people of ... holiness - Israel dedicated as holy unto God (Isa 62:12; Deu 7:6).
possessed - namely, the Holy Land, or Thy “sanctuary,” taken from the following clause, which is parallel to this (compare Isa 64:10, Isa 64:11; Psa 74:6-8).
thy - an argument why God should help them; their cause is His cause.