Hard on the heels of a Holocaust denial row, Pope Benedict XVI has appointed an ultra-conservative bishop in Austria who described Hurricane Katrina as God's punishment for sin and sexual excess in New Orleans.

Father Gerhard Maria Wagner, 54, a parish priest at Windischgarsten in Austria since 1988, said in the parish newsletter four years ago that the death and destruction caused by Hurricane Katrina was "divine retribution" for excessive sexual permissiveness, including tolerance of homosexuality.

He noted that Katrina destroyed not only nightclubs and brothels in New Orleans, but also abortion clinics, adding "The conditions of immorality in this city are indescribable". Father Wagner, who has been appointed as auxiliary Bishop of Linz in Austria, has also accused the popular Harry Potter books and films of "spreading Satanism".

Vatican sources said despite the row over pontiff’s controversial reinstatement of a bishop who denies that the Holocaust occurred, Pope Benedict remained determined to "bring back into the fold" not only the four bishops from the Society of St Pius X (SSPX) who whose excommunications were lifted a week ago but also the 500 priests of the fraternity, founded by the late renegade French bishop Marcel Lefebvre.

The main obstacle however remains the Lefebvrists' continuing refusal to accept the modernising reforms of the Second Vatican Council in the 1960s, including "Nostra Aetate", the statement on relations with other faiths which stressed the bond between Christians and Jews ("Abraham's stock"), cleared the Jews of blame for the death of Christ and condemned all forms of anti-Semitism.

Today however Bishop Bernard Tissier de Mallerais, one of the rehabilitated Lefebvrist bishops, said they would not alter their rejection of Vatican II and hoped on the contrary that the Vatican would be "converted" to their ultra-traditionalist views.

Asked by the writer Alain Elkann in La Stampa whether the Lefebvrists were thinking of changing their minds on Vatican II reforms the bishop replied "No, absolutely not. We are not changing our position, we intend to convert Rome - that is, to bring the Vatican toward our positions".

The bishop said the Lefebvrists had suffered from their separation from Rome as "schismatics", but they were not "returning to the house of the Father" because "in effect we never left it."

He claimed he had "no opinion" about the views on the Nazi Holocaust expressed by Richard Williamson, another of the rehabilitated Lefebvrist bishops.

Last Friday Bishop Williamson, who said the Nazis did not use gas chambers and killed "only" 300,000 Jews rather than six million, admitted his remarks had been "imprudent" and apologised to the Pope for the "anguish" he had caused. He did not however withdraw his claim, nor did he apologise to the Jews.

The Holy See says its decision to rehabilitate Bishop Williamson does not mean that it approves of his views, which have been condemned by the Pope and by senior Vatican officials.

Gilles Bernheim, who was installed today as Chief Rabbi of France, said he had been shocked" by Bishop Williamson's remarks, "both as a Jew and as a supporter of Christian-Jewish dialogue".

He said he had been assured by "my Christian friends" that the bishop was isolated in his extremist views, but said he remained "disturbed" by the Pope's move. "And what will happen if the bishops who are no longer excommunicated continue to reject Vatican II?" Rabbi Bernheim asked.

In its announcement of the appointment in Austria of Father Wagner – who is not a member of the SSPX – the Vatican made no mention of his views on Hurricane Katrina, divine retribution or Harry Potter, stressing instead that he held a doctorate in theology from the Pontifical Gregorian University in Rome.