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Father Jerzy Popieluszko, aged 37, was kidnapped on 19 October allegedly by three secret police, led by a police captain in the Interior Ministry, who have since been arrested.
Father Popieluszko had become famous throughout Poland when he drew thousands to his church where he preached against the Communist government.
In March this year the Pope sent Father Popieluszko a gift via the Bishop of Warsaw after he had attacked the Polish Communist government for banning crucifixes from schools.
Eleven days ago, he was ambushed on a forest road near the town of Torun, 45 miles (72km) from the reservoir.
Divers found the priest's remains in the Wloclawek reservoir, west of the capital Warsaw after a two-day search. The alleged kidnappers had said they had dumped his body in a reservoir on the River Vistula.
When the news was announced at his parish church, his congregation was silent for a moment and then began shrieking and weeping with grief.
Thousands more followers gathered at his church, St Stanislaw's, singing the nationalist church anthem, "May God watch over Poland".
Solidarity leader Lech Walesa issued a statement saying: "The worst has happened. Someone wanted to kill and he killed not only a man, not a Pole, not only a priest. Someone wanted to kill the hope that it is possible to avoid violence in Polish political life."
He also urged the Polish public to remain calm and said Father Popieluszko's funeral should be peaceful.
Both the Polish authorities and the banned trade union movement are worried that national grief will turn to more violent demonstrations followed by repression.
Even before the priest's body was found the government had already imposed a state of alert in nine major towns and cities, imposing large fines or prison sentences on groups of demonstrators.
Yesterday, the Warsaw press published a stern warning issued by Poland's leader General Jaruzelski during a speech to the central committee which read: "The people's authority ... is capable in the name of social peace of carrying out lawful and determined counterblows to the actions of troublemakers."
Martial law, introduced on 13 December 1981, was lifted in March last year but Catholic churches are still the only place where supporters of banned groups such as Solidarity feel they can gather in large numbers.
According to the Daily Telegraph newspaper, the leader of the Polish Church, Archbishop Glemp, had summoned Father Popieluszko and told him several times "to tone down his sermons in accord with restraints and pressures imposed by the Communist system". .
About 250,000 people attended Father Popieluszko's funeral at his church in a Warsaw suburb on 3 November 1984.
For the first time in nearly three years, Lech Walesa was allowed to address the large crowd.
He said: "Solidarity lives because Popieluszko shed his blood for it."
The funeral remained peaceful and church wardens were allowed to control the crowds, with the police keeping a discreet distance.
Just two months later, in December 1984, three policemen and their superior were put on trial during which it emerged the priest had been severely beaten after trying to escape his kidnappers several times.
All four defendants - Captain Grzegorz Piotrowski, Leszek Pekala, Waldemar Chmielewski and Colonel Adam Petruszka - were jailed and have since been released.
Commentators said the fact that an open trial was allowed to take place indicated a rift within the government between hardliners who had allowed the murder to happen and General Jaruzelski who insisted the perpetrators would be brought to justice.
In 1997 the Vatican began procedures to beatify Father Popieluszko, a process that can take decades.
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