I know that reading the Gospel at Mass is restricted to ordained folks. But, is it permissible for a lay man or woman to lead a word and communion service and read from the Gospel? Can they lead a different sort of prayer service in a Catholic Church that includes Gospel reading?
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Well, at a minimum, most people read from the Gospel on Palm Sunday and Good Friday (only about four lines which are labeled "[said by the] crowd:"). I think that counts as laity ;-).
As to "communion service", the prayers of an EM with the homebound can be considered a "communion service," and anyone is allowed to read there.
Your question has to be answered in three parts and must be answered with a sober yes; but the yes can be only permitted in or by a case of grave necessity.
The ordinary ministers of the Eucharist are the bishop and the priests of the diocese or religious house. The ordinary ministers of proclaiming the gospel are the bishop, the priest and the deacon. As is far too common nowadays, there is a genuine shortage of priests and/or deacons in many parishes. Most diocese have permitted parishes to have a certain number of extraordinary ministers of holy communion. These same extraordinary ministers of holy communion are not permitted to read the gospel at Mass. The Archdiocese of Vancouver has very clear rules on this point.
It can arise that the number of priests is so few that a diocesan bishop may have recourse to Rome to have some Pastoral Administrators established in order to fulfill the Sunday obligations for the faithful. This naturally involves reading the gospel during a communion service (outside of Mass). The Diocese of Whitehorse, Yukon has between 4-8 priests at any one time and has several Pastoral Administrators working in the diocese.
A second case in which a lay person may read the gospel at Mass and in a church is when reading the passion on Good Friday. I have seen this in both the Ordinary and Extraordinary Forms of the Mass.
Finally, abbesses are permitted to read the gospel of the day at matins and vespers. In fact, prior to the Second Vatican Council some abbesses (Cistercian and Carthusian) had the privilege of wearing a stole for this occasion. Carthusian abbesses were permitted to wear the maniple also, but on the right arm and not the left like priests. I am unaware if this privilege still exists or not. We should not look into this privilege as some form of ordained deaconesses.