The pope on Monday nominated the Vatican's former foreign minister to head a recreated department for inter-religious dialogue in a move seen as underlining Benedict XVI's desire for good relations with other faiths.
The pontiff, who last September sparked Muslim anger with his comments about the Prophet Mohammed, tapped 64-year-old Cardinal Jean-Louis Tauran to lead the Pontifical Council for Inter-religious Dialogue.
The appointment revives a Vatican department which was merged with the Pontifical Council for Culture in March last year as part of a wider reshaping of the Curia by Benedict.
The thinking behind the merger was that in this way inter-religious dialogue would be seen more in the context of dialogue between cultures.
The head of the dismantled body, Monsignor Michael Fitzgerald, was sent to Cairo as papal nuncio.
The reinstatement of the office for inter-religious dialogue comes amid an awareness in the Vatican that many Muslims around the world still feel deep anger over the pope's controversial remarks on Islam last year.
In a lecture at Regensburg University in Germany, the pontiff cited a medieval emperor who said Islam was "evil and inhuman". Although he did not say he agreed with the emperor, his remarks sparked protests all over the Muslim world.
Benedict subsequently apologised several times and said he had meant no offence.
During a trip to Muslim Turkey last November, the pope made further efforts to smooth relations with Islam, making a historic visit to Istanbul's Blue Mosque.
Despite the calmer atmosphere, the Islamic cleric who is the highest authority on Sunni Muslim theology pulled out of a scheduled meeting with Benedict in March, reportedly because of pressure from fellow Muslims.
The planned meeting between the pope and Sheik Mohammed Sayyed Tantawi, head of the Al Azhar university in Cairo, was seen by Vatican watchers as a potential landmark in Islamic-Catholic relations.
Tantawi's position at Al Azhar university makes him a key reference point for Sunni Muslims all over the world.