A report from Catholic News Service provides further detail as to why the invitation was rescinded:
During the war in January between Israel and Hamas militants in the Gaza Strip, Ghanaim created a stir when he praised Palestinian "martyrs" and declared, "Long live Palestine, whose capital is Jerusalem," at an anti-war demonstration.
In a brief statement to the press, Archbishop Antonio Franco, papal representative to Israel and the Palestinian territories, said it was a "pity to make such a controversy" over the issue of a general audience with the pope and he regretted that Pope Benedict was dragged into the polemics.
A local Christian source told Catholic News Service that the Vatican also was miffed at Ghanaim's claims that he had been invited to meet with the pope and discuss the status of Israeli Arabs prior to the papal visit.
"(Ghanaim) would have had the opportunity to shake the pope's hand and at best exchange a few words with him," said the source, adding that the papal audience had no connection to the pope's pilgrimage.