Taoiseach Enda Kenny has rejected suggestions that the decision to close the Embassy to the Holy See had anything to do with recent child abuse scandals involving the Catholic Church.
Mr Kenny said that the Vatican had responded to the Cloyne Report and he had accepted their expressions of sorrow about what happened in Ireland.
He said the decision of the Government was in response to a memorandum from the Tánaiste in relation to the closure of a number of embassies abroad and the reorganisation of Ireland's diplomatic corps as part of the Comprehensive Expenditure Review.
The Taoiseach said the current ambassador to Italy would transfer to the Holy See embassy in Villa Spada, which was owned by the Irish people.
Mr Kenny said that this would save the taxpayer €200,000 annually in rent.
He said he was not going to comment on Cardinal Seán Brady's reaction to the move, in which the cardinal expressed his profound disappointment.
Cardinal Brady said the decision seemed to show little regard for the important role played by the Holy See in international relations and of the historic ties between the Irish people and the Holy See over many centuries.