The Archbishop of Canterbury today launches his plan to take on and outdo pay day lenders.

Archbishop Justin Welby said the To Your Credit initiative will use all the resources of the Church and of Christian organisations to help people deal with finance "as a servant, not as a really cruel master."

Speaking in a video on the project's website he said: "All of us from time to time need access to some financial flexibility. But in recent years, it's been quite hard to get that at reasonable cost. The To Your Credit initiative is seeking over time to make good finance, both to save and on occasion to borrow, available to everyone at a reasonable cost. It's to get away from people who seek to take advantage of other people's needs."

The Archbishop's project has already led to hundreds of indebted and poverty-stricken people signing up for cheaper lending with credit unions, along with dozens of members of the middle classes.

Welby spoke out against the payday lenders last year and committed the Church to supporting credit unions as an alternative to the "very, very costly forms of finance" that payday lending services represent.

Sir Hector Sants, former chief executive of the Financial Services Authority, who heads the Archbishop's task group on the issue, said the project had the ability to "galvanise and energise" large parts of the community, not just churchgoers.

There had been a "loss of trust" in banks which had caused a lot of disruption to the overall efficiency of the financial system.

He said large banks did not want to provide financial services to a "certain segment" of the population, particularly those on lower incomes, forcing them to get finance from high-cost lenders or leaving them with no way of getting cash at all.

The launch came the day after the second of three pilot projects in the Church of England, in the London diocese. The aim is to use the Church's network of 16,000 parish churches nationwide to help people find salvation from debt through credit unions, and offer a way of getting finance without having to go to a payday lender or loan shark.

The first branch of the Church Credit Champions Network was launched recently in Peckham. The second was launched yesterday in Hackney with a march down a series of roads and streets populated by loan and betting shops, which sometimes exist side-by-side. A third is to be launched soon in Liverpool.

Rev Rosemia Brown, of St James' Clapton, said: "London deserves a community credit union. That's what we do here, that's what we are all here together."

The target in Hackney was to get 100 new credit union members in a day with at least 500 in a year. By the end of yesterday, 132 had signed up.

Rev Chris Woods, of St Anne's Hoxton, said credit sharks were "at large" in Hoxton. The credit union initiative was an effective way to counter them.

David Barclay, of the Credit Champions Network, said: "We've seen payday lenders and betting shops spring up in this borough and cause people lots of misery, trapping people in spirals of debt. We want to put our money where our mouth is and show that, actually, there's a better alternative for people and it's the credit union."

Rev Rob Wickham, rector and area dean of Hackney, said that given the proliferation of lenders charging high interest rates, the aim was to help people borrow money at far lower cost. "There's a number of people I've met in my travels who have been really squashed down by debt." They were struggling to put food on the table or pay the rent.

Andy Walton, of the Centre for Theology and Community, said: "This is part of the Archbishop's response to payday lending and trying to boost community finance." The aim was that from the three pilots, the project would go national. "We are really hoping to sign up hundreds of thousands of people from churches to credit unions around the country because we think they're great news, not just for people who are on the edge financially and excluded, but also we think for middle class people, people with a bit more disposable income. It's a great thing for people, to get involved in their local credit union."

Sir Hector said in Hackney it had been a "fantastic" experience to see how the Credit Champions Network had taken off. "We have now got one hundred churches involved." He said there was "a lot of enthusiasm" and he was "very very confident" it was going to be successful.