The ambassador believed the Pope had put the Archbishop in an "impossible position". The Pope's invitation to Anglicans to convert to Roman Catholicism pushed relations between the churches to their lowest point in 150 years, Britain's ambassador to the Vatican warned.
Francis Campbell also feared a backlash against UK Catholics after the offer to those opposed to women bishops. His fears are detailed in the latest US embassy cables released by Wikileaks.
The comments were made after Archbishop of Canterbury Dr Rowan Williams met Vatican officials last year.
A cable from US ambassador Miguel Diaz, published in the Guardian newspaper, said Mr Campbell believed Pope Benedict XVI had put the Archbishop in an "impossible position" with his conversion invitation.
It said: "The Vatican decision seems to have been aimed primarily at Anglicans in the US and Australia, with little thought given to how it would affect the centre of Anglicanism, England, or the Archbishop of Canterbury.
"Benedict XVI, Campbell said, had put Williams in an impossible situation. If Williams reacted more forcefully, he would destroy decades of work on ecumenical dialogue; by not reacting more harshly, he has lost support among angry Anglicans."
The cable revealed that Mr Campbell felt "Anglican-Vatican relations were facing their worst crisis in 150 years as a result of the Pope's decision" and it had shifted the goal of the Catholic-Anglican ecumenical dialogue "from true unity to mere co-operation".
'Anti-Catholicism' Mr Campbell also said the situation was "worrisome" for England's small, mostly Irish-origin, Catholic minority, according to the cable.
"There is still latent anti-Catholicism in some parts of England and it may not take much to set it off. The outcome could be discrimination or, in isolated cases, even violence against this minority."
Other cables released by the whistle-blowing site reveal that the Vatican was angered by requests for its officials to testify about the clerical abuse of children in the Irish Republic.
A cable said requests by the country's Murphy commission in 2009 "offended many in the Vatican". The Holy See refused to allow its officials to testify.
Despite this, the commission later substantiated many claims of abuse in the Dublin diocese between 1975 and 2004.
It said that some Roman Catholic bishops had tried to cover up abuse.
One of the cables - sent from the US embassy in the Vatican in February 2010 - says that "the Vatican believes the Irish government failed to respect and protect Vatican sovereignty during the investigations".
Vatican and Iran Meanwhile, it is also suggested that the Pope intervened to help gain the release of 15 British sailors captured by Iran three years ago.
A briefing prepared for President Obama in 2009 by Julieta Noyes, deputy chief of mission to the Vatican, explains the Vatican claims "an ability to act as an intermediary" in international crises involving Iran.
She says: "It is unclear how much clout the Vatican really has with Iran."
But she states: "The Vatican helped secure the release of British sailors detained in Iranian waters in April 2007."
However, it is unclear exactly how influential the Vatican was in securing the release of the British military crew, who had been accused of straying into Iranian waters.
Details of the cables are the latest in a series released by Wikileaks to appear in the Guardian and several other newspapers around the world.
The founder of Wikileaks, Julian Assange, is currently being held in the UK and facing extradition to Sweden.
Mr Assange denies sexually assaulting two women in Sweden and has been remanded in custody pending a hearing next week.
Mr Assange's lawyer, Mark Stephens, has claimed the charges against the Australian are "politically motivated".
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