Chancellor Angela Merkel on Thursday welcomed the Vatican's decision to order a traditionalist bishop who denies the Holocaust to recant his views, saying it was a good and important signal.

Merkel, who criticized Pope Benedict XVI this week for rehabilitating four bishops, including one who has questioned the extent of the Holocaust, said she was satisfied the Vatican had made clear that denying the Holocaust could not be permitted.

"The order from the Vatican is an important and good signal," she said at a news conference when asked about the issue. "It makes clear that Holocaust denial cannot be allowed to stand without consequences. Relations between Jewish communities and Christian churches can only succeed without Holocaust denial and without anti-Semitism."

Merkel made a rare criticism of the Vatican on Tuesday, saying it was a fundamental matter if the impression arose, as the result of a Vatican decision, that the Holocaust could be denied.

The Vatican quickly issued a statement saying that Benedict had clearly condemned Holocaust denial in past speeches and at his general audience last week.