Jewish leaders are calling on the Vatican to repair the damage caused by the rehabilitation of an ultra-conservative bishop who is a Holocaust denier.

Rabbi David Rosen, president of the International Jewish Committee on Interreligous Consultations, believed the controversy “worse than any of the crises we have had with the Catholic Church”, almost since the new era of dialogue began more than 40 years ago.

Pope Benedict XVI lifted the excommunication of English-born Bishop Richard Williamson, who in an interview on Swedish television last week said that at most 300,000 Jews died in Nazi camps and that there were no gas chambers.

The Catholic Herald has also reported that the bishop believes the antisemitic forgery, The Protocols of the Elders of Zion, is authentic. He was also quoted by the paper to have once written: “In accordance with their false messianic vocation of Jewish world-domination, the Jews are preparing the Anti-Christ’s throne in Jerusalem.”

Rabbi Rosen said: “We can’t expect them now to cast Williamson out of the Catholic Church. It’s not realistic. It is reasonable that they demand he recant and ask him to apologise.”

He also doubted whether the Pope’s visit to Israel in May would go ahead “unless something happens to overcome the crisis”.

Sir Sigmund Sternberg, patron of the International Council of Christians and Jews, wrote to the Pope’s British envoy to say that, in order to avert a crisis, he believed it “necessary for there to be a categorical repudiation of Bishop Williamson’s outrageous positions from the highest level at the Holy See”.

In response, the Papal Nuncio, Archbishop Faustino Sainz Muñoz, said that while he agreed that Bishop Williamson’s statement was “completely unacceptable, I would wish to point out that the matter of the lifting of the excommunication is completely unrelated to it”.

As Israel’s Chief Rabbis broke off dialogue with the Vatican, Pope Benedict appeared to react to Jewish outrage by warning against Holocaust denial in an audience with pilgrims on Wednesday. “As I once again affectionately express my full and indisputable solidarity with our brothers and sisters who received the First Covenant, I trust that the memory of the Shoah will induce humankind to reflect upon the unpredictable power of evil when it conquers the heart of man,” he said.

The Vatican rescinded the ban on Bishop Williamson and three other bishops as a rapprochement with a traditionalist splinter group, the Society of Saint Pius X, founded by Archbishop Marcel Lefebvre.

The bishops were excommunicated in 1988 after being consecrated by Lefebvre in defiance of the Pope. However, despite this week’s move, they are not yet permitted by the Vatican to act as bishops. The head of the society, Bishop Bernard Fellay, has now ordered Williamson, 68 and rector of an Argentinian seminary, not to comment on politics or history.

Father John Pawlikowski, director of Catholic-Jewish studies at the Catholic Theological Union in Chicago, said: “I do see a rather disturbing pattern in the way Pope Benedict has approached the Holocaust since becoming pope.

“He tends to see it as a rather pagan phenomenon that attacked all religion and doesn’t really seem to want to acknowledge any significant Christian culpability. In that regard, he is quite different from John Paul II.”

Rabbi Rosen said that the decision to rehabilitate Williamson had apparently been taken without consultation with Cardinal Walter Kasper, who oversees the Vatican’s relations with Jews. “It’s mind-boggling,” he said.

Ruth Gruber writes: The cardinal told the Italian press earlier this week that “to deny the Holocaust is stupid and is a position that has nothing to do with the Catholic church”.

He added: “I understand that Williamson’s statements can throw a shadow over relations with Judaism, but I am convinced dialogue will continue”.

Over a year ago the Pope reinstated a Latin rite which includes an Easter prayer for Jews to recognise Christ. Italian rabbis, still angry at the change, pulled out of a day of dialogue with the Vatican earlier this month.