The Archpriest of St George parish in Victoria has slammed "land grabbers" who have occupied most of the square in front of the basilica.
The situation is making it difficult to organise weddings and funerals and obstructing people walking in the square in the heart of the town, he said.
"Piazza San Ġorġ belongs to the people and the situation is becoming intolerable," Archpriest Can. Joseph Curmi wrote in a long Facebook post.
"We have tried good will, dialogue and compromise. We have tried to meet the business owners personally. We tried talks lasting several months with the authorities including the police, Transport Malta, the Malta Tourism Authority, local councils and the Lands Authority. They all insist in one way or another that they hold no authority or involvement over St George Square," he wrote.
"At one time, officials from the Lands Authority came from Malta and tried to enforce control with the police, and then, inexplicably, they suddenly packed up and left. And everything was back to square one after a few days."
The historic square in Gozo's capital has, like many other pedestrian public areas in Malta, been filled with tables and chairs belonging to the various restaurants and cafes situated there.
The archpriest said that while solutions were being arrived at for processions, with regard to day-to-day activities, the situation was getting worse and could not be described as anything other than anarchy.
"How can we continue to tolerate a situation where people have taken over government land and do what they like? How can we tolerate a situation where anyone who needs to hold a funeral or a wedding needs a permit to remove those who have occupied public land? How can we tolerate a situation where a funeral cortege enters the square to the sound of horns, with the mourners themselves needing to move sun shades and tables?
How could one tolerate a situation where a groom had to personally plead to be allowed entry (to the square) for his own wedding, despite having paid for a permit, the archpriest wrote.
"People have a right to hold decent funerals and weddings. They have a right to unfettered access on a wheelchair or a pushchair. They also have a right to walk through the square, but all this is being obstructed."
The piazza has four access points and they are all being abusively obstructed, the priest said.
"Certain business owners do what they do because they know that no action will be taken against them. They are also casting a bad light on other business owners who are respectful, observe the rules and collaborate.
"This is not justice. No one has a right over the people's land other than the people."