Peruvian theologian Gustavo Gutiérrez, 86, will address the General Assembly of the Roman Catholic humanitarian charity Caritas in Rome this week. Gutiérrez spent many years under a cloud of suspicion as a priest and theologian because of his development of 'Liberation Theology', regarded by conservatives with considerable hostility. He was never formally censured for his views and this will not be the first time he has met Pope Francis since he took over from Benedict XVI, but it marks a further step in his road to respectability. It may also be taken as a sign of the relative eclipse of Liberation Theology since the days when it was headier and much more threatening.

Liberation Theology – what's it all about, then?

It grew up in Latin America in the 1950s as a reaction among priests and theologians to the really dreadful poverty and oppression in the region. Gutierrez coined the phrase in 1971 with his book A Theology of Liberation. Liberation Theology shifted the emphasis of morality away from personal sins to the structural sins which kept people poor and downtrodden. That came three years after the famous bishops' conference in Colombia in 1968, which resulted in a document affirming the rights of the poor and accusing industrialized nations of enriching themselves at the expense of Third World countries.

What was Gutierrez teaching?

Gutierrez took the Exodus as an example of what God wanted to do for the world. The Gospel is all about liberation, at every level, including politically. He argued that charity was second-best; the Church should be fighting for justice. He said that God had a "preferential option for the poor". Influenced by Marx, he embraced socialist theory.

That doesn't sound too revolutionary.

We have got much more used to talking about justice, even among evangelicals, thanks largely to people like Gutierrez – though that doesn't mean it isn't still revolutionary. At the time, though, he and others like Leonardo Boff, Jon Sobrino, Hugo Assman and Juan Luis Segundo were being very radical and upsetting a lot of people. The people in their sights were rich industrialists, landowners and politicians – and senior churchmen – who formed a ruling caste throughout Latin America. Most of them were good Catholics who objected to being told they were part of the problem of poverty, rather than its solution. Another problem – far more serious than hurt feelings – was that this was during the Cold War, when a pattern of ruinous civil wars and insurrections between the Right and the Left, each with their super-power sponsor, brought widespread misery. Any challenge to right-wing ideology was automatically Communism, and should be stamped out – violently, if necessary.

It seems odd to think of theology as dangerous.

It's something of a reproach to the Church that it should seem odd. However, Liberation Theology was also seen by the Church – and particularly the Vatican – as dangerous. Its focus on justice and its encouragement of protest and grass-roots activism seemed too close to Communism for comfort; Pope John Paul II was virulently anti-Communist because of his experience in Poland.

However, Liberation theologians weren't generally in favour of violence, but they exposed the violence of the state – not just the death squads and righ-wing paramilitary groups sponsored by the government, but the violence of a system that kept people in poverty. So it was associated with a challenge to unjust regimes, which responded with a violence that provoked violence. In Nicaragua, priests took part in the 1979 Sandinista revolution against Anastasio Somoza's rightwing dictatorship. Liberation theology also influenced leftist rebels in Mexico and Colombia.

In the late 1970s a poster that was circulated in a Central American country depicted a picture of Christ hanging on a cross with a guerrilla soldier superimposed over his body, arms outstretched – a provocative image, to say the least.

Pope Francis has something of a history with Liberation Theology, doesn't he?

Yes. According to the excellent biography by Paul Vallely (Pope Francis: untying the knots), as Provincial Superior of the Jesuits in Argentina, he was determined to clamp down on it. His predecessor had allowed four priests to set up a community in a slum area, following good Liberation Theology principles of coming alongside the poor, and he shut it down. Two of them refused to leave and were arrested and tortured by the regime; Francis was blamed – Vallely believes unfairly – for this. He later had a complete change of heart regarding the poor, and concern for them is the keynote of his message as Pope.

So the Pope is a revolutionary Communist type?

No, and that illustrates one of the nuances of Liberation Theology. It could be confrontational, exclusive and tend to violence, and it could be challenging, inclusive and tend to restoration. That version is the one espoused by Archbishop Romero, for instance, martyred for his faith in 1980. He referred in a sermon in 1979 to a liberation theologian who was asked: "For you, what is the meaning of the Church?" The answer was, "There are two Churches, the Church of the rich and the Church of the poor. We believe in the Church of the poor but not in the Church of the rich." Romero declared, "There is only one Church, the Church that Christ preached, the Church to which we should give our whole hearts."

You seem to refer to Liberation Theology in the past tense.

What might be called its heyday is past, not least because of changing political conditions. However, many of its insights have been internalised in the Catholic Church and the Church in general – hence the warm welcome for Gutierrez at the Vatican. Liberation Theology, with its insistence that the Gospel was for the poor and that the whole world is under the lordship of Christ, was perhaps the most important theological movement of the last century. The triumph of free-market economics and the worldwide eclipse of socialism arguably make it essential to continue listening to its voice.