Francis cited Mother Teresa, the European-born nun who cared for the poorest in India, in making his appeal in remarks to pilgrims and tourists in St Peter's Square.
"Faced with the tragedy of tens of thousands of refugees who are fleeing death by war and by hunger, and who are on a path toward a hope for life, the Gospel calls us to be neighbours to the smallest and most abandoned, to give them concrete hope," Francis said.
"May every parish, every religious community, every monastery, every sanctuary in Europe host a family, starting with my diocese of Rome," Francis said. He also asked bishops throughout Europe to have their dioceses take up his call to "express the Gospel in concrete terms and take in a family of refugees."
The Vatican is a tiny city-state and some of its citizens, including families with children, live in apartments inside its ancient walls. It has two parish churches, including St Peter's Basilica.
Francis said two of the Vatican's parishes will welcome two refugee families, but did not give details. A Vatican spokesman, the Rev Ciro Benedettini, quoted the pope's chief alms-giver as saying the Vatican is now deciding which families will be hosted.
Thousands of migrants and refugees, many fleeing war and persecution, have streamed into Germany and Austria over the weekend after being stuck in Hungary for days.
European bishops will discuss soon the pope's urging every parish to take in refugees, an Italian cardinal said.
"The European and Italian church is ready to mobilize to receive" refugees, Cardinal Angelo Bagnasco told Vatican Radio. The cardinal is a longtime leader of the Italian bishops' conference and is an official of the European bishops conference.
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