Bethlehem prepared yesterday to mark its first Christmas cut off from Jerusalem by an Israeli-built wall, but still hoped for its biggest influx of pilgrims for years.

Until this year Christmas celebrations had been muted because of the Palestinian uprising which began in 2000. But a 10-month-old ceasefire has encouraged a big increase in the number of pilgrims and tourists to the town where Christians believe Jesus was born.

"Things are a bit better than in previous years. All the hotels are booked solid with pilgrims who came to celebrate Christmas," said Mariam Azizeh, 47, manager of the tourist office.

Israeli authorities estimate the number of visitors to Bethlehem over the Christmas season will double to 200,000 this year. They include those celebrating Armenian and Orthodox Christmas in January.

The number of worshippers in Bethlehem for midnight mass on Saturday was however expected to be no more than a few thousand, braving bitter cold and rain.

Israel's army has eased restrictions on visitors to allow visits by foreigners as well as Palestinian Christians from the West Bank and Gaza. Israeli Christians are also expected in Bethlehem.

Pilgrims taking the road from nearby Jerusalem - the likely path taken by Mary and Joseph in the Christian narrative - cannot miss the biggest change to Bethlehem this year: the completion of an eight metre-high concrete wall.

"This wall must not exist. One day it will not exist," Michel Sabbah, Pope Benedict's representative in the Holy Land, told reporters after he passed through the military crossing into Bethlehem.

"The Palestinian people should regain their liberty and land with a state and a capital and the Israeli people should have security," Sabbah, Latin Patriarch for the Holy Land, a Palestinian, added.

Israel erected its internationally condemned barrier inside the West Bank with the avowed aim of stopping Palestinian suicide bombers. Palestinians say the barrier is a land grab that denies them a viable state.

The World Court has branded the barrier illegal because it loops into occupied land.