In 1221, so some writers tell us, Francis drew up a new rule for the Friars Minor. Others regard this so-called Rule of 1221 not as a new rule, but as the first one which Innocent had orally approved; not, indeed, its original form, which we do not possess, but with such additions and modifications as it has suffered during the course of twelve years. However this may be, the composition called by some the Rule of 1221 is very unlike any conventional rule ever made. It was too lengthy and unprecise to become a formal rule, and two years later Francis retired to Fonte Colombo, a hermitage near Rieti, and rewrote the rule in more compendious form. This revised draft he entrusted to Brother Elias, who not long after declared he had lost it through negligence. Francis thereupon returned to the solitude of Fonte Colombo, and recast the rule on the same lines as before, its twenty-three chapters being reduced to twelve and some of its precepts being modified in certain details at the instance of Cardinal Ugolino. In this form the rule was solemnly approved by Honorius III, 29 November, 1223 (Litt. "Solet annuere"). This Second Rule, as it is usually called or Regula Bullata of the Friars Minor, is the one ever since professed throughout the First Order of St. Francis. It is based on the three vows of obedience, poverty, and chastity, special stress however being laid on poverty, which Francis sought to make the special characteristic of his order, and which became the sign to be contradicted. This vow of absolute poverty in the first and second orders and the reconciliation of the religious with the secular state in the Third Order of Penance are the chief novelties introduced by Francis in monastic regulation.

It was during Christmastide of this year (1223) that the saint conceived the idea of celebrating the Nativity "in a new manner", by reproducing in a church at Greccio the <praesepio> of Bethlehem, and he has thus come to be regarded as having inaugurated the population devotion of the Crib. Christmas appears indeed to have been the favourite feast of Francis, and he wished to persuade the emperor to make a special law that men should then provide well for the birds and the beasts, as well as for the poor, so that all might have occasion to rejoice in the Lord.