Dr Andrew Purkis, who was George Carey's secretary for public affairs from 1992 to 1998, told the Independent Inquiry into Child Sexual Abuse on Wednesday that disgraced bishop Peter Ball's prominent connections were well known.
Mr Purkis, who advised on public perception of the church and media coverage, said of the bishop's friendship with the senior royal: "I don't think it was (significant) for me in the dealings I had - that was not really a significant actor that was brought to bear."
Asked if it influenced Lambeth Palace's treatment of the clergyman, he said: "Not specifically. I think it was very well known in Lambeth Palace that not just some great and good people but also loads of church people had a very high opinion of Peter and kept writing letters saying so.
"We would take that into account in the way we talked about things publicly."
Mr Purkis - who helped to draft press releases from Lambeth Palace - admitted that some statements at the time of Balls' arrest in 1992 were 'one-sided' and gave little to no emphasis on the victim.
A press release from the Diocese of Gloucester expressed hopes that the investigation would "clear his name", which IICSA counsel Anna Bicarregui said would not be accepted today.
Another statement in 1993 focused on the "great sorrow" felt by Lord Carey at Ball's resignation.
He added that the then head of the Church of England and his team did initially underestimate the nature of the allegations made against the ex-Bishop of Gloucester.
The inquiry heard from Lord Carey on Tuesday that the CofE did not follow through on steps to discipline Ball because it was inevitable he would resign because of a police investigation.
Mr Purkis said he did not know all of allegations facing Ball, expressing in a verbal witness statement that they were "an impulse of homoerotic nature that slipped beyond the acceptable boundaries of challenging spiritual practice".
He said Lambeth Palace was "grossly, insufficiently aware" of the extent of abuse allegations against Ball.
Echoing sentiments expressed on Tuesday by Lord Carey, he said the response from the CofE was inadequate due to "constitutional issues" within the institution.
Ball, 86, was jailed in 2015 for sexually abusing 18 young men over 30 years. He was given a caution in 1993 for and resigned soon after.
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