CLAUDY, Northern Ireland (Reuters) - The British government, the police and the Catholic Church colluded to protect a priest suspected of involvement in a 1972 bombing in Northern Ireland that killed 9 people, an official report said on Tuesday.

The Police Ombudsman's report revealed that a cardinal was involved in moving Father James Chesney out of British-ruled Northern Ireland, highlighting anew the way the Church hierarchy shielded priests from allegations of criminal activity.

The inquiry showed that Secretary of State for Northern Ireland William Whitelaw had a private meeting with Cardinal William Conway, the head of the Catholic Church in Ireland, in which they discussed the possibility of transferring Chesney.

"I accept that 1972 was one of the worst years of the 'Troubles' and that the arrest of a priest might well have aggravated the security situation," Police Ombudsman Al Hutchinson said. But "the decision failed those who were murdered, injured and bereaved in the bombing."

No one was ever charged or convicted for the triple car bomb attack on the village of Claudy, but the republican guerrilla group the IRA was assumed to be responsible. Those killed included a nine-year-old-girl and two teenage boys.

Chesney, a priest in a neighboring parish, always denied any involvement, though the police had intelligence that he was the leader of the IRA in south Derry and a sniffer dog found traces of explosive in his car when he was stopped at a checkpoint in September 1972.

The current head of the Catholic Church in Ireland, who has been under pressure to resign over his role in concealing sex abuse cases, said it was regrettable that the bombing was not investigated properly but denied the Church took part in a cover-up.

"He (Cardinal Conway) was faced with an impossible situation but his primary consideration would be the prevention of any further acts of violence," said Cardinal Sean Brady.

"The actions of Cardinal Conway or any other church authority did not prevent the possibility of future arrest and questioning of Fr Chesney."

The British government's representative in Northern Ireland apologized for the investigation of the Claudy bombings.

"I am profoundly sorry that Father Chesney was not properly investigated for his suspected involvement in this hideous crime, and that the victims and their families have been denied justice," Owen Paterson said in a statement.

The priest was transferred to Donegal in the Irish Republic in 1973 and died there in 1980.

"A VERY BAD MAN"

July 1972 was the bloodiest month in the bloodiest year of three decades of conflict in Northern Ireland and the Claudy bombings came six months after British soldiers shot dead 13 unarmed civilians in a civil rights march in Londonderry.

A photograph of a Catholic priest waving a blood-stained handkerchief in front of a fatally wounded marcher being carried through the city was the defining image of "Bloody Sunday"

The police may have feared that arresting a priest over the Claudy attack could have triggered a fierce backlash among Northern Ireland's minority Catholic population.

A senior police officer wrote in November 1972 that, rather than arrest Chesney, "our masters may find it possible to bring the subject into any conversations they may be having with the Cardinal or Bishops at some future date..."

Government documents showed that, at a private meeting with Whitelaw, Conway "said that he knew that the priest was a very bad man and would see what could be done. The cardinal mentioned the possibility of transferring him to Donegal..." the report said.

In his diary, the cardinal recorded that he had had a "rather disturbing tete-a-tete."

Conway's protection of Chesney echoed action by the Catholic Church in Ireland to shield priests from allegations of child sex abuse. Scandals over the abuse and the cover-ups have helped topple the Church from its once dominant position in Irish life.

The key police officers in the Claudy bombing are now dead but the ombudsman said that had they been alive their actions would have been investigated.

Hutchinson said he found no evidence of criminal intent on the part of the government or the church.

"The morality or 'rightness' of the decision taken by the government and the Catholic Church in agreeing to the RUC (police) request is another matter entirely and requires further public debate," Hutchinson said.

"I am satisfied that the same situation would not be repeated today."

(Writing by Carmel Crimmins; editing by Tim Pearce; [email protected]; Reuters Messaging: [email protected]; +353 1 500 1529)