Benedict XVI announced the creation of a new Vatican department dedicated to tackling what he called "a grave crisis in the sense of the Christian faith and the role of the Church." He expressed deep concerns that previously staunch Catholic countries in Europe and North America were facing "the eclipse of a sense of God".
Tens of thousands of worshippers are deserting the Church over issues such as clerical sex abuse and the ban on married priests.
"I have decided to create a new body with the aim of promoting a renewed evangelism," in countries that are going through "progressive secularisation of society", the 83-year-old Pope said.
The new department, to be called The Pontifical Council for New Evangelisation, will try to reinvigorate belief among Catholics in rich, developed countries – or, in the pontiff's words, "find the right means to re-propose the perennial truth of the Gospel."
It is expected to be led by an Italian archbishop, Rino Fisichella, who as head of the Pontifical Academy for Life is the Vatican's top bioethics official.
Congregations in the West have fallen dramatically and faith in the Church has been hard hit by a series of high-profile scandals involving the sexual abuse of children by paedophile priests.
The Vatican, together with senior Church leaders in individual countries, has been accused of ignoring or actively covering up sex abuse cases in the United States, Australia, Germany, Italy, Ireland, the Netherlands, Norway and Austria.
The Pope himself has been accused of turning a blind eye to paedophile priest cases when he was Archbishop of Munich and then head of the Vatican's office for doctrinal enforcement.
The Pope made an official visit to Portugal last month, but barely 20 per cent of the population in the formerly staunchly Catholic country regularly attends church and the average age of priests is 62.
Austria – once seen as a bulwark against the Protestant Reformation and a stronghold of Catholicism in central Europe – is witnessing a particularly strong push for a more liberal Church, partly in response to the paedophile sex abuse scandal.
The Austrian Church has estimated that up to 80,000 of the country's 5.5 million Catholics could leave the church this year a new record.
In Britain there are about six million Catholics – one in ten of the population – but only around a million say they go to Mass every Sunday.
Archbishop Vincent Nichols, the President of the Bishops' Conference of England and Wales, said he looked forward to co-operating with the new body.
"This initiative identifies a challenge with which many in the Catholic Church, and many in other Christian communities, are familiar," he said.