A Catholic bishop in Northern California took the extremely rare step of resigning yesterday, after a priest under his supervision sued him for sexual assault.

Bishop Patrick Ziemann, head of the 140,000-member Diocese of Santa Rosa north of San Francisco, became one of only a handful of America's 193 bishops ever to resign over a sexual scandal when Pope John Paul II accepted his resignation. Insisting that he is innocent of the allegation against him, Ziemann said he was leaving to avoid causing embarrassment to his diocese.

Last week, the Rev. Jorge Hume Salas, 41, sued Ziemann in Sonoma County Superior Court, saying the bishop had abused him for two years ending in 1998. Salas claimed that Ziemann demanded sex weekly in exchange for his silence after Salas admitted that he had stolen $1,200 from St. Mary's Church in Ukiah, about 100 miles north of San Francisco.

National groups that monitor sexual abuse cases involving priests called it very unusual for someone as high-ranking as a bishop to resign. Last year, Bishop Joseph Keith Symons of Florida resigned after admitting to molesting five boys over a 40-year tenure. Two other bishops resigned earlier this decade after admitting to affairs with women.

Ziemann, though, continues to deny the charges aggressively, saying they amount to blackmail by a disgruntled employee. Late last year, Salas demanded an $8 million settlement from the diocese. Ziemann's decision to resign, said his lawyers, was a noble act designed to prevent the bankrupting of the diocese at the hands of a profiteer.

"The Bishop has refused to buy his reputation and peace of mind from this man at the price of millions from the people of this Diocese," said Joseph Piasta, Ziemann's lawyer, in a statement. "These charges threaten not only the reputation of a very holy man, but the faith of thousands of North Bay Catholics that recognize him as what a modern Catholic leader should be."

Salas's lawyer, Irma Cordova, said her client had made the demand for $8 million only as a device to get attention from church officials after they repeatedly ignored his complaints and then suspended him from his job. She said Salas had always intended to keep the matter private and in fact withdrew the demand for money seven months ago, in the vain hope that church officials would rehire him.

"When you make a claim like this against a person that powerful, the church sort of sweeps you under the rug," said Cordova.

The Santa Rosa Police Department is investigating Salas's claims.

Ziemann recruited Salas, a Costa Rican native, in 1992 to reach out to the diocese's Latino community. Local press reports described Ziemann as "always jovial and decidedly less formal than any of his predecessors," an active bishop who spent his days touring churches and schools in his region.

But trouble started for Ziemann in January of this year, when a local nun, Sister Jane Kelly, released documents showing that Ziemann had covered up Salas's admission of theft, as well as accusations by four Latino men that Salas had accosted them.

For Kelly, this was the last straw. Ziemann had promised to publicize misconduct by priests after five priests in the diocese were involved in sex scandals during his seven-year tenures. Yesterday, Kelly said she was grateful for his resignation.