In front of a huge crowd gathered at the Union Building in Pretoria, President Mbeki took the oath of office before standing alongside Mr Mandela for a 21-gun salute.

The two men gripped hands and held them above their heads in a victory salute as the crowd cheered loudly.

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Above them air force jets performed a fly past trailing red, blue, yellow and green smoke - the colours of the South African flag.

Around 4,500 people were gathered in the amphitheatre of the Union buildings, with thousands more on the lawns below.

Representatives from 130 countries attended the ceremony which saw Mr Mandela step down after five years of leading the country during its transition to democratic rule.

Mr Mandela appeared weary as he watched the swearing in of his friend and colleague, while President Mbeki was trying to shake off the symptoms of influenza.

'A day of salute'

In his inauguration speech President Mbeki paid tribute to the generation of leaders now retiring from the political scene.

Thabo Mbeki takes the oath of office

"It is a day of salute for a generation that pulled our country out of the abyss and placed it on the pedastal of hope," he said.

He said the Mandela era was a beginning, but that the full meaning of liberation would not be realised until people were freed from what he called the "dehumanising legacy of deprivation".

Nelson Mandela, in a speech delivered after the inauguration, said President Mbeki was a capable man who would rise to the challenges that face him.

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Mr Mandela became South Africa's first black president in the country's first multi-race elections in 1994.

The ANC won another decisive victory in the country's second all-race elections on 2 June.

The handover falls on the anniversary of the start of the 1976 Soweto uprising, a turning point in the struggle against apartheid.

Concert for the people

Among the 30 heads of state attending the occasion were many allies of the ANC such as Palestinian President Yasser Arafat, Libyan leader Muammar Gaddafi, and Namibian President Sam Nujoma.

Later there will be a "concert for the people", featuring American singer Jermaine Jackson and South African performers Johnny Clegg and Brenda Fassie, which about 90,000 fans are expected to attend.

And South Africa's national football team will play Zimbabwe for the Presidential Inauguration Cup.

Moments in the life of Nelson Mandela

Mr Mandela has said he wants to "retire into obscurity", and spend time with his grandchildren.

He says he will divide his time between South Africa and Mozambique, home of his wife Graca Machel.

He has also said he will spend time writing his memoirs.

New government

Watching on the big screen

South Africans will have to wait until Friday for the new president to announce his government.

The delay is because the ANC is still negotiating with the Zulu-based Inkatha Freedom Party on the composition of the cabinet, and control of the volatile KwaZulu-Natal province.