Christians gathered at the Church of the Nativity in the holy city of Bethlehem on Tuesday to mark a solemn Christmas overshadowed by war, as Pope Francis led mass in the Vatican.

In Bethlehem, in the Israeli-occupied West Bank, festive decorations were missing for a second consecutive year.

The crowd of several hundred paled in comparison to the throngs of tourists and pilgrims of Christmases past - a reflection of the sombre mood as the war between Israel and Hamas fighters in the Gaza Strip churns on.

At Manger Square, the heart of the Palestinian city dominated by the revered church that marks the site where Christians believe Jesus Christ was born, a group of scouts held a parade that broke the morning's silence.

"Our children want to play and laugh," read a sign carried by one of them, as his friends whistled and cheered.

Traditionally in Bethlehem, a grand Christmas tree would light up Manger Square, but local authorities opted against elaborate celebrations for a second year.

Prayers, including the church's famed midnight mass, will still be held in the presence of the Catholic Church's Latin patriarch, but the festivities will be of a more strictly religious nature.

The patriarch, Archbishop Pierbattista Pizzaballa, told a crowd in Bethlehem he had just returned from Gaza, where he "saw everything destroyed, poverty, disaster".

"But I also saw life. They don't give up. So you should not giver up either. Never."

Despite the gloomy mood, some Christians in the Holy Land, who number about 185,000 in Israel and 47,000 in the Palestinian territories - were finding refuge in prayer.

In war-ravaged Gaza, which is cut off from the West Bank by Israeli territory, hundreds of Christians gathered at a church to pray for an end to the war.

"This Christmas carries the stench of death and destruction," said George al-Sayegh, who for weeks has sought refuge in the 12th-century Greek Orthodox Church of Saint Porphyrius in Gaza City.

"There is no joy, no festive spirit. We don't even know who will survive until the next holiday."

Elsewhere in the Middle East, hundreds of people took to the streets in Christian areas of Damascus to protest the burning of a Christmas tree in a Syrian town, just over two weeks after Islamist-led rebels ousted president Bashar al-Assad. (AFP)