The traditional method, i.e., the method described in the Bentley manual, is to remove the wheel bearing (WB) housing from the car and take it to the dealer or some other place that has a proper press. The main downside to this method is that realignment might be required at the end of the procedure plus you'll need to secure a tool (a pitman arm puller or a pickle fork) to remove the tie rod ends.  The following procedure describes an alternative to removing the WB housing using the Schley wheel bearing removal tool.

The Schley tool (Schley Products tool No. 85500) consists of a 10-inch long  7/8" machine bolt, a steel "cup" that looks like the head of a piston, a large nut and a set of heavy steel washer-like disks that vary in diameter depending on what car you're working on. You use the one that is just smaller than the outer race of the bearing.   In the case of the Rabbit you will use the disk that is 2.438" in diameter.  Each disk also has a raised central projection that just fits inside the inner race to keep everything lined up. The tool "set" also includes two pairs of long bolts (12 mm x 1.5 x 80 mm) which have the same threads as your car's lug bolts.  You can rent the tool from Rapid Parts.com for $30 with a deposit of $250 or purchase the individual parts from any Schley tool distributor...I bought mine from ToolSource.com for about $100.  Here's a parts list and photo of the tool.

Also, for a heavy duty application such as road racing or performance driving you can purchase new wheel bearings that have been repacked with Red Line CV-2 extreme pressure grease from RapidParts.com (Part #053-4071)  for $27.95 each.  What the good folks at Rapid Parts do is remove the seals, force the stock grease out of the bearings, replace it with Red Line CV-2 extreme pressure grease, and re-install the seals.  The claim is that these bearings will withstand higher temperatures and last longer than any OE replacement bearings....if the Redline CV-2 grease is anything like Redline's other products they may be right!

In order to give you a mental picture of what it's like to use the tool, here are the steps involved:

1.  Remove the 30 mm axle nut.
2.  Remove the wheel.
3.  Remove the front brake caliper and pads and hang the caliper up with wire so that you don't damage the brake hose.
4.  Remove the brake rotor screw and rotor.
5.  Now you have two choices:

    o Remove the  ball joint pinch bolt and pull the entire strut/wheel bearing housing unit away from the lower control arm OR...
    o Remove the 6 spline headed bolts from the inner end of the axle and remove the axle from the car.

I found that removing the control arm pinch bolt and dropping the control arm is the easiest way to go (see photo below).

6.  Thread two of the long "lug bolts" into the lug bolt holes in the hub and, making sure they are pressing against a solid area of the WB housing behind the brake dust shield, tighten them each a little at a time until the hub is pressed out of the bearing (see photo below).  It is highly likely that the inner race of the outside half of the bearing will be stuck to the hub and will come out with it (see step 11 below).

7. Remove the inner and outer snap rings from the WB housing (see photo below).  Good quality large snap ring pliers are a big help here. Some report that the snap rings may be rusted in place, mine were not.

8. Pressing the old bearing out:  Oil the threads and the thrust washer on the tool, insert the giant bolt shaft through the old bearing (from the outside), place the "cup" up against the outside of the bearing housing, place the proper size disk up against the rear (i.e. inner) end of the bearing, thread on the giant nut, and tighten it all together until the old bearing is pressed out into the "cup."  This definitely requires some "grunt" but, for the multiple times I have done this, it never felt like I was about to break something or that something was going wrong.

9. Replace the outer snap ring.

10. Pressing the new bearing in: Smear a thin coating of antiseize compound inside the WB housing and on the outer race of the new bearing.  Position the tool exactly as described in step 8 above, i.e., cup and bolt head on the outside of the WB housing. Thread the new bearing over the shaft of the bolt and up against the INNER SIDE of the WB housing, slide the disk up against the bearing's inner end, thread on the nut and tighten away until the new bearing hits the outer snap ring (there's no question about when this occurs...it STOPS...but make sure the bearing is all the way in, if it is not then you won't be able to re-install the inner snap ring as the bearing will be covering a portion of the groove that the snap ring goes into).

11. If you're not putting new wheel hubs on (which you should do if you are racing or hard driving your VW...it's cheap insurance to replace your hub regularily...use a quality German-made hub like a FEBI...$29 at Auto Sports VW Parts) then you need to remove the stuck outer race from the hub.   This is probably the hardest part of the job.   Fortunately, there are two slots milled in the base of the hub shaft that allow you to get some sort of prying apparatus up against the stuck race.  A two armed puller might work but there is not a lot of purchase to be had for a puller.  I've had good success using the two SP Bolts (used to remove the hub) as adjustable pry points as shown in the photo below.

This has worked pretty good for me by simultaneously prying the old race with a set of beefy screwdrivers.   As always, penetrant lubricant helps and if the race is REALLY stuck you might have to resort to a propane torch (or just buy a new hub as a last resort!).   In any event, be careful not to bend the hub or score its polished surface!

12. My car doesn't have brake dust shields but if you removed your brake dust shield....replace it now!

13. Pressing the hub into the new bearing:  Again,  position the tool exactly the same way as in steps 8 and 10 above EXCEPT turn the disk around so that its raised central projection points toward the nut (i.e., AWAY from the WB housing). When the tool is tightened together, the skirt of the "cup" presses against the flanged part of the hub and pushes it into the bearing (see photo below).  This step usually goes well...hubs press in without a lot of required grunt.

14. Replace the inner snap ring (this takes a little deft coordination with the snap ring pliers...it's doable...just be patient).

15.  Insert the drive axle spline through the wheel hub then re-install the lower control arm and pinch bolt.   Pinch bolt torque is 37 ft-lbs.  You can now put the washer on the axle spline and and hand-thread on a new self-locking 30mm axle nut.

16. Replace rotor, caliper, and brake pads.   This is good time to inspect and lubricate the brake caliper rubber inserts from which the brake caliper pins are inserted through.  If the rubber looks worn or spongy replace them (they're cheap).  A new kit includes tube-shaped teflon inserts which go inside of the rubber inserts.  MAKE SURE you lubricate the caliper pins with high temp silicone grease!  I burned through a brand new $80 set of Hawk Blue pads in one weekend because I used the old rubber inserts and neglected to lubricate the pins.  What happens is the caliper assembly sticks and the inner brake pads wear down VERY quickly.  Also...thinking ahead...(and as Neil Young says...rust never sleeps)....I coat the front of the hub and back of the brake rotor with a thin film of antiseize as well as the small Phillips screw that holds the brake rotor to the hub.

17.  The last step is to re-mount the tire and lower the vehicle back on to the ground and firmly chock the tires.  For street applications torque the new self-locking 30mm axle nut to the specified 173 ft-lbs.  For track and racing applications, according to veteran Rabbit racers and  Greg Raven's Book (Water-Cooled VW Performance Handbook) the best way to solve hub failure is to over torque the wheel nut using a cheater bar and the heaviest guy in the paddock (upwards of 250 ft-lbs).  When you do this you do run the risk of stripping the threads of the axle.  I take the intermediate approach and torque to an even 200 ft-lbs.  Note that torquing the axle nut should ONLY be done with the tire mounted and the vehicle firmly on the ground with the tires chocked.
 

Note:  Credit for this tech tip goes to a circa-1994 write-up I found entitled "A1 Bearing Removal" by fellow named William Maslin...thanks!  William wrote about using this tool on his 1982 Convertible Rabbit.  I added the photos from my garage and modified some of the text to fit my experience.  If anyone is interested here's the link.