For Father Rupert Frania it seemed the best way. His parishioners in the Bavarian spa town of Bad Tölz had just learned a terrible secret.

It had been reported that one of their curates was a convicted paedophile, Peter Hullermann. The curate who had officiated at the children's mass. The one who had been with their sons and daughters the year before at a campsite in the mountains over their medieval town.

Frania decided to tackle the issue from an angle. In his sermon at the main mass last Sunday morning, he began with the parable of the prodigal son – and was stopped dead in mid-sentence.

"I cannot listen to that," shouted a man who was soon to have been married by Hullerman. "You just cannot dodge the issue any longer," he continued as other parishioners broke into applause and some began shouting "shut your mouth" at their parish priest.

It was a raucously rebellious start to a week in which the disclosure of hundreds of cases of alleged clerical sex abuse in the Roman Catholic church's European heartlands shook the allegiances of millions and forced their pastors to make unprecedented admissions of guilt and mortification.

In Armagh on St Patrick's Day the primate of All Ireland, Sean Brady, told the congregation in his cathedral that the clergy should admit "the full truth of our sinfulness".

Brady, who in 1975 was involved in the swearing to silence of two young victims of Ireland's most notorious clerical paedophile, was one of scores of prelates bowing their heads in disgrace in the Netherlands, Austria, Germany and the German-speaking parts of Switzerland and Italy.

So far almost 700 new cases have come to light. It was a week of unmitigated calamity for Benedict XVI, who became pope pledging to shore up Christianity in an increasingly secular Europe.

"It is such a big story because everything about it is extreme," says the religious affairs author and journalist Clifford Longley. "It is the worst crisis for the Vatican since the middle ages."

Longley believes the Catholic church is embedded in European history like nothing else. "It claims divine foundation. The pope's title of Vicar of Christ means he still claims to represent supernatural power. It has been loved and hated, with passion and sometimes loathing. It dominated the middle ages, launched the Crusades, triggered the Reformation; the Enlightenment was a direct reaction against it."

The topic of child sexual abuse provokes strong emotions, even more so when people learn of the steps taken to conceal it. Nowhere has this veil of secrecy been lifted higher than in the Irish Republic, the focus of three reports since 1994.

At the start of the millennium the Catholic church in England and Wales commissioned Lord Nolan to investigate priestly abuse. It resulted in measures to improve child protection policies and reporting procedures, but did little or nothing to address or repair the damage of past abuse.

The 2007 Cumberlege commission reviewed the church response to the Nolan report, but only two of its 72 recommendations dealt specifically with historic cases. This oversight is something support groups are all too aware of and there are demands for a UK inquiry.

Graham Wilmer, who runs the Lantern Project which has helped hundreds of sexual abuse victims since 2003, said: "The psychological and emotional damage has affected them throughout their lives. Until they made contact with us, they have had little if any help in dealing with the aftermath."

Wilmer was sexually abused by a teacher at a Catholic school and spent years trying to bring his tormentor to justice. He wants the British government to establish a truth and reconciliation commission to address the issue.

Longley says the scandal "brings into contrast the priest as man of God, symbol of purity and holiness and the sexual abuse of children as the ultimate betrayal of innocence, representing unspeakable evil. And conspiracy in high places to hide the scandal. No novelist could have invented such a plot."

In spite of earning outright condemnation for its clumsy attempts to sweep matters under the carpet, the church will probably overcome these difficult times. Unlike the Anglican Communion, which buckles under the weight of polarised opinion on homosexuality, the Catholic church always emerges, not entirely unscathed, from adversity.

Longley says the church survived nazism, fascism and communism and will outlast the EU, the UN, the US. "Bad though this crisis is, it has survived much worse. At the start of the 16th century the Vatican was little better than a shit-hole."

The question remains why this situation should be judged so grave when the numbers involved are smaller than in the US, where a 2004 report found evidence in support of almost 7,000 allegations.

One possible answer is the cumulative effect of abuse in so many countries. The crisis has spread from the US to Ireland, Canada, Australia, New Zealand and now the German-speaking heart of Europe. Not the least of the difficulties is financial. The church has already had to find some $5bn (£3.3bn) in compensation and now faces the prospect of having to fund more compensation, settlements and legal fees at the same time as disgusted Catholics stop their contributions.

Giancarlo Galli, the Italian author of Finanza Bianca, a study of the Vatican's finances, said: "There is nothing less transparent than the accounts of the church. It is known that with all the troubles in the US, the church was very much looking north, across the Alps, and above all to Bavaria, for support."

It has even been suggested that some of the cardinals who elected the then Cardinal Joseph Ratzinger as pope cast their votes with one eye on the material benefits of having a German pontiff.

This is scarcely the first crisis involving what an Australian victims' group, Broken Rites, has termed black-collar crime. But never before has a scandal cast doubts on the judgment and authority of a pope.

So far the debate has focused on his role in the Peter Hullermann affair. Hullermann was transferred to the Munich diocese when Ratzinger was archbishop, ostensibly for therapy. Though known to be a paedophile, he was moved to a parish where he was convicted of abusing another child.

Christian Weisner, the spokesman for the lay movement, Wir sind Kirche, said that in Munich: "People are asking: 'What did [Benedict] know? What did he do?'" Many Catholics in Bavaria and elsewhere were ready to accept the diocese's version – that the decision to reassign Hullerman was made by Ratzinger's deputy. But Weisner added: "The pope is asking for transparency. So he too should be transparent and ask his successor to open the archives for people to see exactly what happened."

The issue of Benedict's responsibility goes far beyond Munich to encompass his subsequent role as pope.

Weisner argues that this pope "learned more about clerical sex abuse than any other bishop or cardinal and has done more to fight it than any other cardinal or pope".

But there is a sharp distinction between his attitude while a cardinal and his activities as pope that could yet leave an indelible stain on the reign of Benedict XVI.

In 2005 he was elected days after declaring that the time had come to sweep "the filth" from his church. By then he had read – and was disgusted by – files on more than 3,000 clerical abuse cases that were channelled to his department by a decree issued four years earlier by John Paul II.

Most of the cases dealt with by the Vatican department in recent years resulted in the accused being removed, if not defrocked.

The problem for Benedict is that, as in many other theological respects, he changed his mind. The US Vatican-watcher John Allen this week published in National Catholic Reporter an extract from the transcript of a conference in Spain that showed that, as late as November 2002, Ratzinger dismissed the American abuse scandals as the result of a "planned campaign" in the media.

By 2002 the then cardinal had signed what critics claim was an incitement to the obstruction of justice. A letter he circulated to bishops the previous year reminded them that internal church inquiries into certain serious offences were covered by what is known as papal secrecy, for which the penalty is excommunication.

"The question is whether Ratzinger's past may trump Benedict's present," wrote Allen.