A formal covenant is to be signed between Anglicans and Catholics in New South Wales, Australia, as a sign of warming relations between the two Churches in the state.

The Anglican Archbishop of Newcastle, Dr Brian Farran, said it was an indication of the common value they shared together and a step towards "healing" the differences.

This covenant, the second such to be agreed in Australia, is to be signed by three regional heads of the two largest Christian denominations from the Newcastle area.

A Fairfax newspaper reported the agreement would be marked by an annual ecumenical service of worship, joint clergy day and exchange of pulpits, as well as by examining the possibilities of sharing church planting.

Bishop Farran told the Sydney Morning Herald that sharing resources would benefit both parties given they were limited and emphasised the goodwill both denominations had enjoyed towards one another over the years.

"There are already cases in rural areas where resources are stretched and many 'competing' church buildings are being used for a few parishioners. This will be a statement that we don't want to waste resources," Farran said.

"There is much goodwill already between our denominations and we have been running successful combined clergy days for many years," he added. "I'm sure there will be a solid welcome by parishioners for the annual exchange of pulpits."

The covenant is scheduled to be signed on April 2 in the Newcastle Anglican Cathedral.