A Vatican official, Archbishop Crescenzio Sepe, gave the first official confirmation that the visit would go ahead at a press conference unveiling the Vatican's updated schedule for the millennium celebrations.

The Pope was also dogged by controversy in India

The Israeli Foreign Ministry welcomed the announcement.

"It's a very important visit. We all hope that this visit is going to reinvigorate and support the spirit of peace and reconciliation between religions and the peoples of the Middle East," said a Foreign Ministry spokesman Effie Ben-Matityahu.

The visit will take place at the end of March, and is expected to take in Jerusalem, Bethlehem and Nazareth.

Tension over Nazareth mosque

The tour had been put in doubt because of a dispute over plans to build a mosque near the Holy Basilica of the Annunciation - the site where Christians believe the Virgin Mary was told by the Angel Gabriel that she would give birth to Jesus Christ.

Muslims want to build an Islamic Centre in front of the Basilica

A Vatican official had said that the Pope's visit would be hindered by the plan, which was approved by the Israeli authorities.

The Christian mayor of Nazareth had wanted to turn the land next to the Basilica into a public square for the thousands of pilgrims expected during the millennium celebrations.

Muslims in the town want to expand a nearby mosque onto the site and build an Islamic centre. They believe that it is the burial site of a revered Islamic scholar.

The dispute exploded into violence last April. Demonstrations by thousands of Muslims left nearly 30 injured.

Iraq visit under consideration

Details of another controversial Papal trip have been released by the Vatican's missionary news agency, Fides.

In a report based on comments by Iraqi church officials, Fides said a Vatican advance team would leave for Baghdad on Saturday to plan a visit proposed for January.

Fides suggests that the Pope was keen to visit the ancient city of Ur, believed to be the birthplace of Abraham.