The Bishop of Waterford and Lismore, Alphonsus Cullinan, has withdrawn accusations made earlier this week against the Sunday World newspaper that it published a "wholly incorrect" report which "seriously impugned" the good name and reputation of a senior priest of the diocese.
A Catholic Church spokesman told RTÉ News that this evening's statement by the diocese retracting a news release of last Tuesday was issued following legal representations by the newspaper to the church.
The spokesman said the Sunday World agreed not to take any further legal action if the retraction was published.
The story at the centre of the dispute was written by Patrick O'Connell and published last Sunday 5 August.
It related to the case of Bartholomew Prendergast.
This evening's agreed statement said that in the course of the article, the Sunday World reported that Canon Brendan Crowley, had referred Prendergast to a psychiatrist.
The statement added that the diocese "was concerned that the report could potentially be interpreted to suggest that Canon Crowley knew of (Prendergast's) abusive behaviour.
"While the news report by Patrick O'Connell is wholly factually correct any possible interpretation that Fr Crowley had any knowledge of this behaviour is not correct as is clear from his reported statements to that effect."
In the statement, the diocese reiterates its categorical statement of earlier this week that Canon Crowley was never informed, nor had any knowledge, of the abuse that Prendergast's victims endured as children.
It continues "Canon Crowley, in a signed statement to An Garda Síochána in the course of its investigation, declared that Mr Prendergast, his wife, Patricia, together with Patricia's parents, came to see him in 1984 to discuss a problem.
"As the issue was beyond his competence, Canon Crowley referred them to Mr Jim Morrison, psychiatrist with the South Eastern Health Board at that time.
"At no point in the meeting was the issue of child abuse discussed nor was it disclosed that Mr Prendergast was abusing children.
"Canon Crowley had no knowledge whatsoever that Mr Prendergast posed a threat to children.
"The issue that was discussed had nothing to do with child abuse."
The diocese extended its "sincere sympathy to Stephanie Hickey and her sister Deirdre, as well as to the other unnamed victim, all of whom suffered horrendous abuse perpetrated by Mr Prendergast."
It also reiterated that the diocese's safeguarding policy is fully compliant with policies set down by the National Board for Safeguarding Children and the Catholic Church in Ireland.
Amongst other standards, this means in practice that all issues of child safeguarding that may arise are reported immediately to the civil authorities.
On 30 July last, 65-year-old Bartholomew Prendergast, from Dungarvan, Co Waterford, pleaded guilty to charges of rape and sexual abuse of three young girls in the 1980s.
Prendergast, who is also known as Bart or Batty is to be sentenced in November.