The Daily Telegraph reports Fr Cooney, 60, was freed pending further police enquiries but another priest who is still on the board of the school was charged with eight offences.
Father Phil Robson, 61, from the Vincentian order in Marsfield, was charged with aggravated sexual assault of a child, intent to have sexual intercourse with a child and three counts of aggravated indecent assault.
Current St Stanislaus principal John Edwards said the congregation would now decide upon Fr Robson's future.
Mr Edwards said Fr Cooney, who was a science teacher at the school from 1989 to 1992 and returned as chaplain for two years in the late 1990s, visited the college up to three times a year and "enjoyed a fine reputation at the school."
Fr Cooney's lawyer Greg Walsh said the priest had been out of the country at the time of the alleged offences that police were investigating and that officers had made a grave error.
Mr Walsh also said that Fr Robson will be contesting the charges. "He's been charged, he emphatically denies any wrongdoing, he's upset about the allegations and will strenuously defend himself," he said, according to a Sydney Morning Herald report.
The Catholic Church's Sydney Archdiocese confirmed the Vincentians were cooperating with police, "and have been doing so since the start of the investigation."
A church spokeswoman said St Stanislaus, where the alleged offences took place, was not part of the Sydney Archdiocese, for which Cardinal George Pell is responsible, meaning the archdiocese's Professional Standards Office could not get involved.
The school's principal, John Edwards, said yesterday he could not comment. "I'm not aware of what has taken place ... We haven't been told anything in detail," he said.
On Monday, the school's former assistant dormitory master, Rick McPhillamy, 47, was charged with two counts of indecent assaults relating to two events involving one student in 1985.
Fr Robson is due to appear at the Downing Centre Local Court with other co-accused on Friday.
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(Source: CTHN)