Fresh revelations have been made directly implicating Pope Benedict XVI in mishandling the case of a paedophile priest in his former archdiocese of Munich.

According to the New York Times, the then Cardinal Joseph Ratzinger was copied in on a memo from his deputy in which the priest was transferred to parish duties in Bavaria that brought him into contact with children. As a result of that decision by the then vicar-general, Father Gerhard Gruber, the priest was able to continue abusing boys, for which he was later tried and convicted.

A spokesman for the archdiocese told the Guardian: "The report does not contain false information, but the interpretation – that Cardinal Ratzinger knew – is pure speculation." The spokesman added: "I do not know if any copy [of the memo] exists. But it is a usual procedure that a decision about priests goes to the office of the archbishop. But it is not usual that he takes note of every written piece of paper; every decision of the vicar-general."

Father Peter Hullerman, who was known to be a paedophile, was originally moved to Munich to allow him to undergo therapy. The future pope attended a meeting in January 1980 at which the transfer was agreed, the New York Times reported today. The paper said the reason for the priest's transfer was clear, even though not explicitly stated.

The allegations come a day after the Vatican responded angrily to the allegation that as a cardinal the pope had ignored an American diocese's request that another predatory priest should be defrocked.

Hullermann had been removed from his previous parish in September 1980 and did not deny the allegations made against him. Correspondence at the end of that year referred to a formal request that he should be transferred for psychiatric treatment in Munich.

Although sexual abuse of boys was not explicitly mentioned in the letter from Essen, it stated: "Reports from the congregation in which he was last active made us aware that Chaplain Hullermann presented a danger that caused us to immediately withdraw him from pastoral duties." It warned of possible legal action but suggested that Hullermann could teach religion "at a girls' school".

A report, drawn up by one of Ratzinger's closest colleagues before the meeting, stated that a young chaplain needed "medical-psychotherapeutic treatment in Munich" and a place to live with "an understanding colleague". It presented the priest from Essen as a "very talented man, who could be used in a variety of ways". As soon as he arrived, however, Hullermann was placed in a parish where he continued to abuse boys before being convicted six years later.

The suggestion that the pope was more closely involved in the case than previously suggested followed allegations that while he was head of the congregation in Rome in the mid-1990s, he acceded to a plea from an American priest, Father Lawrence Murphy, not to be disciplined or defrocked for abusing as many as 200 deaf boys at a school where the chaplain taught between 1950 and 1974. Murphy died a few months later and there have been allegations that earlier bishops in his US diocese had ignored the complaints against him and that the diocese tried to hush the matter up.

The continuing and spreading allegations are devastating for the authority and reputation of the church – the world's largest Christian denomination, with more than 1 billion adherents. Previously the Vatican has denied accusations that it has covered up systemic abuse by priests in many countries for decades in the interests of protecting its reputation. It formerly blamed a handful of perverted priests and even suggested that abuse was a problem of the church in "Anglo-Saxon" countries, including the Irish diaspora.

The pope has apologised for the way the church handled allegations without accepting any personal responsibility for his actions in Munich nor during his 24 years as head of the Congregation for the Doctrine of the Faith in Rome. But the accusations are getting closer to him all the time.

The Vatican's spokesman, attempting to stem the relentless tide of allegations that the church – and now the pope himself – covered up or dismissed complaints against clergy paedophiles in the 1980s and 90s, complained about an "obvious and ignoble attempt to strike at all costs Benedict and his closest collaborators". A statement published in the official Vatican daily paper, L'Osservatore Romano, said: "The prevalent tendency in the media is to gloss over the facts and force interpretations with the aim of spreading an image of the Catholic church almost as if it were the only [institution] responsible for sexual abuses."

Meanwhile, speculation is rife that Cardinal Seán Brady, the head of the Catholic church in Ireland, will shortly offer his resignation following accusations that as a young priest he took part in a cover-up and the silencing of victims of a paedophile priest there. The cardinal has apologised, but has so far resisted calls that he should go.