VATICAN CITY - Pope Benedict XVI urged the faithful to set aside time in their lives for God and the needy, as he ushered in Christmas early today by celebrating Midnight Mass in St. Peter's Basilica.

Echoing a theme he has raised about an increasingly secular world, Benedict said that many people act as if there is no room for spiritual matters in their lives.

"Man is so preoccupied with himself, he has such urgent need of all the space and all the time for his own things, that nothing remains for others, for his neighbor, for the poor, for God," he said.

In a homily delivered in Italian in front of thousands packing the basilica, Benedict asked the faithful to make room for God, as well as the less fortunate, in their lives.

"Do we have time for our neighbor who is in need of a word from us, from me, or in need of my affection? For the sufferer who is in need of help? For the fugitive or the refugee who is seeking asylum? Do we have time and space for God?"

Benedict drew parallels between what he perceives as modern society's refusal of God and the story of how Jesus was born in a manger because there was no space for his family at a nearby inn.

"In some way, mankind is awaiting God, waiting for him to draw near," he said. "But when the moment comes, there is no room for him."

But the message of Jesus' birth is also that God "finds a space, even if it means entering through the stable; there are people who see his light and pass it on."

Earlier, as Midnight Mass began, Benedict blessed the crowd of pilgrims, Romans and tourists, as he walked in a procession up the main aisle to the central altar.

As a choir sang, Benedict sprinkled incense on the altar under Bernini's massive bronze baldachin before opening the service with the traditional wish for peace in Latin:

"Pax vobis"

(Peace be with you). The faithful responded:

"Et cum spiritu tuo"

(And also with you).

For those unable to get into the midnight service, giant screens were set up in St. Peter's Square, made festive with a twinkling Christmas tree and the Vatican's Nativity scene.

Officials unveiled the life-size Nativity yesterday, revealing the statues of Mary and Joseph in a huge house-like structure next to the Vatican's tree.

This year, the scene of Jesus' birth was depicted in a re-creation of Joseph's Nazareth home rather than the traditional manger in Bethlehem. Officials at the unveiling said the shift underscored the idea that Jesus was born not just in a single place, but everywhere and for everyone.

Today, Benedict is to deliver his traditional Christmas Day speech from the balcony of the basilica. He then is expected to issue Christmas greetings to the faithful in more than 60 languages.