Disgraced former Post Office chief executive Paula Vennells was shortlisted to become the Bishop of London in 2017.
The Rev Paula Vennells, 68, who handed back her CBE yesterday, is an ordained Anglican priest.
Her application for the role of Bishop of London – the third most senior position in the Church of England – was reportedly pushed by Justin Welby, the Archbishop of Canterbury, sources told the BBC.
She was beaten to the role by Sarah Mullally, who used to be England’s chief nursing officer before she became a priest.
Vennells handed back her CBE yesterday
PAThe 68-year-old was ordained as a priest in 2006 and had been an associate minister in the diocese of St Albans while at the same time running the Post Office.
The revelations come after the fallout of the Horizon IT scandal which led to the wrongful prosecution of hundreds of sub-postmasters.
Between 1999 and 2015, hundreds of staff members were accused of false accounting, theft and fraud after using the new Horizon system.
The awareness of the case came to the forefront of public attention following the ITV drama Mr Bates vs The Post Office.
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Her application for the role was reportedly supported by Justin Welby
PAA spokesman for the Bishop of St Albans said people should not judge her based on the show and asked viewers to reserve their judgements until a public inquiry is heard.
The spokesman told The Telegraph: “It is a bit like The Crown where it diverges from actual fact into TV.”
They added: “The television show has... diverged from established public fact and that is why we need the appropriate processes to go ahead.”
Yesterday, Vennells handed back her CBE after a petition calling for her to do so gathered over a million signatures.
Rishi Sunak also joined the calls, saying he would “strongly support” the Honours Forfeiture Committee if it decided to look at revoking her award.
Public awareness of the Post Office scandal has surged recently after the popular ITV drama
PAVennells said in a statement: “I continue to support and focus on cooperating with the inquiry and expect to be giving evidence in the coming months.
“I have so far maintained my silence as I considered it inappropriate to comment publicly while the inquiry remains ongoing and before I have provided my oral evidence.
“I am, however, aware of the calls from sub-postmasters and others to return my CBE. I have listened and I confirm that I return my CBE with immediate effect.
“I am truly sorry for the devastation caused to the sub-postmasters and their families, whose lives were torn apart by being wrongly accused and wrongly prosecuted as a result of the Horizon system.
“I now intend to continue to focus on assisting the inquiry and will not make any further public comment until it has concluded.”