'An old anachronism has been overcome,' said the Vatican spokesman, Joaquin Navarro- Valls. 'These new relations will now permit the normal life of the Church in Mexico . . . With this decision Mexico brings itself into line with the international practice by nearly all modern states to have relations with the Catholic Church, its institutions and the Holy See,' he added.
Although Mexico is Latin America's second-largest Catholic nation after Brazil - with around 96 per cent of the population belonging to the religion - the constitution was highly anti-clerical until changes pushed through earlier this year.
The constitution, drawn up in 1917 after a revolution that cost hundreds of thousands of lives, barred the Church from owning property, including places of worship. It made it technically illegal for priests to wear clerical garb in public or for the Church to run schools or publish newspapers.
For decades, the laws were either dodged by the Church or not enforced but the Vatican wanted to correct the anomaly of their existence in the statute book.
Mexico severed relations with the Vatican in the 1860s, after the government confiscated Church property and decreed the separation of Church and State to punish Rome for its support of European intervention in the country. More than half a century later, the constitution punished the Church for siding with colonial powers and wealthy landowners in the 19th century.
In the late 1920s the government brutally crushed the Cristeros rebellion, in which some Catholics and clergy took up arms against anti-clerical laws. The rebellion, which was immortalised in Graham Greene's novel The Power and the Glory, was crushed in a ruthless campaign of repression in which churches were burned down and priests hanged in public squares.
Church-State relations in Mexico began improving radically after the election of the reform- minded President, Carlos Salinas de Gortari, in 1988.