The president of the "underground" Catholic community's bishops' conference in China, Bishop Joseph Fan Zhongliang of Shanghai, died on Sunday aged 96, following a long illness.
Soon after his death officials removed his biretta, a gesture to show they do not recognize his bishop's status, a Church source told ucanews.com.
However, authorities have allowed two days for the faithful to pay their respects to the Jesuit bishop.
"They backed off as a result of a protest by the underground Church administrator, who threatened not to hold a Mass and let the officials face the resulting wrath of angry Catholics," the source said.
Shanghai has lost a "steadfast and persevering" leader in Bishop Fan, said Anthony Lam Sui-ki, senior researcher at the Holy Spirit Study Centre in Hong Kong.
He was a well respected churchman, Lam said on Monday, noting that even all young priests from the "open" community went to get Bishop Fan's blessing before they were ordained.
"Bishop Fan's death will create the need for the underground bishops to get together for an election, even though it has been the secretariat operating the bishops' conference for years," Lam observed.
Asked whether such a meeting will bring a new crackdown on the Church, Lam said, "The government should be rational and understand that the Church is a peaceful group that does not bring any harm."
There is now an urgent need for Auxiliary Bishop Thaddeus Ma Daqin of the "open" community to regain his freedom, though it is hard to predict how the government will handle his case, Lam added.
Bishop Ma has been under house arrest since he declared he would leave the government-sanctioned Catholic Patriotic Association during his episcopal ordination in July 7, 2012.
The diocese, under government pressure, suspended his ministry for two years, during which he cannot make public appearances. The suspension ends this July.
Bishop Fan was born in 1918 and baptized at 14 years old. He entered the Jesuit Society in 1938 and was ordained a priest in 1951.
In 1955, he and the then Bishop Ignatius Kung (Gong Pin-mei, who later became a cardinal) and a number of priests were thrown into prison accused of revolutionary crimes.
The future Bishop Fan was sentenced to 20 years imprisonment in Qinghai province, during which it became his job to carry corpses to a cemetery.
After his release, he became a high school teacher before being allowed to return to Shanghai.
He was secretly ordained as coadjutor bishop of Shanghai in 1985 and succeeded Cardinal Kung when he died in 2000.
Bishop Fan found himself under strict surveillance for decades.
"His name 'Zhong' and 'Liang' [loyal and kind] reflected his virtues throughout his life," a layperson said on Monday.