Speculation is that the Pope will be cancelling his planned visit to Britain after a Foreign and Commonwealth Office memo suggested that the Church's head should bless a gay marriage and even launch Papal-branded condoms.
The shocking proposals were contained in official documents drawn up earlier this month by civil servants that mocked the Pope's forthcoming visit to Britain in September.
The British Government has apologised to the Pope for suggestions made in the document, but senior Papal aides suggested the Foreign Office had not taken strong enough disciplinary action against those responsible for the document, The Telegraph reports.
No one has lost their job over the memo, which was sent to Downing Street and at least three Whitehall departments, and the civil servant who authorised it, has simply been moved to other duties.
"This could have very severe repercussions and is embarrassing for the British government - one has to question whether the action taken is enough.
"It is disgusting. Britain's ambassador to the Holy See has been in to see the Vatican Secretary of State and explain what happened and this will all be relayed to the Pope. It's even possible the trip could be cancelled as this matter is hugely offensive," a highly placed Vatican source said.
Cardinal Renato Martino, the former head of the Vatican's Pontifical Council for Justice and Peace, said: "The British government has invited the Pope as its guest and he should be treated with respect. To make a mockery of his beliefs and the beliefs of millions of Catholics not just in Britain but across the world is very offensive indeed."
The documents, included in a memo headed 'The ideal visit would see ...', ridiculed the Catholic Church's teachings including its opposition to abortion, homosexual behaviour and contraception, The Telegraph reports.
Referring to the sensitive issue of child abuse engulfing the Catholic Church, the Government document suggested that the Pope should take a "harder line on child abuse, announce sacking of dodgy bishops" and "launch helpline for abused children".