The German-born Pope delighted the crowds at his weekly audience by wearing a red velvet cap trimmed with white fur along with his scarlet cape as he drove around the square. A Vatican insider said: "The Pope was told it was cold outside and he said he had just the thing. "He came out holding the hat and said he would wear it. He even joked that it made him look like Father Christmas."

The traditional hat, known as a camauro, used to be worn by popes in the Middle Ages to keep their heads warm. In modern times only John XXIII, who was pope from 1958 to 1963, was regularly seen in one.

Pope Benedict changed into his more familiar white skull cap when he arrived at the podium, where he told a packed square that Christmas was a time to remember the true roots of the faith.

Looking over the crowd towards a 100ft Christmas tree, the Pope said that Christmas lights adorning cities and houses around the world should "remind us of another light, invisible to the eyes but not to the heart". The Pope has already shown a taste for traditional papal dress, preferring delicate red slippers for daily wear rather than the robust walking shoes favoured by his predecessor, Pope John Paul II.