The Church's eparchial council also banned some clerics in the Far Eastern diocese from holding services.
"We have long tolerated every accusation and attack. His statements tempted people," Patriarch Alexy II of Moscow and All Russia said.
Diomid, 47, has headed the Chukotka diocese since it was established in 2000.
In his letters, published in the Novye Izvestia newspaper, Diomid described the evolving ecumenism as "heretical teachings." He also criticized the Russian Orthodox Church for "implicitly approving instead of denouncing the incumbent government's anti-national policies" and called the church's consent to democracy a mistake.
He argued that monarchy was the only system of government blessed by God.
In an online publication, Diomid accused the Russian Orthodox Church and the Moscow Patriarchate of "deviating from the purity of Orthodox teachings."
The same publication slammed the Group of Eight major industrialized nations as a body of global Masonry, designed to pave the way for the arrival of a single global leader, or antichrist, and warned against any spiritual cooperation with the "dangerous" group.
Diomid also demanded abolishment of the foreign church relations department at the Moscow Patriarchate, said the Church should refuse to communicate with people of other religions, and called for an end to tax payer identification numbers, modern passports and cell phones.
In a resolution, a working group at the eparchial council of the Russian Orthodox Church said there was no reason to consider anti-national the government supported by the bulk of people. It added that the Orthodox Church has always expressed its concerns about negative social phenomena, such as social stratification, demographic problems and the public promotion of immoral behavior.
The resolution said Diomid's calls for rejecting communication with other denominations and religions were a manifestation of sectarian ideology and schism.
However, the council did offer Diomid the chance to repent, saying the decision to degrade him could then be suspended.