Levies imposed on parishes to pay into a fund for victims of clerical sex abuse are to be abolished, the Catholic diocese of Derry has announced.
Dr Hegarty admitted imposing a levy on all parishes
Bishop Seamus Hegarty and his diocesan priests have also decided to return all money already paid by parishioners.
It follows an emergency meeting in Londonderry to which the bishop was not invited.
He had faced criticism because he paid into the Stewardship Trust Fund without the knowledge of many parishioners.
Dr Hegarty told BBC Northern Ireland's Spotlight programme he was raising the money through a 3% levy imposed on all parishes.
Following the programme, Dr Hegarty issued a statement expressing "sincere regret at the disquiet" caused by his actions.
He also said a letter explaining the church's obligations would be circulated throughout the diocese as soon as practicable.
However, priests in the diocese were invited to a meeting at the Iona Retreat Centre at Termonbacca in the city on Friday to discuss the controversy.
They were asked to attend by priests in charge of the four deaneries in the diocese.
Donations were being paid into a trust for victims of child sex abuse
In a statement following the meeting, Monsignor Joseph Donnelly said: "The bishop and priests of Derry diocese have decided to abolish the 3% levy on parishes for the Stewardship Fund and return to the parishes all monies that have already been paid."
He said the priests had been clear in the recommendations they made to the bishop.
"The thought of the 3% was a difficult one for people to understand and accept. I think it was the manner in which it was presented that was the main issue," he said.
"It came without due notice to the people or due consultation."
Earlier on Friday, Bishop of Clogher Dr Joseph Duffy said 105,600 euros had been paid from the diocese into the Stewardship Trust.
"A portion of this sum came from voluntary personal contributions made by the priests of the diocese on foot of an invitation by the bishop," he said.
The remainder was from a general purposes fund made up of money and assets accumulated over the years, the disposal of which was at the bishop's discretion, he said.
"No money collected from parishes for parochial, diocesan or specific purposes has been used for the Stewardship Trust."
On Thursday, Catholic Primate Sean Brady said no money paid by Catholic parishioners for specific purposes had been used for the fund.
Dr Brady said cash donated by congregations for missions and the education of student priests was not diverted to the fund.
The fund was set up by the Irish bishops to fund child protection initiatives and provide financial redress to victims of child sexual abuse by priests.