When the Catholic Archbishop of Dublin, Diarmuid Martin, solemnly ordained this year's crop of new priests in his diocese last month, he called them all by their first names.

This did not involve any great feat of memory on his part since there were, after all, only three of them. Michael, Richard and Dan are the only newly ordained priests for Dublin's million-plus Catholics.

The tiny number is an ominous indication that Ireland, which once exported Catholic clergy around the world, is running out of priests. The manpower crisis for the Irish church is one which may well change its fundamental character. A new order is taking shape in which congregations will be sharing power with an ageing, shrinking priesthood. The faithful are now being invited not simply to be passively supportive, but to help rescue a church in deep trouble. This will represent a huge change for a country which the Rev Ian Paisley used to denounce as "priest-ridden".

The old model of the priest as a stern and authoritarian figure has long since gone, swept away in a more prosperous society. Now the church is coming to terms with the fact that almost no one in Ireland wants to be a priest any more. Michael Kelly, one of Dublin's three new priests, said: "When I told people I wanted to be a priest they were shocked and disbelieving. Some of them thought I should be committed."

This is in dramatic contrast to the pride formerly felt by Irish families when a son joined the priesthood. Malachi O'Doherty, author of the new book Empty Pulpits, confirmed: "Now if a youth says he wants to be a priest, there is huge discouragement. It is seen as a very silly career move."

Joe Mullan, a senior Dublin priest, agreed the slump in vocations had been startling. "It happened extraordinarily quickly," he said. "I was ordained 22 years ago, and when I was in the seminary there were a hundred of us, just for the Dublin diocese."

Fr Mullan is now nearly 50 but is regarded as unusually youthful, given that the average age of a Dublin priest is 63. He smiled ruefully as he recounted: "A woman in the sacristy at a wedding on Saturday looked at me and said, 'Are you the parish priest? God, you're very young.'"

Ireland still has thousands of priests, but they are ageing and many are in ill-health. They are supposed to retire at 75 but the chronic shortage means bishops often ask them to stay on longer. The Irish Catholic newspaper estimated that 160 priests have died in the past year. The paper's verdict that this is a crisis which is affecting morale around the country is readily confirmed by many clerics. The irony is that Protestant churches report no such problems.

"It's an almighty struggle for a lot of priests," said Fr Dan Carroll of Kilkenny, "and it's not going to get any easier. Morale can be low at times – you are just working so hard and there's nobody coming behind you."

So how many are in training for his diocese? "None," he answered tersely. "We have had no candidates for the priesthood for 12 years, maybe 15, no intake in that length of time."

Kevin Mullan, a Tyrone priest, remembered the old days when Ireland helped stock the world with clerics. "We used to have a superfluity of clergy," he said. "Way back we had so many priests they were sent on loan to Glasgow or England or America."

The decline in numbers is seen throughout the church. With few new nuns and monks, many imposing former convents and monasteries have been sold and transformed into modern apartments as Ireland has moved from austerity to affluence.

The church is still heavily involved in education, but the crisis is affecting this too. The Christian Brothers, for example, have had to relinquish the day-to-day running of their schools because of their dwindling numbers.

So how did the church lose out so dramatically in terms of personnel, finances, power and standing? Fr Mullan offered one explanation: "It's the secularisation of Ireland, the reduction in family size. Ireland has just caught up with the more secular Europe with its more libertarian values – good values around freedom and individuality and personal choice."

Others believe the church has brought many of its difficulties on itself. In particular, the child abuse scandals of the past decade dealt the severest blows to its reputation, partly because of the abuse itself and partly because of its defensive reaction.

But long before that the old authority was ebbing away. The Irish, like much of the Western world, disregarded the 1960s Vatican strictures against contraception, but the episode significantly eroded the deference to Rome. While abortion remains illegal in almost all cases, divorce and contraception have been legalised. The triumphant 1979 visit of Pope John Paul II seemed to confirm Ireland's status as "the most Christian country in the world," as hundreds of thousands turned out to see the pontiff. Yet with hindsight it was just another staging post in decline.

In the years that followed, the Pope's two most prominent warm-up men, a bishop and a prominent priest, were found to have secret sons. Ireland goggled as the bishop's mistress told of their affair on television: "It was like I was on gossamer wings," she trilled. The resulting damage laid the Irish church low, to the extent that one bishop said sorrowfully that society had become "to a very large extent de-Christianised".

Attendance at Mass has dropped sharply, though this was from a very high level and it remains higher than in many other European countries. The picture is patchy, however: in some of Dublin's poorest areas it stands at well below 10 per cent. Yet in other places the pews are almost full; the veteran Derry priest Oliver Crilly, for example, said that his church can be filled to overflowing. "Eleven o'clock Mass last Sunday was a full house," he said. "It really bolsters you, buoys you up, to see that."

He attributed this high turnout to his practice of co-opting parishioners into the running of the church; he has been something of a pioneer in introducing congregational co-operation. "Some priests would be fearful of this," he said, "but there's absolutely no need to be. They can see it as a sort of competition, they're afraid that if they give people more power they're going to lose power.

"But it isn't like that – it's a collaborative effort, a sharing of responsibility. It takes a lot of weight off the priest."

Confronted with the priest shortage, Archbishop Martin and some of the hierarchy are now convinced that involving the laity holds the key to countering the present crisis. The informal co-operation introduced by Fr Crilly and others is now to be formalised with a new structure of part-time and full-time workers. In other countries this might seem little more than common sense, but in Ireland it will be a sea-change. The Dublin diocese is to have a new system of lay people who will work alongside its priests. In Dublin every parish has been mandated to have a pastoral council. Parish pastoral workers will be properly salaried – and women will, the church pledges, be employed on the same basis as men.

"For us to be able to survive we must share the workload, said Fr Mullan, "but it's culturally quite a challenge for the community – and for us – to accept that this is the change that circumstances now demand."

Not every priest is in favour of such radical reform. Fr Mullan conceded: "It's quite threatening to the professional identity of the priest when non-ordained people come into work in the parish. They're to be paid more than the clergy, and perhaps in time their status will be equal to or greater than the clergy."

Despite the lack of universal enthusiasm, some veterans are highly receptive to the idea. Fr Sean McKenna, who works on the Derry-Donegal border and has been a priest for 23 years, is relaxed and supportive.

"It's up to us to reorganise things and adapt to the change," he said. "We have to recognise whatever God is saying to us about combining the roles of the clergy and the laity."

And the idea holds no terrors for an even more experienced cleric, Sean O'Dwyer of Co Tipperary, a priest for almost 50 years. His attitude is shaped by the fact that he served as a missionary in Peru. There, he explained, one priest could be looking after 50,000 people, and could only do so with the help of hundreds of volunteers.

In his opinion: "We have to learn from the missions system. The only answer to all this is with lay involvement. The co-operation of the people is essential." And the future of the church in Ireland? "Humanly speaking you might think it's going to get worse and worse," he said. "But it's God's church, and maybe he's putting us to the test to find other ways of stirring people."