The Episcopal Bishop of Maryland has said the diocese is in "deep pain" over the hit-and-run in which one of its most senior bishops killed a cyclist.

Bishop Suffragan Heather Cook, the first female bishop in the Episcopal Diocese of Maryland, hit and killed cyclist Tom Palermo, 41, when she drove her SUV into a bicycle lane in Baltimore on 27 December last year. She left the scene of the incident, but returned approximately 30 minutes later.

The Episcopal Bishop of Maryland Eugene Taylor Sutton, Cook's senior in the diocese, wrote in a pastoral letter on Tuesday: "The Diocese of Maryland is in deep pain. Words barely express the depth of our shock and despair over the events and revelations of the past two weeks.

"There are still too many questions for which there are no easy answers, and we are filled with anger, bitterness, pain and tears. Our thoughts and prayers remain with the Palermo family in their bereavement and for ourselves as a diocese in mourning," Bishop Eugene said.

Cook was released on bail on Thursday, having been charged with manslaughter, leaving the scene of an accident resulting in death, driving under the influence of alcohol and texting while driving. She had been in jail since last Friday, having been unable to afford the $2.5 million bail penalty until a local bail bond surety company provided a guarantee for the full amount.

The 58-year-old bishop has admitted to having an alcohol problem. Cook's lawyer told the Christian Post on Thursday that she had gone into an inpatient alcohol treatment facility after leaving the detention centre.

She has been placed on administrative leave by the diocese, and Bishop Eugene said that the church was conducting an investigation "to consider the consequences for her actions as well as review the process that resulted in her election."

One particularly contentious issue is that diocesan officials knew that Cook had been convicted of driving under the influence of alcohol in 2010, but this information had not been formally disclosed to the people who elected her last year.

In his letter Bishop Eugene counsels his diocesan colleagues on how to respond to the tragedy, sharing his own experience.

He wrote: "I hadn't realized how much I had internalized the weight of responsibility for the tragedy, the sense of shame, and the desperate need to make it all better. Later, praying before the Icon of Christ the Pantocrater, I gazed into those piercing eyes of our Lord, asking: What is Christ wanting to say to me? And what did I want to say to him? After what seemed like an eternity, I was finally able to gaze into his eyes and say: 'Lord, it's not your fault.'"

One minister in the diocese has described the situation as an "epic failure" on the part of the Episcopal Church.

Following a diocesan meeting Rev Anjel Scarborough wrote in an open letter to her congregation at Grace Episcopal Church in Brunswick last week.

She said that although the committee that appointed Cook appear to have followed the Church's national guidelines, "our guidelines are woefully inadequate and naïve in addressing the complex problems of substance abuse and addiction."

Scarborough lists a summary of the many failures she perceives in this tragic event.

"In the end, this was an epic failure. It was the failure of a process to stop a candidate for bishop from being put forward when clearly her alcoholism was not in remission. It was a failure of Heather's to choose not to treat her alcoholism and conceal her past. This resulted in the death of a husband and father – something which Heather will have to live with for the rest of her life and for which she may be incarcerated. This was our failure of Heather too.

"As the Church, we set her up to fail by confusing forgiveness with accountability. We did not hold her accountable to a program of sobriety and we failed to ask the tough love questions which needed to be asked. In so doing, we offered cheap grace – and that is enabling."

Palermo leaves behind a wife and two children aged 6 and 4. Scarborough said that the churches in the diocese had agreed to designate the funds from the offering on 1 February to go to the education fund which has been set up for Palermo's children.The fund has already collected in excess of $80,000 according to youcaring.com.

Cook's case is scheduled for a preliminary hearing in February, but it could be a number of months before the trial.