Vatican spokesman Rev. Federico Lombardi said Bishop Richard Williamson's statement "doesn't appear to respect the conditions" the Vatican set out for him.
Also on Friday, Germany announced it was considering issuing an arrest warrant on hate crime charges against Williamson. It is a crime to deny the Holocaust in Germany and in several other EU countries.
German Justice Minister Brigitte Zypries, speaking in the sidelines of EU justice ministers' talks in Brussels, said officials in her country were considering issuing an EU-wide warrant for the bishop's arrest and that a German investigation into his remarks was already under way.
In an interview broadcast last month on Swedish state TV, Williamson denied 6 million Jews were killed during the Holocaust, saying 200,000 or 300,000 were murdered. He said none were gassed.
Williamson apologized for his remarks on Thursday, saying he would never have made them if he had known "the full harm and hurt to which they would give rise," but he did not say his comments had been erroneous, or that he no longer believed them.
Williamson's initial remarks sparked widespread outrage among Jewish groups and others. The interview was broadcast just days before the Vatican announced that it was lifting his excommunication and that of three other bishops belonging to the Society of St. Pius X.
Bowing to the criticism, the Vatican on Feb. 4 demanded that Williamson "absolutely and unequivocally distance himself from his remarks about the Shoah if he is to be admitted to episcopal functions in the church."
Williamson issued the apology, carried by the Zenit Catholic news agency, upon his arrival in Britain after being expelled from Argentina.
In it, Williamson said he was only giving the opinion of a "non-historian" during the Swedish TV interview. He said that opinion was "formed 20 years ago on the basis of evidence then available, and rarely expressed in public since."
However, he said, "the events of recent weeks and the advice of senior members of the Society of St. Pius X have persuaded me of my responsibility for much distress caused."
"To all souls that took honest scandal from what I said, before God I apologize."
Jewish groups not impressed
"With his failure to clearly retract his malicious lies, Williamson has shown again that he is a convinced anti-Semite and an incorrigible Holocaust denier," said the head of Germany's Central Council of Jews, Charlotte Knobloch.
"If it is, let him reflect over the coming weeks and make a proper act of penance," he said in an e-mail statement. "For our part, we seek to move ahead and resume the Catholic-Jewish dialogue with renewed vigor and determination."
A new set of EU guidelines to toughen up national anti-racism and hate crime laws, passed in 2007, recommends EU nations impose prison sentences of up to three years for those convicted of denying genocides officially recognized under statutes of the International Criminal Court.