The pontiff officially launched preparations for the event initiated by his predecessor John Paul II at a Palm Sunday mass at St Peter’s Square in Rome on Sunday.
Wearing red and white vestments, the Pope urged young people not to give in to the temptations of worldly riches and moral irresponsibility.
"All this sounds convincing and seductive but it is the language of the serpent," he said, referring to the Biblical story where Eve was convinced by the devil in the form of a snake to disobey God.
During the service, young people from Germany handed over a large wooden cross to six young Australians to take to Sydney for the 2008 celebrations.
The Pope said their journey would symbolise their attempt to spread peace "across continents and cultures, across a world lacerated and tormented by violence".
The ceremony coincided with a special mass at Sydney’s St Mary’s Cathedral to mark the handover.
The New South Wales and federal governments have announced that they will contribute $A40 million to help Sydney stage the event.
The week long festival is expected to attract up to half a million visitors including 130,000 pilgrims from overseas.
It will be the first time a Papal mass has been held in Australian by Pope Benedict XVI.
Pope laments corruption
Coinciding with the announcement of the upcoming Papal visit, Pope Benedict XVI led the Roman Catholic Church towards the first Easter season of his pontificate.
At a Palm Sunday service in St Peter's Square, surrounded by palm and olive branches, he said selfishness and corruption were devastating today's world.
He was commemorating Christ's triumphant entry into Jerusalem, when he was welcomed by adoring crowds a week before people turned against him and he was arrested and crucified.
This year marks the first Easter season for Pope Benedict. His predecessor John Paul was in his dying days for all of last year's Easter season and was only able to make brief appearances. John Paul died on April 2, a week after Easter.
Speaking to tens of thousands of people, the Pope weaved his sermon around the contrast between material and spiritual riches and the relationship between personal freedom and responsibility.
After blessing palm and olive branches, symbols of peace, he called for people around the world to undergo "a purification of hearts" to help heal what he said was a "lacerated world".
He urged them to look to Christ for help to "overcome the corruption and selfishness which is devastating the world today".
Christ's message, he said, was "not to respond to an injustice with another injustice, to violence with another violence, but to remind us that evil can only be overcome with good, not with another evil".
Easter services
The 78-year-old Pope will have a hectic week ahead of him as he
leads Roman Catholics to Easter. He hold his general audience on Wednesday.
On Holy Thursday he presides at two services, including one in which he will wash and kiss the feet of 12 priests in a gesture commemorating Christ's gesture of humility to his apostles on the night before he died.
On Good Friday, he will hold two services commemorating Christ's
death, including a Via Crucis (Way of the Cross) procession around the ancient ruins of Rome's Colosseum.
He says an Easter Eve mass on Saturday night and on Sunday will
deliver an Urbi et Orbi (to the city and the world) blessing and message.