VATICAN CITY (AFP) - The Catholic Church has entered uncharted waters after Pope Benedict XVI's shock announcement that he would become the first pontiff to resign of his own free will in 700 years.

The 85-year-old Benedict told a group of cardinals in a speech in Latin on Monday that he will step down on February 28 because his advancing age prevented him from carrying out his duties in a fast-changing world.

Only a few advisers knew of the pope's plan beforehand and many leaders of the Vatican hierarchy were caught off guard, with Cardinal Angelo Sodano saying the announcement came "like a lightning bolt in a clear blue sky".

Ordinary faithful among the world's 1.1 billion Catholics were divided.

Some said the move was a courageous act that would breathe new life into a Roman Catholic Church struggling with multiple crises and could possibly set a precedent for ageing popes no longer at the height of their powers.

Others said they were dismayed that a leader whose election by the Church's cardinals is believed to be divinely inspired could simply decide to quit.

World leaders said they were respectful of Benedict's decision and praised his pontificate, particularly for increasing inter-religious dialogue.

The pope's eight-year rule - one of the shortest in the Church's modern history - also earned him a lot of enemies however, from the gay community to AIDS activists to campaigners for victims of paedophile priests.

An academic theologian and the author of numerous tomes including a trilogy on the life of Jesus Christ, the pope was often seen as somewhat distant from the intrigue of the Vatican and the day-to-day running of the Church.

The Vatican said the ex-pope would initially stay at the papal summer residence of Castel Gandolfo near Rome and then retire to a former monastery inside the Vatican walls - a stone's throw from his successor.

Speculation over who could be the next pope was already in full swing in Rome just hours after the announcement, although even seasoned observers cautioned that predictions on future popes are notoriously unreliable.

The field appears wide open, with some saying the papacy could return to an Italian for the first time since 1978, others saying it could go to a North American and others still saying Africa or Asia could yield the next pope.

The Vatican has said it expects a new pope to be in place in time for Easter, which falls on March 31 this year, although the decision is ultimately up to the cardinals of the Catholic Church meeting in a secret conclave.

They send a signal of black smoke each day until a decision is taken with a two-third majority.

White smoke is then put out from the Vatican palace when a candidate has been approved.

The new pope is then presented to the crowds in St Peter's Square with the famous Latin cry "Habemus Papam!" ("We have a pope!).