In the annual state of the world speech, Pope Benedict has condemned terrorism as moral perversion, called for peace between Israel and Palestinians, and urged sacrifice to feed the world's hungry.

The pope said terrorism is all the more deplorable when it "hides behind religion, bringing God's truth down" to the terrorists' own level.

The pope said Israel must be able to exist peacefully and the Palestinians must be able to develop their own democratic institutions.

Pope Benedict said wealthy countries must do more to help the poor, noting that a reduction by only half in arms spending could alleviate hunger for large masses of the world's people.

The pope's message was given in French to Vatican-based diplomats.

Some information for this report provided by Reuters and AP.