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VATICAN CITY | Thu Jan 8, 2009 2:01pm EST

VATICAN CITY (Reuters) - Relations between the Vatican and Israel grew tense on Thursday when the Jewish state condemned an aide to Pope Benedict for calling Gaza "a big concentration camp."

Israel criticized Cardinal Renato Martino as the pope delivered a speech to diplomats in which he spoke out against the use of violence by both Israel and Hamas Islamists in Gaza.

On Wednesday, Martino, president of the Vatican's Council for Justice and Peace, delivered the Vatican's toughest criticism of Israel since its offensive in the Palestinian-ruled enclave, calling Gaza a "big concentration camp."

"We are astounded to hear from a spiritual dignitary words that are so far removed from truth and dignity," Israeli Foreign Ministry spokesman Yigal Palmor told Reuters.

"The vocabulary of Hamas propaganda, coming from a member of the College of Cardinals, is a shocking and disappointing phenomenon," he said.

Jewish leaders around the world also condemned Martino.

"His comments are offensive and an insult to the memory of the Holocaust and survivors worldwide," said Elan Steinberg, vice president of the American Gathering of Jewish Holocaust Survivors and their Descendants.

"He is either trying to nefariously disseminate anti-Israeli propaganda or he doesn't have the faintest clue about the murderous conditions inside a concentration camp," Stephan Kramer, general secretary of the Central Council of Jews in Germany, told Handelsblatt newspaper.

"These remarks are untrue, distort the memory of the Holocaust and are only used against Israel by terrorist organizations and Holocaust deniers," said Rabbi Marvin Hier, dean of the Simon Wiesenthal Center.

SHADOW OVER POPE'S HOLY LAND TRIP

The row over Martino's remark as well as Israel's bombing of Gaza have cast a shadow over negotiations for the pope to visit the Holy Land in May, a trip some diplomats say is now in doubt.

The exchange of accusations heated up as the pope delivered his yearly "state of the world" speech to diplomats in which he seemed at pains to be even-handed following the furor over Martino's remarks.

The pontiff lamented "a renewed outbreak of violence provoking immense damage and suffering for the civilian population" in Gaza and Israel and urged "the rejection of hatred, acts of provocation and the use of arms."

"Violence, wherever it comes from and whatever form it takes, must be firmly condemned."

More than 750 Palestinians have been killed since Israel started bombarding Gaza on December 27 with the aim of halting Hamas rocket attacks. At least eleven Israelis have been killed, eight of them soldiers, since the offensive began.

In a follow-up interview in Italy's La Repubblica newspaper on Thursday, Martino defended his comments, saying the people of Gaza "are surrounded by a wall that is difficult to breach, in conditions that go against human dignity."

Martino said "certainly, the rockets of Hamas are not confetti. I condemn them" but forcefully criticized Israel for an attack on a U.N. school.

(Additional reporting by Erik Kirschbaum in Berlin)

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