In a statement issued yesterday, Drennan said that Casey would be returning in the "near future" and that he would be living in Beagh, Co Galway.

"I'm very happy that Bishop Casey has decided to return to live in Galway, " said Drennan.

"Since taking up office as bishop of Galway in July 2005, I have found that the attitude of the priests and people of the diocese towards his return has been both positive and compassionate. I hope that Bishop Eamonn will find the privacy and peace that he deserves in his new home in Galway."

Casey (78) resigned from office and left the country in 1992 after it was revealed that he had an affair with Annie Murphy, an American divorcee, and that he had fathered a child, her then 18year-old son Peter.

He has spent the past six years working as a chaplain in the diocese of Arundel and Brighton in the south of England, but stood aside from his ministry there last December following allegations of child abuse made against him by a middle-aged woman. The alleged incident took place 30 years ago in Ireland. Casey, who said there was no foundation to the claims, travelled to Ireland to help gardai with the investigation, and has said he is confident that his name will be cleared following the inquiry.

Since his official departure in 1992, Casey has privately returned to Galway several times, and a number of opinion polls in local papers have indicated that the vast majority of people in the diocese would welcome his return.

The former parochial house in which Casey will live had been on the market for six to eight months in a bid to raise money for the local church.

"It was known for the past few days that the house had been taken off the market and that there was a retired priest on his way, " said local publican Michael Whelan, from the village of Shanaglish, which is in the parish of Beagh. "It has been discussed in the pub here and everyone is delighted that Bishop Casey is coming."

The announcement of Casey's return coincides with the news this week that a 73year-old east Galway priest, Fr Mossy Dillane, had fathered a child with a 31-year-old woman. Parishioners reacted to this revelation with a generally understanding attitude.