The Vatican has issued a denial and is threatening legal action after claims that one of its priests has been arrested while looking for a male or transsexual prostitute in an area known for soliciting.

Italian news agency, Ansa, and several Italian newspapers, reported last weekend that an unidentified 48- year-old official of the secretary of state of the Vatican had been stopped by police after acting awkwardly in an area known for male prostitutes.

A Vatican statement said: “Information disseminated this morning by newspapers concerning a cleric in service at the Vatican are totally without foundation.

The statement accused the media of contributing to “defaming the good reputation of the official.”

The accusations come after the head of the Roman Catholic Church in England and Wales, Cardinal Cormac Murphy O’Connor, was reported to have sacked a gay media aide because of his sexuality.