The closure comes at a sensitive time, on the eve of Pope Benedict's visit to Sydney when the Vatican is under intense pressure to issue a public apology to Australian victims of clerical sex abuse.
Encompass Australasia, which operates from a private psychiatry clinic in Ashfield, has told its clients it will close pending a restructure on June 30 because a "significant downturn in business" means it is no longer able to financially support its services.
The psychosexual program was established in 1997 jointly by the Australian Catholic Bishops Conference and the Australian Conference of Leaders of Religious Institutes to treat those in the church guilty of offences against children, or of "adult boundary violations".
It has in recent times been run as an independent service for all denominations. But the Australian church says the programme has been operating recently without sufficient referrals, and other models, including private referrals, are now more effective.
"This is not a case of ignoring the problem but dealing with the problem most effectively," said Father Brian Lucas, general secretary of the bishops' conference, who said the church maintained its strong stand against any forms of abuse.
Encompass is understood to have seen as many as 1300 clients, including 250 in its six-month programme for people with serious psychosexual disorders.
The programme aimed to give offenders the skills to stop them reoffending.
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