Reverend Brian Hassett was at the helm of Cootamundra’s Sacred Heart Catholic Church as Parish Priest from 1980 until 1989.
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Following his tenure in Cootamundra, he moved to Tumut, from where claims arose and were investigated he inappropriately touched children.
The claims were investigated by the Archdiocese of Canberra-Goulburn under the NSW Reportable Conduct Scheme and were substantiated, according to a spokesman for the church.
NSW Police has confirmed Tumut Police were not aware of any active investigations into the former priest.
It is understood the two complainants did not want to press charges.
Archbishop of Canberra-Goulburn Christopher Prowse has confirmed that following the investigation the priest was removed from his position as Parish Priest.
It has now been revealed Father Brian Hassett has been living at Lanigan House in Garran, on the ground of Sts Peter and Paul Primary School, for about two years.
Archbishop Prowse said the priest was only moved to Lanigan House because there was no other accommodation available.
"However, due to a significant deterioration of his health he has remained at Lanigan House where his medical needs can be met," he said.
Archbishop Prowse said no children were permitted to visit Lanigan House and Father Brian had no contact with students at the neighbouring schools.
"Prior to me making the decision to move this clergy member to Lanigan House, a thorough risk assessment was conducted by staff within the Institute for Professional Standards and Safeguarding and the principal at the nearby Catholic school consulted," he said.
"I do acknowledge the concerns of this community and in moving forward, I am seeking alternative accommodation which addresses the community concerns and meets the medical needs of this retired priest."
The revelations come a week after Archbishop Prowse told the Royal Commission into Institutional Responses to Child Sexual Abuse that he had heralded in a new era of transparency and accountability in the Canberra archdiocese.
"It has been heartbreaking to see these statistics nationally, but at the very same time to be able to say, well, let us go forward in a completely different way that is a way that we can hold our head up high and be able to say we're learning from this. We have a long way to go, but we're on the way," Archbishop Prowse told the royal commission.
He had said the days of the church examining these issues in-house were gone.
"I think the gravity of the sex abuse is really starting to dawn on us, and we can see that, no, no, we simply don't have the resources on our own to be able to cope properly with this. And even if we did, it's not appropriate," Archbishop Prowse said.
