Lawyers acting for alleged victims of abuse say the document proves that for decades the Vatican has systematically obstructed the course of justice in order to protect Catholic priests.
Church lawyers, on the other hand, argue that the document referred only to church law and did not order bishops to engage in criminal cover-ups.
But the US lawyer who uncovered the document told a British newspaper the archive material is a smoking gun.
The lawyer, Daniel Shea, told The Observer newspaper the 1962 Vatican instruction was "a devious attempt to conceal criminal conduct".
It "is a blueprint for deception and concealment", the Sunday newspaper quotes him as saying.
" So that these matters be pursued in a most secretive way, everyone is to
be restrained by a perpetual silence under penalty of excommunication. "
The document was sent to every bishop in the world, with orders to keep it under lock and key, the BBC's David Willey in Rome reports.
Mr Shea, who represents alleged victims of abuse by Catholic priests, obtained the document from an American priest and handed it over to US authorities.
It bears the seal of Pope John XXIII, and calls for "strictest" secrecy in dealing with abuse allegations within the Church.
It threatens to expel from the Church anyone who breaks their silence.
It deals primarily with priests accused of propositioning congregants during confession, the Catholic rite in which the faithful tell priests of their sins. Mr Shea says he was given the document by a clergyman in Germany who has close dealings with the Vatican.
He handed a copy of the document to US authorities late last month.
Church's defence
Early in August, the US Conference of Catholic Bishops said that the document, "Instruction on the manner of proceeding in cases of solicitation", had not been in force for years.
The conference said it was superseded by later guidelines introduced in the 1960s, 1970s and in 1983, the Associated Press reported.
The Vatican's 1983 Code of Canon Law says a priest found to have abused a minor can be defrocked.
The conference also said the 1962 document "had no bearing on civil law" and had been misrepresented.
The US Catholic Church has been rocked by revelations of sexual abuse by priests.
Bishops there have been accused of protecting priests suspected of sexual abuse, moving them to new parishes rather than confronting the problem.
The leader of England and Wales's Catholics, Archbishop Cormac Murphy-O'Connor, has apologised for relocating priest Michael Hill when accusations against him arose.
Vatican critics say the 1962 document suggests bishops who moved priests may have been acting in line with instructions from Rome.
They also say its age refutes Church claims that the problem of sex abuse by priests is a new one.
The Archbishop of Boston, Cardinal Bernard Law, was forced to resign late last year after he admitted he had covered up sexual abuse by priests for many years.
The Church faces hundreds of civil lawsuits by people who say they were
abused.
RELATED INTERNET LINKS:
The Observer
Survivors Network
The Holy See
US Conference of Catholic Bishops
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