Former ambassadors to the Holy See said moving that embassy would diminish the stature of the mission and conservative Catholic activists seized on the issue.
Addressing the growing controversy in Rome, the State Department arranged a briefing for reporters on Monday with an unnamed senior official who said the purpose for the move was to save money and increase security.
A spokesman for the Vatican said the move was well within the Holy See's requirements for embassies and that relations with the United States are far from strained.
The Rev. Thomas Rosica, a Canadian priest who works with the Vatican's press office, said the Vatican requires foreign embassies to the Holy See be separate from the country's mission to Italy, have a separate address and have a separate entrance.
Both Rosica and the senior State Department official said the proposed U.S. move satisfies those requirements.
Rosica also praised Ken Hackett, the new U.S. ambassador to the Holy See, telling CNN that "at this critical time in history, he brings eminent credentials to represent the United States to the Vatican."
He added there "a very good feeling right now" between the two countries.
Another Vatican official, not authorized to speak on the record about diplomatic relations, told CNN the Holy See understands security concerns are an issue for some countries and this move is "an exception, not the ideal, but not the end of the world."
The State Department contends the move from a free-standing building to a more secure compound that currently includes the U.S. Embassy and the U.S. Mission to the United Nations is a must following attacks on other American embassies.
The State Department official dismissed complaints that the move was hurting the U.S. relationship with the Vatican, telling reporters the embassy to the Holy See will be much closer to the Vatican and there will be "no reduction in diplomatic staff. There’s no reduction in ambassadors, there’s no reduction in mission."
"The plan is to have the U.S. mission to the Holy See relocate to a building" inside the current U.S. government compound, said the official. "We figure that we will save about $1.4 million a year in lease and operating costs in moving them."
Additionally, the official said the security of the current U.S. Embassy to the Holy See is "not in a building that has the kind of physical security protection that we would like it to have" but that the new building affords diplomats with better security.
For Francis Rooney, the former U.S. Ambassador to the Holy See under President George W. Bush, the proposed move is a slight to the Vatican.
Rooney told CNN that a freestanding, separate embassy shows more value to the relationship and that he worries the move will create "a perception among foreign governments and other missions that the United States does not value its relationship with the Holy See."
"It is going to depreciate the prestige of the mission to relocate" he said.
In response to the Vatican's statement that relations between it and the United States are fine, Rooney said the Holy See is "bending over backwards not to disagree with the Department of State’s decision" and that privately "they wouldn't want it to happen."
Not all former U.S. ambassadors to the Holy See agree with Rooney, however.
Ambassador Miguel H. Diaz, who served as Obama's first ambassador to the Holy See, said those who disagree are not basing their opinion on fact and information.
"I firmly believe that these issues have to be based on facts and not politicized in any way," he said. "It is absolutely, 100 percent incorrect, it is absolutely erroneous, to interpret this decision in any way as the intention of the Obama administration to undermine or diminish the relationship between the United States and the Holy See."
He continued: "This was done for security and financial reasons, not in any way to undermine and diminish the importance of the Holy See."
Just as quickly as ambassadors like Rooney and Diaz weighed in, a number of contrastive Catholics began to assail the Obama administration for the move.
"The public perception is going to be a downgrading of the importance of the Holy See," Bill Donohue, head of the conservative Catholic League. "It smacks of an animus."
Donohue and others contend that by moving the embassy into a compound with other embassies, the United States is distancing itself from the Vatican and harming relations. He also finds it hard to believe the Obama administration would make a decision based on security and cost.
"When you have a track record that is not exactly Catholic-friendly, the people like myself are going to ask what is going on here," he said. "This is the first time in six years this administration has ever been concerned with saving money. I am not surprised they found it at the Vatican."
Chris Hale, who helped run Catholic outreach for Obama's 2012 campaign, said the reaction of conservative Catholics is "another attempt to politicize another issue and create a fight that isn't there."
"This is in no way signaling the administration’s desire to not work with Pope Francis," he said. "I think (conservative Catholics) are concerned with the narrative of Pope Francis being a progressive and they are trying to push any narrative the creates a perceived divide between Pope Francis and President Obama."
In attempt to quell any controversy, earlier on Wednesday, the U.S. Embassy to the Holy See posted on its Facebook page that reports that claim the "embassy to the Holy See is closing, that our Ambassador’s position is being cut, and/or that his residence is moving … are untrue."
The embassy, according to the Facebook post, will make the move in "early 2015."
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