The Lisbon Treaty: Dominic Hughes on what will change
The Lisbon Treaty has come into force, marking what European Union leaders have described as a "new era" for the 27-nation bloc.
Top officials marked the occasion with celebrations, fireworks and speeches in the Portuguese capital.
European Commission President Jose Manuel Barroso said the treaty symbolised a "free and democratic" Europe.
Critics say the treaty will cede too many national powers to Brussels.
The hour-long celebrations took place at a custom-built temporary venue close to the River Tagus.
Addressing the event, Mr Barroso called the Lisbon Treaty "the symbol of a reunited, free and democratic Europe".
The celebrations were marked with fireworks
But he said EU leaders could not rest on their laurels and still had more work to do.
Fredrik Reinfeldt, the Swedish prime minister who is currently steering the EU presidency, said the treaty made the EU "more open and more democratic".
Institutional changes are now under way following ratification of the treaty by all 27 member states, eight years after the EU started negotiations.
The treaty is designed to streamline decision-making and give the EU greater influence in world affairs.
It creates two new posts - President of the European Council and a High Representative for Foreign Affairs.
The BBC's Jonny Dymond, in Brussels, says the introduction of the treaty may appear low-key but the way decisions are made in the EU will change.
It overcame its final hurdle when the Czech Republic became the last of the member states to ratify it last month.
EU leaders later chose Belgian Prime Minister Herman Van Rompuy to be the first permanent European Council President.
During the celebrations on Tuesday, he said the treaty would allow members "to play our part on the world stage".
The job of foreign affairs supremo went to the EU Trade Commissioner, Baroness Ashton from the UK.
Belgium's Herman Van Rompuy is the EU's first permanent president
She takes over from EU foreign policy chief Javier Solana, who is leaving his post after 10 years in the role.
As High Representative for Foreign Affairs, Lady Ashton will command a more powerful position with a new, and eventually vast, European diplomatic service.
One of the treaty's key areas is the removal of national vetoes in a number of areas. These include the fight against climate change, energy security and emergency aid.
Unanimity will still be needed in tax, foreign policy, defence and social security.
Mr Reinfeldt said that "in the future, when we make decisions concerning citizens' freedom, security and justice, our main principle will be to make them together with the European Parliament".
The treaty makes the EU Charter of Fundamental Rights legally binding for EU institutions and, according to Mr Reinfeldt, "we make clear equality between men and women and protection of children's rights within all policy areas".
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