Cardinal George Pell says it was a mistake to walk pedophile priest Gerald Ridsdale to court in 1993.
A photograph of Dr Pell, who was then an auxiliary bishop in Melbourne, and Ridsdale walking together is often used by critics of the Catholic Church as evidence it was more inclined to support pedophile priests rather than victims of child sexual abuse.
Giving evidence on Thursday, Cardinal Pell said he was asked in May 1993 to either give evidence or give Ridsdale a reference.
There were prolonged discussions with Ridsdale's lawyer, he told the child abuse royal commission by audio visual link from Rome.
"I made it quite clear that I was not going to dispute any of the allegations, that I was not going to imply any disrespect for the victims, the survivors," Dr Pell said.
"I certainly was proposing to say that although I was unaware of much of what he'd done, that already it had done great damage to the church."
The cardinal said he told the lawyer the only thing he would say was that, as a priest, Ridsdale had done good things like burying the dead and celebrating the sacraments.
The lawyer then said he wouldn't call Dr Pell to give evidence and asked him to walk Ridsdale to court instead.
"And I said yes. I now realise that was a mistake," he said.
Cardinal Pell explained he walked with Ridsdale believing - in line with Christian teaching - in being kind to prisoners.
The photograph led to the formation of Broken Rites, a Melbourne-based support group for victims of clergy abuse.
The group uses the image on its internet homepage.