The decision by St Paul's Cathedral to drive protesters from its steps using force threatens to further divide the Church of England – and has prompted the Prime Minister to look at measures to curb protest camps.

The cathedral, which reopened its doors at lunchtime yesterday after closing the previous Friday on health and safety grounds, will go to the High Court next week seeking to evict the demonstrators. The legal action has isolated it from many Christians.

The hundreds of protesters camped on church land, who want to draw attention to the role the City has played in the financial crisis, as well as its continued high pay and bonuses, also face a separate challenge from the City of London Corporation, which acts for the interests of businesses in the Square Mile. City firms will argue that the camp breaches highway regulations. The Archbishop of Canterbury, Dr Rowan Williams, privately despairs of the cathedral's handling of the financial protest, The Independent understands.

Dr Williams has been criticised for not intervening as questions are asked about the conduct of the cathedral and the role played by the Bishop of London, Richard Chartres, in antagonising protesters.

Dr Williams's natural sympathies lie with the protesters but because of Church of England politics he does not want to be seen to interfere. His silence, and that of high-ranking bishops, has left the Church's leadership accused of not practising what Jesus preached – caution against greed and furtherance of a distribution of wealth.

The former Archbishop of Canterbury, George Carey, described the situation as a "debacle" which threatened to damage the reputation of Christianity.

David Cameron threatened to clamp down on the "broader issue" of demonstrators pitching tents "almost anywhere". Likening the St Paul's camp to the tents in Parliament Square, which for nearly 10 years were subject to efforts to remove them, he said: "I'm all in favour of the freedom to demonstrate, but I don't quite see why the freedom to demonstrate has to include the freedom to pitch a tent almost anywhere you want to in London. Of course we need the right to protest but these tents – whether in Parliament Square or whether in St Paul's – I don't think is the right way forward, and I do think we need to look at this whole area and I'm very keen that we do."

Stuart Fraser, the City of London Corporation's chairman of policy and resources, said: "We have no problem with a demonstration but the camp constitutes an obstruction of a public highway affecting people and businesses."

While the Corporation's decision was widely expected, the thought of the Church evicting protesters from its grounds is unpalatable for many Christians. The decision to seek a legal injunction against the protesters yesterday immediately prompted the resignation of a junior chaplain, the Rev Fraser Dyer. Compared with Giles Fraser, the former Canon Chancellor of St Paul's who resigned on Thursday, Mr Dyer is a minor figure, but his departure will cause consternation among the lower ranking clergy at St Paul's, some of whom are less than happy with the route their leadership is pursuing.

Mr Dyer's resignation letter articulated the crux of the problem. "I appreciate that St Paul's has its own means of speaking to the issue of corporate and financial conduct in the City," he said, "but am sorry that a way could not be found of – at the very least – continuing to [support] the occupation of the precinct by those with a genuine and prophetic complaint that has much in keeping with the values of the gospel."

Canon Michael Hampel, a member of the cathedral's chapter, defended the legal decision but said he was opposed to a forced eviction. He added the cathedral felt the protesters' message was now being lost.

"The central message is how do you share the God-given resources that earth affords more justly and more equitably. This lies at the heart of the gospel and is a message that St Paul's Cathedral shares," he said.

"But we believe that message has been lost in the camp. What we are committed to is how the camp can move on peacefully and that message can continue at St Paul's."

A coalition of eight Christian groups, including the Student Christian Movement, Christianity Uncut and the Fellowship of Reconciliation, published a joint statement yesterday supporting the protests.