Pope Benedict XVI
Pope Benedict XVI announced his intention to step down due to old age and declining strength (Reuters)

The existence of a gay lobby and a related blackmailing ring inside the Vatican was revealed to Pope Benedict XVI just days before Christmas by a three-cardinal commission tasked with investigating the Vatileaks scandal, Italian press has claimed.

Some Vatican observers said Benedict decided to resign after reading a damning report exposing infighting, rivalries and power struggle within the Church, handed to him by cardinals Julian Herranz, Josef Tomko and Salvatore de Giorgi on December 17.

Now Italian daily La Repubblica has reported the dossier "depicted a network of different power lobbies," working inside the corridors of the Holy See, including one made up by clergymen "united by sexual orientation".

Made of "two volumes of almost 300 pages - bound in red" and now held in a safe in the papal apartments, the dossier "drew geography of 'inappropriate influences'," La Repubblica wrote, quoting a Vatican source.

"Everything revolves around the non-observance of the sixth and seventh commandments," the source told the newspaper.

The seventh commands followers not to steal, while the sixth enjoins against adultery, but is interpreted broadly by Catholic doctrine as a warning against the commitment of any "impure act", including homosexual behaviours and onanism.

The dossier said some prelates had been subject to "external influence" - a word La Repubblica reads as a euphemism for "blackmail" - from laymen with whom they have a relation of "worldly nature", the newspaper said.

Vatican spokesman Father Federico Lombardi said: "Neither the cardinals' commission nor I will make comments to confirm or deny the things that are said about this matter. Let each one assume his or her own responsibilities. We shall not be following up on the observations that are made about this."

Benedict, 85, announced his intention to step down due to old age and declining strength earlier in February.