Communist Vietnam's prime minister became his country's highest-ranking official to meet a pope on Thursday, an encounter the Vatican called an "important step" towards normalizing diplomatic ties.
Nguyen Tan Dung, Pope Benedict and their delegations held talks for about 25 minutes in the Pope's private study.
A statement called the visit an "important step towards the normalization of bilateral relations" and added that the Holy See was pleased that recent years had seen "concrete progress" for religious freedom in the country.
The meeting was seen as perhaps the last prelude to full links between the Holy See and one of Asia's biggest Catholic countries after decades of tense relations.
One-tenth of officially atheist Vietnam's 82 million population is Catholic.
Hundreds of thousands of Catholics moved from North Vietnam to South Vietnam when the country split after French colonial rule ended and became some of Hanoi's most implacable foes.
The Vatican's ties with Hanoi have suffered because the Church is associated with Vietnam's colonial past and because the government did not always agree to the appointment of bishops by previous Popes.
The Vatican statement said outstanding problems would be discussed in the hope that the Church in Vietnam could enjoy full cooperation with the state and that Catholics could make positive contributions to the country's development.
While the status of Catholics has steadily improved since the communist unification of Vietnam in 1975 ended the Vietnam War, there has been some lingering suspicion about the activities of Catholic and other religious leaders.
In 2005, Benedict created a new diocese in Vietnam and a Vatican cardinal traveled to the country to ordain 57 new priests in a public ceremony in Hanoi cathedral.
In the past, the U.S. State Department has criticized Vietnam for restricting freedom of religion and the operation of religious groups other than those approved by the government.
Hanoi says it respects freedom of religion. Buddhism, estimated to be followed by nearly 80 percent of the population, is the main religion.