Benedict said he was comforted by such a "beautiful and spontaneous show of faith and solidarity" and again denounced what he called the "sin" that has infected the church and needs to be purified.
Citing estimates from Vatican police, the Vatican press office said 150,000 people had turned out for the demonstration organized by an association of 68 Italian lay groups.
Despite a drizzling rain, the balloon- and banner-toting faithful from around Italy overflowed from the piazza; banners hung up on Bernini's colonnade encircling the piazza read "Together with the pope," and "Don't be afraid, Jesus won out over evil."
"We are here to show both to other people and to ourselves our solidarity with the church in this difficult time," said Simone Pleticos, a 24-year-old student who traveled from Milan for the occasion.
Such large crowds are usually reserved for major holiday Masses and canonizations, not for Benedict's brief, 10-minute Sunday blessings from his studio window. The crowd interrupted Benedict frequently with applause and shouts of "Benedetto!" and the pontiff himself strayed from his prepared remarks to thank them again and again.
"Thank you for your presence and trust," he said. "All of Italy is here."
Benedict didn't refer explicitly to the scandal, but repeated his recently stated position that the scandal was born of sins within the church, which must be purified.
"The true enemy to fear and to fight against is sin, the spiritual evil that unfortunately sometimes infects even members of the church," he said.
The Vatican has been mired in scandal amid hundreds of reports in Europe, the United States and elsewhere of priests who raped and molested children while bishops and Vatican officials turned a blind eye. Benedict's own handling of cases has also come under fire.
Rome's center-right Mayor Gianni Alemanno was in the crowd, along with other pro-Vatican Italian officials.
"We want to show our solidarity to the pope and transmit the message that single individuals make mistakes but institutions, faith and religion cannot be questioned," Alemanno told Associated Press Television News. "We will not allow this."
Luca Colussi, from the farmers' union Coldiretti, said abuse allegations must be fully investigated. "But as far we're concerned, our members will always remain close to the Pope as we share the same values."
Associated Press reporter Alice Herford contributed to this report.