- (BBC) The Pope was cheered by crowds as he entered and began speaking at a weekly audience in a hall at the Vatican.
He said he resigned "for the good of the Church", aware of his own declining spiritual and physical strength.
Later he will hold what is expected to be his last public Mass, for Ash Wednesday, in St Peter's Basilica.
The 85-year-old will continue with his diary as usual until the day he officially retires at the end of February, Vatican officials say.
By the end of Lent, in six weeks' time, there is expected to be a new Pope.
The BBC's David Willey in Rome says Pope Benedict is anxious to ensure a smooth transition of power to his successor, and does not want to go down in history as a pope who abandoned his ministry without sufficient cause.
The pontiff's daily diary until his departure from the Vatican at the end of the month is already full.
On 28 February he will fly off to the papal retreat at Castel Gandolfo, where he will stay while Church leaders go through the complicated ritual of choosing a successor.
The secret process of selecting a new Pope is known as a conclave, governed by rules which have evolved over centuries.
Our correspondent says says the behind-the-scenes battle for the succession has already begun.
The Pope held his weekly general audience at its traditional venue, the audience hall in the Vatican.
Thousands of people gathered in the hall to greet him, giving him a standing ovation as he arrived, and cheering as he began and finished speaking.
Looking tired and drawn, Pope Benedict thanked the crowd for their warm greeting and their sympathy.
"Thank you for the love and prayer with which you have accompanied me... Keep praying for me, for the Church and for the future pope," he said.
He said he was aware of the gravity of his decision to resign but also of his declining strength, adding that he was certain the Church would sustain him with prayer.
"I did this in full liberty for the good of the Church," he added.
The afternoon Mass has been relocated. The pontiff had been scheduled to celebrate Ash Wednesday at the small Sant' Anselmo church, then lead a procession to Santa Sabina Basilica on Rome's Aventine Hill.
The Vatican said the change to St Peter's was to accommodate the crowds, but it will also save the Pope the effort of the procession.
"It will be an important concelebration, and the last led by the Holy Father in St Peter's," Vatican spokesman Federico Lombardi said.
Pope Benedict will anoint the foreheads of the faithful with ashes, in a service attended by cardinals, bishops, monks, friars and pilgrims.
Ash Wednesday begins Lenten season, a period of penitence before Easter - celebrated this year by western Christians at the end of March and beginning of April.
The Vatican holds a Lenten retreat from 17 to 23 February. The Pope will hold one more Wednesday audience on 27 February, again in St Peter's Square.
At 78, Cardinal Joseph Ratzinger was one of the oldest popes in history at his election.
He took the helm as one of the fiercest storms the Catholic Church has faced in decades - the scandal of child sex abuse by priests - was breaking.
The pontiff said in his resignation statement on Monday: "After having repeatedly examined my conscience before God, I have come to the certainty that my strengths, due to an advanced age, are no longer suited to an adequate exercise of the Petrine ministry."
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