* Resignation could mean uncertainty for Catholic Church
* Vatican expects new pope before end of March
* Pressure on cardinals to elect leader from developing world
* Decision leaves close aides "incredulous", tributes pour in (Adds call for pope from developing world, advocates for women priests)
By Philip Pullella
VATICAN CITY, Feb 11 (Reuters) - Pope Benedict stunned the Roman Catholic Church on Monday when he announced he would stand down, the first pope to do so in 700 years, saying he no longer had the mental and physical strength to carry on.
Church officials tried to relay a climate of calm confidence in the running of a 2,000-year-old institution, but the decision could lead to uncertainty in a Church already besieged by scandal for covering up sexual abuse of children by priests.
The soft-spoken German, who always maintained that he never wanted to be pope, was an uncompromising conservative on social and theological issues, fighting what he regarded as the increasing secularisation of society.
It remains to be seen whether his successor will continue such battles or do more to bend with the times.
Despite his firm opposition to tolerance of homosexual acts, his eight year reign saw gay marriage accepted in many countries. He has staunchly resisted allowing women to be ordained as priests, and opposed embryonic stem cell research, although he retreated slightly from the position that condoms could never be used to fight AIDS.
He repeatedly apologised for the Church's failure to root out child abuse by priests, but critics said he did too little and the efforts failed to stop a rapid decline in Church attendance in the West, especially in his native Europe.
In addition to child sexual abuse crises, his papacy saw the Church rocked by Muslim anger after he compared Islam to violence. Jews were upset over rehabilitation of a Holocaust denier. During a scandal over the Church's business dealings, his butler was accused of leaking his private papers.
In an announcement read to cardinals in Latin, the universal language of the Church, the 85-year-old said: "Well aware of the seriousness of this act, with full freedom I declare that I renounce the ministry of Bishop of Rome, Successor of St Peter ...
"As from 28 February 2013, at 20:00 hours (1900 GMT) the See of Rome, the See of St. Peter will be vacant and a conclave to elect the new Supreme Pontiff will have to be convoked by those whose competence it is."
POPE DOESN'T FEAR SCHISM
Benedict is expected to go into isolation for at least a while after his resignation. Vatican spokesman Father Federico Lombardi said Benedict did not intend to influence the decision of the cardinals in a secret conclave to elect a successor.
A new leader of the world's 1.2 billion Roman Catholics could be elected as soon as Palm Sunday, on March 24, and be ready to take over by Easter a week later, Lombardi said.
Several popes in the past, including Benedict's predecessor John Paul, have refrained from stepping down over their health, because of the division that could be caused by having an "ex-pope" and a reigning pope alive at the same time.
Lombardi said the pope did not fear a possible "schism", with Catholics owing allegiances to a past and present pope in case of differences on Church teachings.
He indicated the complex machinery of the process to elect a new pope would move quickly because the Vatican would not have to wait until after the elaborate funeral services for a pope.
It is not clear if Benedict will have a public life after he resigns. Lombardi said Benedict would first go to the papal summer residence south of Rome and then move into a cloistered convent inside the Vatican walls.
The resignation means that cardinals from around the world will begin arriving in Rome in March and after preliminary meetings, lock themselves in a secret conclave and elect the new pope from among themselves in votes in the Sistine Chapel.
There has been growing pressure on the Church for it to choose a pope from the developing world to better reflect where most Catholics live and where the Church is growing.
"It could be time for a black pope, or a yellow one, or a red one, or a Latin American," said Guatemala's Archbishop Oscar Julio Vian Morales.
The cardinals may also want a younger man. John Paul was 58 when he was elected in 1978. Benedict was 20 years older.
"We have had two intellectuals in a row, two academics, perhaps it is time for a diplomat," said Father Tom Reese, senior fellow at the Woodstock Theological Center at Georgetown University. "Rather than electing the smartest man in the room, they should elect the man who will listen to all the other smart people in the Church."
Liberals have already begun calling for a pope that would be more open to reform.
"The current system remains an 'old boy's club' and does not allow for women's voices to participate in the decision of the next leader of our Church," said the Women's Ordination Conference, a group that wants women to be able to be priests.
The last pope to resign willingly was Celestine V in 1294 after reigning for only five months, his resignation was known as "the great refusal" and was condemned by the poet Dante in the "Divine Comedy". Gregory XII reluctantly abdicated in 1415 to end a dispute with a rival claimant to the papacy.
Lombardi said Benedict's stepping aside showed "great courage". He ruled out any specific illness or depression and said the decision was made in the last few months "without outside pressure". But the decision was not without controversy.
"This is disconcerting, he is leaving his flock," said Alessandra Mussolini, a parliamentarian who is granddaughter of Italy's wartime dictator. "The pope is not any man. He is the vicar of Christ. He should stay on to the end, go ahead and bear his cross to the end. This is a huge sign of world destabilisation that will weaken the Church."
Cardinal Stanislaw Dziwisz, secretary to the late Pope John Paul, said the former pope had stayed on despite failing health for the last decade of his life as he believed "you cannot come down from the cross."
While the pope had slowed down recently - he started using a cane and a wheeled platform to take him up the long aisle in St Peter's Square - he had given no hint recently that he was considering such a dramatic decision.
Elected in 2005 to succeed the enormously popular John Paul, Benedict never appeared to feel comfortable in the job.
"MIND AND BODY"
In his announcement, the pope told the cardinals that in order to govern "... both strength of mind and body are necessary, strength which in the last few months, has deteriorated in me to the extent that I have had to recognise my incapacity to adequately fulfil the ministry entrusted to me."
Before he was elected pope, the former Cardinal Joseph Ratzinger was known as "God's rottweiler" for his stern stand on theological issues. After a few months, he showed a milder side but he never drew the kind of adulation that had marked the 27-year papacy of his predecessor John Paul.
U.S. President Barack Obama extended prayers to Benedict and best wishes to those who would choose his successor.
German Chancellor Angela Merkel said the pope's decision must be respected if he feels he is too weak to carry out his duties. British Prime Minister David Cameron said: "He will be missed as a spiritual leader to millions."
The Archbishop of Canterbury, leader of the worldwide Anglican communion, said he had learned of the pope's decision with a heavy heart but complete understanding.
CHEERS AND SCANDAL
Elected to the papacy on April 19, 2005, Benedict ruled over a slower-paced, more cerebral and less impulsive Vatican.
But while conservatives cheered him for trying to reaffirm traditional Catholic identity, his critics accused him of turning back the clock on reforms by nearly half a century and hurting dialogue with Muslims, Jews and other Christians.
After appearing uncomfortable in the limelight at the start, he began feeling at home with his new job and showed that he intended to be pope in his way.
Despite great reverence for his charismatic, globe-trotting predecessor -- whom he put on the fast track to sainthood and whom he beatified in 2011 -- aides said he was determined not to change his quiet manner to imitate John Paul's style.
A quiet, professorial type who relaxed by playing the piano, he showed the gentle side of a man who was the Vatican's chief doctrinal enforcer for nearly a quarter of a century.
The first German pope for some 1,000 years and the second non-Italian in a row, he travelled regularly, making about four foreign trips a year, but never managed to draw the oceanic crowds of his predecessor.
The child abuse scandals hounded most of his papacy. He ordered an official inquiry into abuse in Ireland, which led to the resignation of several bishops.
Scandal from a source much closer to home hit in 2012 when the pontiff's butler, responsible for dressing him and bringing him meals, was found to be the source of leaked documents alleging corruption in the Vatican's business dealings.
Benedict confronted his own country's past when he visited the Nazi death camp at Auschwitz. Calling himself "a son of Germany", he prayed and asked why God was silent when 1.5 million victims, most of them Jews, were killed there.
Ratzinger served in the Hitler Youth during World War Two when membership was compulsory. He was never a member of the Nazi party and his family opposed Adolf Hitler's regime. (Additional reporting by James Mackenzie, Barry Moody, Cristiano Corvino, Alexandra Hudson in Berlin, and Dagamara Leszkowixa in Poland; Editing by Peter Graff)