And the serious "reputational, political and canonical risks" involved could trigger a perception that government money meant for the education of children was being diverted to other church activities, the paper says.

The internal briefing paper, obtained by Fairfax Media and dated early April, was prepared for the heads of the 11 different Catholic education offices in NSW, who each report to their local bishop.

At least one diocese, Newcastle-Maitland, has confirmed to Fairfax Media it is considering a proposal to charge its schools rent.

Two others, Armidale and Bathurst, did not rule it out when asked if they had it under consideration.

The dioceses of Lismore, Paramatta, Sydney, Broken Bay, Wollongong and Wilcannia-Forbes said they did not have plans to start collecting rent from the schools they administer, and Wagga Wagga said it had not been discussed.

The internal paper warns that "following the case of Islamic schools where funds appear to have been diverted from the operational aspect of the schools to a governing authority, there is a risk that the 'social compact' may be eroded if we are perceived to be acting in a similar vein" .

"The social compact is critical in underpinning the political legitimacy of ongoing [ government] funding for Catholic and independent schools".

The paper notes that the Catholic education system is locked in negotiations with the federal government over funding beyond 2017.

"Significantly, our capacity to negotiate will be restricted if proposed rental for schools were made known to the government at this time."

Catholic authorities in NSW receive close to $2.5 billion a year in education funding from federal and state governments, which goes towards the running of 545 Catholic diocesan schools, accounting for 230,000 students statewide.

The schools come under the individual administration of the state's 11 Catholic dioceses, meaning decisions on school rental fall to individual bishops.

Armidale and Bathurst dioceses deflected questions about charging rental to the NSW Catholic Education Commission, which said "any financial arrangements between diocesan schools, schools authorities and their dioceses are made locally".

But it said schools had to comply with a recently strengthened section 83C of the NSW Education Act, which specifies that funds granted for educational purposes must be used to support school education, and with similar federal safeguards.

An internal report prepared by a working party for NSW Catholic bishops in June last year noted that "NSW dioceses and their parishes have provided a longstanding and continuing subsidy to their Catholic schools" through not charging rent.

It said rent foregone was "conservatively to be estimated in the range of circa $19 million to $28 million per annum."

But the April 2017 paper prepared for the heads of the 11 Catholic education offices issues the sharp warning that "any proposed strategy of raising rent from schools runs the risk of being seen by current parents (and the community) as a means for paying for the 'sins' of the clergy. Even if this is not an informed position, it needs to be recognised that strong reactions will be held by parents. This may lead to parents withdrawing their financial support for schools and/or parishes, and , possibly in the extreme, terminating their child's enrolment."

It also noted that some dioceses were struggling to "sustain financial viability for their pastoral works".

Earlier this year the Royal Commission into Institutional Responses to Child Sexual Abuse revealed nearly 4500 claims of child sexual abuse within the church over the past 35 years. So far the church has paid out nearly $280 million in compensation.