Pope Benedict XVI led hundreds of thousands of pilgrims in an open-air mass in Sydney on Sunday, ending a week of World Youth Day festivities marked by a historic papal apology for priestly sex abuse.

The final service, at which the pope announced that the next World Youth Day would be held in the Spanish capital Madrid in 2011, came a day after he said he was "deeply sorry" for the "evil" of the sexual abuse of children.

Royal Randwick Racecourse, usually the cathedral of Australia's massive horse racing industry, was transformed into a sea of cheering and flag-waving Catholic devotees from around the world as the pontiff took to a special stage.

Organisers had predicted that the more than 200,000 pilgrims in Sydney for the festival would be joined by hundreds of thousands of other worshippers, but observers said the total appeared to fall well short of the expected 500,000.

Benedict told them World Youth Day in Australia had been an unforgettable experience but warned that a "spiritual desert" was spreading in the modern world.

He urged the young pilgrims who travelled to Australia from all over the world to become "messengers of love".

"The world needs this renewal," he said. "In so many of our societies, side by side with material prosperity, a spiritual desert is spreading, an interior emptiness, an unnamed fear, a quiet sense of despair."

Before the service, the 81-year-old pope, in his traditional white robes with a red cape over his shoulders, took to the skies in a helicopter to get a bird's-eye view of the sea of pilgrims gathered to see him.

He then did a slow circuit of the racecourse in his iconic "popemobile," smiling and waving to the crowds as some mothers thrust babies up to the vehicle's large windows in the hope their children might feel the papal aura.

"It's really the opportunity for us to build up our faith more deeply, especially for my children," said Corry Setio, an Indonesian-born Australian who turned up to see the leader of the world's 1.1 billion Catholics say mass.

During the service, traditional Fijian dancers and singers performed for the pope, pilgrims and a battery of robed bishops and cardinals from around the world who attended the mass.

The pontiff arrived in Australia a week ago to preside over the biggest Christian gathering on earth that has seen Sydney's easy-going pace replaced by an atmosphere that combines football match fever with rock concert festiveness and religious fervour.

World Youth Day was launched in 1986 by the late pope John Paul II in a bid to help the stem the flow of young Catholics away from the once-dominant church in an age of growing secularism in the western world.

But this year's celebrations were partly overshadowed by a scandal over the sexual abuse of Australian children by some Catholic clergy that had rocked the global church for years.

Amid public pressure from victims, the pope on Saturday apologised publicly and fully for abuse in the Australian church and called for those responsible to be brought to justice.

During a mass for local clergy in Sydney's St Mary's Cathedral, he expressed his shame and made his first direct and explicit apology to victims of paedophile priests.

"Here I would like to pause to acknowledge the shame which we have all felt as a result of the sexual abuse of minors by some clergy and religious (order members) in this country," Benedict said.

"I am deeply sorry for the pain and suffering the victims have endured and I assure them that, as their pastor, I too share in their suffering," he said.

But some activists dismissed the pontiff's apology before a group of bishops, seminarians and novices, saying words were not enough and that he should have apologised in front of sex abuse victims.

"Sorry may be a start but we want to see a lot more," said Chris MacIsaac, spokeswoman for the victims' group Broken Rites, adding that she wanted victims to be treated fairly and not to be "re-abused by church authorities."

In a visit to the United States in April, the pope spoke of the shame and suffering that abusive priests had brought upon the church, but stopped short of a direct apology.