Associated Press has issued an apology for its misleading reporting of this issue. Most of the major "shock! horror!" aspects of the story seem to have been fabricated and then subsequently picked up and embelished by other news agencies:

"In stories published June 3 and June 8 about young children buried in unmarked graves after dying at a former Irish orphanage for the children of unwed mothers, The Associated Press incorrectly reported that the children had not received Roman Catholic baptisms; documents show that many children at the orphanage were baptized. The AP also incorrectly reported that Catholic teaching at the time was to deny baptism and Christian burial to the children of unwed mothers; although that may have occurred in practice at times it was not church teaching. In addition, in the June 3 story, the AP quoted a researcher who said she believed that most of the remains of children who died there were interred in a disused septic tank; the researcher has since clarified that without excavation and forensic analysis it is impossible to know how many sets of remains the tank contains, if any. The June 3 story also contained an incorrect reference to the year that the orphanage opened; it was 1925, not 1926."

(source: http://blogs.telegraph.co.uk/news/timstanley/100277164/associated-press-apologises-for-its-incorrect-reporting-of-the-tuam-babies-scandal/ )