It described Christmas Day as a 'falsehood that Muslims should avoid' and warned that 'disbelievers' were trying to draw Muslims away from the 'straight path'.
The Lebanese Muslim Association, which manages the mosque, said the message did not represent the views of the organisation.
Muslim leader, the Grand Mufti of Australia, Ibrahim Abu Mohammad, stressed the foundations of Islam are peace, co-operation, respect and holding others in esteem.
'Fatwa': Part of the post removed from the Lakemba Mosque Facebook page.
He told The Sydney Morning Herald: 'Anyone who says otherwise is speaking irresponsibly. There is difference between showing respect for someone's belief and sharing those beliefs.
'We are required to have good relations with all people, and to congratulate them on their joyous events is very important.'
Community leader Dr Jamal Rifi, who joined priests at a Christmas celebration in the capital last night, said: 'We can share the festivities with friends and families and neighbours – I don't think there is any civil, religious or ethical reason not to.'
Muslim convert Rebecca Kay added: 'It's sad to see the Lebanese Muslim Association, which considers itself the peak body representing Australian Muslims, with comments like these. It goes to show how far they are from representing the community.'
Muslim convert Rebecca Kay added: 'It's sad to see the Lebanese Muslim Association, which considers itself the peak body representing Australian Muslims, with comments like these. It goes to show how far they are from representing the community.'