The demonstrators will tell hundreds of thousands of pilgrims expected at the Catholic celebrations in Sydney that "the pope is wrong, gays are great and condoms save lives," the NoToPope Coalition said in a statement.
The coalition includes the Metropolitan Community Church, Atheists Sydney, Community Action Against Homophobia and the Socialist Alliance among other groups, the statement said.
"This Pope is homophobic and condemns same-sex marriage," said spokeswoman Rachel Evans.
"Pope Benedict also condemns millions of people to AIDS via his world-wide anti-condom policy," she said.
The coalition plans to hold a public rally in the city on July 19 and then march toward Randwick Racecourse, where pilgrims will be gathering for a Papal mass the next day which is expected to draw 500,000 people.
"By calling homosexuality an objective disorder and saying gay sex is evil, Pope Benedict nurtures bigotry and violence, not love," said organiser Luke Roberts.
The five-day celebration of Catholic youth has been billed as a major boost to the economy of Australia's largest city, attracting up to 125,000 international visitors.
But there has been a stream of grumbles over the event's costs, its impact on businesses as well as the inconvenience it will cause the city's residents.
The New South Wales state government has committed almost 110 million dollars (104 million US) to staging the event, arguing it will pump 150 million dollars into the economy.
But the coalition said it would protest state funding for an event staged by the Catholic Church "an organisation that clearly doesn't need the money."
"The money should instead have gone to badly needed community services," said Anthony Englund, representing Atheists Sydney.
Pope Benedict XVI is due to arrive in Australia on July 13 and will take a four day holiday before joining the World Youth Day celebrations culminating in the Papal mass on July 20.
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