no exaggeration to call this a revolution. For to stand with a group, many of whom are atheists, and some anti-religious, against your own Church leadership, is to “spill” the Church, to make a provisional one — not departing from it, as a sect or new denomination, but to challenge its ownership from within.

Here, it’s the Church. In Greece, the public disrupts a national holiday that commemorates the country’s resistance to fascism, halting military marches and forcing the President to depart. In Australia, the head of Qantas shows the public that he would rather act to destroy an airline built up by the public over a century, to preserve the power of capital. Across the world, “leaders” are showing that they just don’t get it. They will continue to do so, and to build such movements better than any camp could ever do. God willing.