A statement issued on behalf of himself and family said the former governor general was "stepping back from most aspects of his public life following a diagnosis of cancer. This is to allow him to focus on addressing the health issues and to spend more time with Lady [Beverley] Reeves and his family."
The 78-year-old asked for privacy and directed comments to Taranaki's Bishop Philip Richardson.
Bishop Richardson said he was shocked when he found out Sir Paul, who was the first Maori to hold the position and is also a former Archbishop of New Zealand, was ill.
He wouldn't be drawn on what type of cancer Sir Paul has, however, he said he was doing well.
"He's our most senior...and our most respected bishop. He's always there to advise us and we continue to look forward to being able to seek that advice from him and take his counsel.
"Sir Paul is an incredibly strong person and has a great outlook on life and has a wonderfully strong and supportive wife and family and they're doing really well.
"I'm very confident he will deal with this in the way he deals with everything - with strength and courage.
"We are all wishing him and Lady Beverley well and certainly they will be very much in the prayers of the people of the church."
However, Bishop Richardson said Sir Paul wasn't withdrawing from all of his public roles, he is to continue as AUT's chancellor because of its personal importance.
Canon Hone Kaa said his friend of Te Ati Awa decent had been kept busy in recent years with iwi work in Taranaki.
"Apparently, he's cheerful enough and I guess it's just a matter of wait and see."
Sir Paul was governor-general from 1985-1990.
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