The government leader has categorically refuted that the closure is down to anything other than economic reality.

Fianna Fail's deputy leader Eamon O Cuiv challenged Kenny to admit his row with the Catholic Church over the Cloyne Report was the real reason behind the decision to close the embassy at the Vatican.

First of all, it was made for "economic reasons", which means that keeping a diplomatic mission at the papal court is supposed to be expensive (implicitly, uselessly expensive). Worse, the costs just seem to be a pragmatic and neutral explanation to cover up a hot political struggle: the sex abuse scandalsinvolving Irish Catholic priests.

But in a period of financial turmoil, economy might be a perfect reason, or excuse, for other governments to take similar steps. This has happened before.

"I wish to express my profound disappointment at this decision which means that Ireland will be without a resident ambassador to the Holy See for the first time since diplomatic relations were established and envoys were exchanged in 1929. I know that many others will share this disappointment", said Brady.

"I hope that despite this regrettable step, the close and mutually beneficial co-operation between Ireland and the Holy See in the world of diplomacy can continue - based on shared commitment to justice, peace, international development and concern for the common good."

Brady said he looked forward to a time when the Government will again appoint a resident ambassador to the Holy See and that it will happen as soon as possible.

The Minister for Foreign Affairs Eamon Gilmore said the announcement was made with the "greatest regret" and said that although the embassy was one of "Ireland's oldest missions" it yielded "no economic return".

As part of cost-cutting plans, Ireland is also closing the embassy in Iran and a representative office in Timor Leste, formerly East Timor.

Gilmore said due to EU targets to help restore public spending the Government had "been obliged to implement cuts across a wide range of public services" and "no area of government expenditure" was immune.

"The Government believes that Ireland's interests with the Holy See can be sufficiently represented by a non-resident ambassador," he said.

He added he would be seeking the agreement of the Holy See to appoint a senior diplomat to the position.

Vatican spokesman Fr Federico Lombardi SJ, said, "The Holy See takes note of the decision of Ireland to close its Embassy to the Holy See in Rome.

"Naturally, every state that has diplomatic relations with the Holy See is free to decide, on the basis of its possibilities and its interests, whether to have an Ambassador to the Holy See resident in Rome or in another country. What's important are the diplomatic relations between the Holy See and the states, and these are not in question with regard to Ireland."

The decision to shut the Irish embassy to the Vatican comes after the Papal Nuncio, the Vatican's representative in Ireland, was recalled in July following the impact of the Cloyne Report into clerical abuse. Mr Gilmore insisted the closure was not as a result of the report's controversy.

According to the minister, the Irish government will not sell Villa Spada - the Irish embassy in the Vatican - but instead staff working in the embassy to Italy will be transferred there.

The grand building is the most expensive property owned by the Irish diplomatic service.

The annual saving from the closures is thought to be around £1.4m a year.

Sources

• Belfast Telegraph
• Vatican Radio
• Catholic Herald
• Image: FaithWorld