There is no constitutional reason why a Prime Minister cannot be a Catholic or any other religion.
The problems arise from Roman Catholic and Jewish Relief Act's of 1829 and 1858 repectively which state that no Catholic or Jew may advise the Monarch on eccleisiastical matters, this simply means that if we had a Catholic Prime Minister, he would be barred from appointing members of the Clergy to the House of Lords or appointing Arch-Bishops, someone else would have to advice the Queen on the Governments behalf I would imagine.
The only positions actually barred from being Catholic are the Monarch themselves or their spouses, this is a legacy of the Act of Settlement that followed the Glorious Revolution in 1688.
There are many Catholics in high positions in Parliament and Government, in fact Iain Duncan Smith, a previous leader of the Tory party is Catholic as is Charles Kennedy of the Liberal Democrats and both could in theory have become Prime Minister.