Cardinal Philippe Barbarin, Archbishop of Lyon, made the admission in a statement after a meeting at the bishop's residence in Lyon to discuss accusations the church failed to report several child sexual abuse cases in the area.
The meeting, which was held behind closed doors and attended by some 220 priests, heard from a victim of Bernard Preynat, a priest who has admitted sexually abusing scouts under his supervision over 25 years ago.
The media-friendly cardinal, one of the top figures in the Church in France, has vehemently denied any cover-up.
"The cardinal recognised that the diocese committed errors in the management and nomination of certain priests," the statement issued after today's meeting said.
"We failed to fulfil our obligation to investigate and to seek the truth," Yves Baumgarten, vicar-general of the diocese, told a later press conference.
The scandal is the worst to hit the Catholic Church in France since 2001, when a bishop was given a three-month suspended jail sentence for failing to inform authorities about a paedophile priest.
The Catholic Church in France has announced plans for an independent commission of secular experts to advise bishops on handling allegations of clerical abuse as well as for local units in charge of listening to victims' complaints.
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