Patriarch Michel Sabbah addressed his message to all Israelis and Palestinians as thousands of pilgrims descended on the Church of the Nativity in Bethlehem, the birthplace of Jesus Christ, which enjoyed its busiest Christmas of the young century, despite icy rain.
Sabbah told worshippers: "To our political leaders, who by their policy can decide for the life or the death of so many in this land, we say: Be builders of life, not of death.
"Any delay of a solution, with the ongoing injustice under its different aspects, the wall, the gates, the prisons or the assassinations, will only add fuel for violence.
"We hope that we can begin a new period in which all violence will stop on both sides, Israeli and Palestinian alike," he said.
He also added: "Leaving all violence, all vengeance, freeing political prisoners and putting the past behind can create a new land in which we can assure security for Israelis ... and give Palestinians liberty and an end to occupation."
Sabbah singled out Palestinian leader Mahmoud Abbas - a Muslim, and the first Palestinian leader in five years to attend the service - for special mention.
Mahmoud Abbas (C) sent a
peace message to Israelis
"Abu Mazen, you are welcome on this night. We pray to God to give you the strength to bring peace to this region," the patriarch said, referring to Abbas.
The address in Arabic and French began nearly an hour late, with heavy security surrounding the Palestinian leader whose predecessor Yasser Arafat was prevented by the Israelis from attending for the last three years of his life.
"We say it again: security for the Israelis means liberty and sovereignty for the Palestinians. These are two interdependent and inescapable realities," said Sabbah who on 11 December led a demonstration by peace activists against Israel's separation barrier in the West Bank and prayed for its removal.
"And the half measures, half liberty, or half sovereignty lead us to nowhere except to fall again in an interminable cycle of violence and insecurity," he said after another year without the creation of a Palestinian state.
Hundreds attended the traditional
procession to Manger Square
"Our Holy Land thirsts to recover its peace and holiness. So give the two peoples the life, the security and the dignity they ask," the patriarch said.
"We hope that our leaders will now take the time and will spend their energies to accomplish what had to be accomplished a long time ago: peace and justice for two peoples capable of living side by side in peace."
Municipal officials and shop owners said the number of foreign visitors was higher than at any other stage since the Palestinian uprising against the occupation broke out five years ago, devastating the tourist industry.
Sabbah led a protest against the
barrier on 11 December
All visitors had to enter Bethlehem from Jerusalem via a huge security terminal in a gap in the towering concrete barrier that has cut Bethlehem off from the holy city about 8km away.
Abbas also condemned the barrier in his Christmas message before attending the mass.
"In our bitter and painful reality, we use this spiritual and religious occasion to send a message of peace to our Israeli neighbours," said Abbas.
Bethlehem governor Salah Tamari said the barrier between Israel and the West Bank had transformed Bethlehem into a "big prison".
"Leaving all violence, all vengeance, freeing political prisoners and putting the past behind can create a new land in"
"Even though the circumstances are very harsh with the wall and the restrictions, the Palestinian people can still celebrate," he told AFP.
Bethlehem has been the scene of some fierce clashes during the course of the intifada, and it has also been struck by the security chaos which has hit large parts of the Palestinian territories.