Vatican diplomats fear Ireland's decision to close its embassy there may trigger a similar move by other countries.
The decision has brought relations between Ireland and the Holy See to an all-time low.
A Vatican diplomatic source said Ireland would now be the only major traditionally Catholic country without an embassy in the Vatican.
"This is really bad for the Vatican because Ireland is the first big Catholic country to do this and because of what Catholicism means in Ireland's history," he added.
He also stressed that the Vatican was "extremely irritated" by the wording of the Irish Government decision which equated diplomatic missions with economic return instead of promoting human values.
The Government said the embassy was being closed because "it yields no economic return".
Diplomats are now afraid the move might sway other countries to make a similar decision to save money on the grounds that a double diplomatic presence in Rome is too expensive.
While Tanaiste and Foreign Affairs Minister Eamon Gilmore has denied the closure was linked to the row between the Government and the Church over the handling of sex abuse cases, Rome-based diplomats believe it played a big role.
"All things being equal, I really doubt the mission to the Vatican would have been on the list to get the axe without the fallout from the sex abuse scandal," said one ambassador.
Cardinal Sean Brady said he was profoundly disappointed by the decision.
"This decision seems to show little regard for the important role played by the Holy See in international relations and of the historic ties between the Irish people and the Holy See over many centuries," he said.