Cardinal Renato Martino said on Thursday that he agreed with a proposal by an Italian Muslim umbrella group, saying it was only fair as the number of non-Catholic children in the country was growing.
"If there is a need. If in a school there are 100 children of the Islamic religion, I don't see why they can't be taught their religion," he told a conference in Rome.
Martino leads the Vatican's department on Justice and Peace and is one of the most influential people in the Holy See. The Vatican's views on issues such as religious education can have great influence on Italian political decisions.
A Muslim group recently asked the Education Ministry to arrange for Muslim students to be taught their religion for an hour a week in public schools.
Catholic pupils who do not attend Church schools have such an arrangement.
Muslim groups estimate that there are 1.2 million Muslims out of a population of about 57 million in Italy, but there is no reliable estimate of the number of Muslim children in state schools.
Martino said that if Italy made it easier for Muslim children to study religion it would be easier for Christians living in some Islamic countries to ask for reciprocity.
Some conservative Catholics disagreed. Leading Catholic writer Vittorio Messori told a national newspaper the proposal was "absurd", branding it as "just a dangerous and confused mix of political correctness".
Muslims in Italy, most from North Africa, generally keep a low profile. There have been no significant protests in Italy over publication of cartoons of the Prophet Muhammad.
An Italian minister was forced to
quit after violent protests in Libya
But their presence is important because of their proximity to the Vatican, the world headquarters of Roman Catholicism.
Pope Benedict has condemned the cartoons and last month appointed Archbishop Michael Fitzgerald, a top expert in Islamic affairs, to be his envoy to Egypt and the 22-nation Arab League.
Roberto Calderoli, a leader of the anti-immigrant Northern League party, caused a storm last month after he appeared on television wearing a T-shirt featuring the cartoons.
He was forced to resign as reforms minister after 11 people died in Benghazi, Libya, when crowds protesting against the cartoons tried to storm the Italian consulate.
Religious tensions between Muslims and non-Muslims are rare in Italy, although there have been some calls by Muslims and lay groups to remove crosses from public schools, hospitals and courtrooms.
Laws passed under fascist dictator Benito Mussolini in the 1920s decreed schools and courts must display the cross.
Italy dropped Catholicism as state religion in 1984, but laws about crosses in some public places are still technically in force, although rarely enforced.