In June 2007, when the property market was at its peak and the credit crunch was yet to arrive, the Church made investments in Stuyvesant Town and Peter Cooper Village, two Manhattan housing estates situated along the New York's East River. But the projects incurred huge debts and collapsed when the US property bubble burst next year.

The complexes were bought for $5.4bn in 2006 by a consortium led by the American property group Tishman Speyer in what turned out to be the biggest US residential property deal ever. The Church of England acquired a 4 per cent stake in the project for £40m.

However, Tishman could not repay the $4.4bn loan it had taken to finance the deal because of the fall in real-estate prices. The company has now turned over the entire property to its creditors. The value of the estates is today estimated to be less than $2bn.

The Church said it had written off the entire investment and was looking into lessons to be learnt from the bad deal.

The Church Commissioners hold about £4.4 billion in assets to sustain Church operations in the UK.