A children's story by James Joyce has been published for the first time ever by a small press in Ireland.

Joyce's The Cats of Copenhagen is a "younger twin sister" to his published children's story The Cat and the Devil, which told of how the devil built a bridge over a French river in one night, said Ithys Press. Publisher Anastasia Herbert called it a "little gem" which she said "reflects Joyce's lighter side, his sense of humour – which can fairly be called odd or even somewhat absurdist".

Like its predecessor, The Cats of Copenhagen was written in a letter to Joyce's grandchild, Stephen James Joyce, while the author was in Denmark and the four-year-old Stephen was in France. The new tale is "exquisite, surprising, and with a keen, almost anarchic subtext", said Ithys, which has printed a limited run of 200 illustrated copies, ranging in price from €300 (£250) to €1,200.

"In early August 1936, Joyce had sent his grandson 'a little cat filled with sweets' – a kind of Trojan cat to outwit the grown-ups. A few weeks later, while in Copenhagen and probably after hunting for another fine gift, Joyce penned 'Cats', which begins: 'Alas! I cannot send you a Copenhagen cat because there are no cats in Copenhagen.' Surely there were cats in Copenhagen! But perhaps not secretly delicious ones. And so the story proceeds to describe a Copenhagen in which things are not what they seem," said Herbert. "For an adult reader (and no doubt for a very clever child) 'Cats' reads as an anti-establishment text, critical of fat-cats and some authority figures, and it champions the exercise of common sense, individuality and free will."

The letter in which the story was found, dated 5 September 1936, was donated by Hans Jahnke, son of Giorgio Joyce's second wife, Asta, to the Zurich James Joyce Foundation. The Foundation has called its publication an "outrage", stressing that it has not granted permission for the book's release.

"We have been completely overlooked and ignored. It's only common decency to ask the owner," said the Foundation's Fritz Senn. "We are outraged. We have had no hand in this unfair thing and feel not just ignored but cheated."

Although the published works of Joyce entered the public domain in Europe on 1 January this year, Senn says it has not yet been determined whether the non-published material is now out of copyright as well. "Copyright has been lifted only, we believe, from the published material. All the huge amount of non-published material we believe is still under copyright, so this is, we believe, an infringement of that," he said, adding that he is concerned the "very belligerent" Joyce estate might sue. "We haven't heard from them [but] what I'm afraid of is that with the large amount of copyright taken away from them, their remaining territory will be defended even more fiercely."

But Anastasia Herbert of Ithys Press believes the unpublished works of Joyce are now in the public domain. "A publication such as that of The Cats of Copenhagen is legal and valid and any attempt to interfere with its free dissemination is both unlawful and morally reprehensible," she wrote in a statement, in which she went on to say that the "attempt by Mr Fritz Senn of the Zurich Joyce Centre proprietarily to assert some right on this now public-domain document is preposterous".

"The book was conceived not as a commercial venture but as a carefully crafted tribute to a rather different Joyce, the family man and grandfather who was a fine storyteller, much like his own father John Stanislaus," wrote Herbert. Those with a spare €300 will be able to find out.