A Vatican cardinal said today that the decision to rehabilitate an ultra-conservative bishop who denies any Jews were killed in the Holocaust had been badly mishandled, amid an escalating internal row over the decision.

As criticism mounts against Pope Benedict XVI over his decision to welcome back excommunicated Bishop Richard Williamson, the Vatican cardinal in charge of relations with Judaism admitted that he had followed the escalating row "with great preoccupation".

The remarks by Cardinal Kasper, head of the Pontifical Council for Christian Unity, follow dismay expressed by German bishops over a "loss of faith in the Pope" because of the row over the lifting of Bishop Williamson and three other ultra-traditionalists.

He did not attack the Pope directly — an unthinkable act for a cardinal — but blamed the row on "errors of management" in the Curia, the Vatican hierarchy, and on "a lack of communication" inside the Vatican. There had been "much too little" internal discussion of the Pope's reinstatement of the arch-conservative followers of the late Archbishop Marcel Lefebvre, he said, and a failure to foresee the row that followed.

Cardinal Kasper, who, like the Pope, is German by birth, has admitted that he was not consulted over the rehabilitations. There is a growing view in Rome that Pope Benedict neither seeks, nor is offered, advice that might head off potentially damaging public relations disasters.

Cardinal Kasper told Vatican Radio: "There have certainly been errors in the way the Curia handled this — I want to say this explicitly." The reinstatement of the four bishops was "far from complete", he said. There were "many open questions between us and them", including inter-faith dialogue and ecumenism.

The followers of Marcel Lefebvre, who rejected the modernising reforms of the Second Vatican Council, were excommunicated after being ordained by him without authorisation from Rome, and formed the breakaway Society of St Pius X (SSPX). Cardinal Kasper said that the Pope had wanted to bring them back into the fold to "reinforce the unity of the Church". But the dialogue with the Lefebvrists was only "at the beginning".

Leading Lefebvrists said this week that they still refused to accept Vatican II, which among other reforms condemned anti-Semitism "in all its forms" and exonerated the Jews from blame for the Crucifixion of Christ.

Several German bishops have openly criticised the Pope's move. Monsignor Gebhard Fürst, Bishop of Rottenburg-Stuttgart, said that the rehabilitations were "a betrayal of trust, especially for our Jewish sisters and brothers in their relationship to the Church".

Monsignor Werner Thissen, the Archbishop of Hamburg, said that the Pope should not have lifted the excommunication of Bishop Williamson until he had explicitly recanted his "unspeakable" claim that the Nazis did not use gas chambers. Bishop Williamson has apologised to the Pope for the "anguish" his views had caused, but has not retracted them.

Bishop Fürst said that the unity of the Chuch was "a precious gift", but would be achieved at "too high a price" if it embraced those who refused to accept Vatican II. Archbishop Thissen also defended the Pope's efforts to reach out to the ultra-traditionalists but said that, because of the controversy, there was "clearly a loss of faith in the Pope".

Hermann Haering, a liberal German Catholic theologian, said that the Pope should resign "for the good of the Church". Cardinals were obliged to leave office at 80, he said, and Pope Benedict was 81. Although not used since the 13th century, there was provision in canon law for papal retirement, and "it would not be a scandal".