The decision to resign on February 28 sets the stage for a conclave to elect a new pope before the end of March.
The 85-year-old pope announced his decision in Latin during a meeting of Vatican cardinals on Monday morning. He said that because of his advanced age and diminishing strength, he didn't feel he could carry on the job.
The German-born Pope, hailed as a hero by conservative Catholics and viewed with suspicion by liberals, said he had noticed that his strength had deteriorated over recent months.
His papacy has been beset by a child sexual abuse crisis that tarnished the Church, one address in which he upset Muslims and a scandal over the leaking of his private papers by his personal butler.
'Strength of body and mind'
In a statement, the pope said in order to govern " ... both strength of mind and body are necessary, strength which in the last few months, has deteriorated in me to the extent that I have had to recognise my incapacity to adequately fulfil the ministry entrusted to me.
"For this reason, and well aware of the seriousness of this act, with full freedom I declare that I renounce the ministry of bishop of Rome, successor of Saint Peter," he said.
A Vatican spokesperson said the pontiff would step down on February 28, leaving the office vacant until a successor was chosen to Benedict who succeeded John Paul one of history's most popular pontiffs.
Elected to the papacy on April 19 2005 when he was 78 years old – 20 years older than John Paul was when he was elected – Benedict ruled over a slower-paced, more cerebral and less impulsive Vatican.
But while conservatives cheered him for trying to reaffirm traditional Catholic identity, his critics accused him of turning back the clock on reforms by nearly half a century and hurting dialogue with Muslims, Jews and other Christians.
Before he was elected pope, the former Cardinal Joseph Ratzinger was known by such critical epithets as "God's rottweiler" because of his stern stand on theological issues.
German government 'moved'
The German government said it was "moved and touched" by the surprise resignation.
"As a Christian and as a Catholic, one can't help but be moved and touched by this," government spokesperson Steffen Seibert said at a government news conference.
"The German government has the highest respect for the Holy Father, for what he has done, for his contributions over the course of his life to the Catholic church. He has been at the head of the Catholic church for nearly eight years. He has left a very personal signature as a thinker at the head of the church, and also as a shepherd. Whatever the reasons for this decision, they must be respected," Seibert added. – AFP, Reuters