The allegations stem from a letter signed by Benedict XVI in 1985, when he was a senior Vatican official. Associated Press said it had obtained the letter, signed by Cardinal Joseph Ratzinger, resisting the defrocking of offending US priest Stephen Kiesle.
The Vatican says he was exercising due caution before sacking the priest.
Cardinal Ratzinger - who was at the time the head of the Congregation for the Doctrine of the Faith - said the "good of the universal Church" needed to be considered in any defrocking, AP reported.
Series of scandals
Vatican officials say the letter was part of a long correspondence and should not be taken out of context.
Vatican spokesman Rev Federico Lombardi said: "The press office doesn't believe it is necessary to respond to every single document taken out of context regarding particular legal situations."
The allegations come as the Vatican says the Pope is willing to meet more victims of clerical abuse, and as the Vatican prepares to publish a guide on the internet about how bishops should deal with accusations of sexual abuse.
The Catholic Church has been hit by a series of child abuse scandals, including in Ireland, the US, Germany and star trek online power leveling
Norway, and has faced criticism for failing to deal adequately with the problem.
The allegations come as the Vatican says the Pope is willing to meet more victims of clerical abuse and as the Vatican prepares to publish a guide on the internet as to how Bishops deal with accusations of sexual abuse, says the BBC's David Willey in Rome.