Published Saturday, 03 September 2011
It follows the publication of the Cloyne report, which revealed damning findings of abuse cover-ups in the diocese between 1996 and 2009.
Former bishop John Magee, a Vatican aide to three Popes, was singled out for misleading investigators and "dangerous" failures on child protection.
In an unprecedented attack in the Dail in July, Mr Kenny accused the Vatican of downplaying the rape and torture of Irish children by clerical sex abusers.
He said the report exposed a dysfunctional, elite hierarchy determined to frustrate investigations.
However the Vatican has branded the comments "unfounded" in its formal response to the Irish government.
It said: "The accusation that the Holy See attempted 'to frustrate an Inquiry in a sovereign, democratic republic as little as three years ago, not three decades ago', which Mr Kenny made no attempt to substantiate, is unfounded."
The statement, published on Saturday, added that the Vatican is "ashamed and sorry for the terrible sufferings which the victims of abuse and their families had to endure."
"The Holy See is deeply concerned at the findings of the commission of inquiry concerning grave failures in the ecclesiastical governance of the Diocese of Cloyne and the mishandling of allegations of abuse," it stated.
"It is particularly disturbing that these failures occurred despite the undertaking given by the bishops and religious superiors to apply the guidelines developed by the Church in Ireland to help ensure child protection."
Primate of All-Ireland Cardinal Sean Brady has welcomed the church's response.
He said he hopes the document will help ease those who have been hurt.
"The reply conveys the profound abhorrence of the Holy See for the crime of sexual abuse and its sorrow and shame for the terrible sufferings which the victims of abuse and their families have endured," said Cardinal Brady.
"It shows an appreciation of the seriousness of the questions raised and of the importance, especially for survivors of abuse, of effectively combating this crime.
"I believe it will contribute to the healing of those who have been hurt and also to a closer working together of all concerned with the safeguarding of children."
Following Mr Kenny's scathing attack, the Vatican's envoy in Ireland was transferred to the Czech Republic.
Archbishop Guiseppe Leanza was recalled to Rome by the Pope for discussions with the Vatican in the wake of the Cloyne report.