Cardinal Cormac Murphy-O'Connor, the Archbishop of Westminster, said it was "increasingly recognised" that voluntary organisations were frequently more successful than state initiatives in supporting the most socially excluded.
He said: "In our developed welfare state, the assumption is often made that politicians hold the answers to eradicating poverty.
"However, whilst it is essential that the state provides help and assistance, everyone has a part to play in taking responsibility to care for a neighbour in need - it cannot be something which is left just to Government."
The Cardinal today announced around £50,000 worth of grants to seven organisations in London working in causes such as cerebral palsy, homelessness and drug rehabilitation.
The money comes from the newly-launched St John Southworth Fund, set up by the Westminster Diocese, which will have around £200,000 to hand out every year for work with the most vulnerable and disadvantaged in London.
The Cardinal said although a place of "great opportunity and enterprise", London was also a city where many people experience suffering as a result of poverty and marginalisation.
He said many children were living below the poverty line and homelessness and sub-standard housing affect large numbers of families and single people in the city.
He added that many migrants were living on the margins of society.
He highlighted the work of Catholic voluntary organisations in London such as the Cardinal Hume Centre, the Notre Dame Refugee Centre, and the Women at the Well project (women@thewell), which helps women exploited through prostitution and sexual trafficking.
The Cardinal's remarks have been made after figures were released this week by the National Council for Voluntary Organisations (NCVO), and the Charities Aid Foundation (CAF) showing that Britons this year gave £200m less to good causes than in 2006.
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