The head of the Knights of Malta, an ancient Catholic order, has resigned over a dispute with the Vatican about free condoms that has become a battle of wills between the heads of two of the world’s oldest institutions and a test of Pope Francis’s authority.

The Rome-based chivalric and charity institution said Grand Master Matthew Festing, 67, resigned after the Pope asked him to step down on Tuesday. Grand masters of the institution, which was founded in the 11th century, usually hold their posts for life.

"The Pope asked him to resign and he agreed,” the order’s spokesperson said, adding that the group’s sovereign council would sign off on the highly unusual resignation within days.

Festing and the Vatican have been locked in a bitter dispute since one of the order’s top officials, Grand Chancellor Albrecht Freiherr von Boeselager, was sacked in December after the charity distributed condoms as part of a medical project for the poor.

Von Boeselager and his supporters said the condom issue was an excuse by Festing and the papal envoy to the order, Cardinal Raymond Burke – an American arch-conservative who has accused the Pope of being too liberal – to increase their power.

Burke has been outspoken in his criticism of Francis’s efforts to reform Catholic teaching on questions related to the family, marriage and divorce. He was one of four cardinals who signed an open letter to Francis last year questioning new guidance allowing priests to decide on a case-by-case basis whether divorced and remarried believers should be able to receive communion.

After Von Boeselager was sacked by Festing, he appealed to the Pope, who appointed a five-member commission to look into the unusual circumstances of the dismissal.

Festing, a Briton who has been grand master for nine years, refused to cooperate, saying the papal commission was an illegitimate intervention in the order’s sovereign affairs. He defiantly set up his own internal commission.

The Vatican, in turn, rejected what it said was an attempt to discredit members of the commission and ordered the leaders of the institution to cooperate with the inquiry. The papal commission was due to deliver its findings to the Pope at the end of January.

"Behind this dispute is an internal struggle within the Knights between reformers who want the order to focus on humanitarian work and a traditionalist clique out of step with Francis,” said Austen Ivereigh, the Pope’s biographer.

"Historically, the Knights have mixed ecclesiastical policy and high finance in a way which is repugnant to Francis. He is naturally inclined to support the reformers, and seized the opportunity to encourage them.”

The all-male top leaders of the Knights of Malta are not clerics but take vows of poverty, chastity and obedience to the Pope. The institution has 13,500 members, 25,000 employees and 80,000 volunteers worldwide.

The order – formed in the 11th century to provide protection and medical care for pilgrims to the Holy Land – has the trappings of a sovereign entity. It maintains diplomatic relations with more than 100 states and the EU, and permanent observer status at the United Nations.

When Festing fired Von Boeselager he accused the German of hiding the fact that he allowed the use of condoms when he ran Malteser International, the order’s humanitarian aid agency.

The church does not allow the use of condoms as a means of birth control and says abstinence and monogamy in heterosexual marriage is the best way to stop the spread of Aids.

Von Boeselager said he closed two projects in the developing world when he discovered condoms were being distributed but kept a third running for a while because closing it would have abruptly ended all basic medical services to poor people.

The order’s leadership said the scandal was serious and it was "disgraceful” that Boeselager had refused to obey Festing by resigning.

Francis has said he wants the 1.2 billion-member church to avoid so-called culture wars over moral teachings and show mercy to those who cannot live by all its rules, especially the poor.

Agencies