The Archbishop of Canterbury Dr Rowan Williams has thrown his weight behind the Occupy protest at St Pauls by saying that society is paying for the "errors and irresponsibility" of the banks. His intervention comes in the wake of another resignation at the cathedral over whether the protestors camped outside should be evicted.

In an article for the Financial Times, Dr Rowan Williams says the banking sector has refused to reform its practices, and failed to curb what he calls "still-soaring bonuses".

He made the comments following a day of high drama that saw the cathedral announce it would no longer be taking legal action against the demonstrators, who have been on the doorstep of the historic landmark for more than a fortnight.

Dr Williams writes about the so-called Robin Hood Tax: "This means a comparatively small rate of tax (0.05 per cent) being levied on share, bond, and currency transactions and their derivatives, with the resulting funds being designated for investment in the “real” economy, domestically and internationally.

"The objections made by some who claim it would mean a substantial drop in employment and in the economy generally seem to rest on exaggerated and sharply challenged projections"

On Monday, Graeme Knowles, the Dean of St Paul's Cathedral, resigned over the handling of anti-capitalism protests, saying that due to "insurmountable issues" his position was "untenable".

His resignation came days after Giles Fraser, the Canon of St Paul's, said an eviction of the protestors would be "violence in the name of the church" after other senior clerics backed calls to remove the camp.

Stepping down, Rt Reverend Graeme Knowles admitted with "great sadness" that he believed he was no longer the right person to lead the Chapter of the cathedral.

The Archbishop of Canterbury, who is reportedly to resign early next year, expressed his dismay at the latest development:

"The events of the last couple of weeks have shown very clearly how decisions made in good faith by good people under unusual pressure can have utterly unforeseen and unwelcome consequences, and the clergy of St Paul's deserve our understanding in these circumstances."

The City of London Corporation also said it would be "pausing" its legal bid to clear the encampment - but officials are expected to make a further announcement on the matter later.