Pope Benedict XVI has reversed a controversial decision he took a year ago to downgrade the Vatican department which deals with the Islamic world.
The Council for Interreligious Dialogue will be restored to its former position as a department in its own right.
It is not clear if the department's former head, British archbishop Michael Fitzgerald, will also be reinstated.
His removal was seen as a sign the Pope was more interested in improving ties with other Christian denominations.
The BBC's David Willey in Rome says that by reversing his decision, which was interpreted negatively in the Muslim world, the Pope has tacitly admitted that this was a mistake.
In a rare about face, Vatican Secretary of State Cardinal Tarcisio Bertone told the Italian newspaper, La Stampa, that the Council for Interreligious Dialogue would again become "a dicastery in its own right".
In March 2006, the Pope had downgraded the office by merging it with the Pontifical Council for Culture.
clipped from: news.bbc.co.uk