Burundi's largest armed groups have formed a single national army after more than a decade of war.
The integrating and disarming of armed men will take four years
All but one of the Hutu rebel groups and the Tutsi dominated government army are brought together.
The move is a major step in the long process to end the crisis in Burundi that has claimed more than 300,000 lives during an 11 year civil war.
But a BBC reporter says it will take at least four years before the process of forming the new army is complete.
Presidential spokesman Pancrace Cimpaye said that in theory all armed fighters in Burundi were now the responsibility of the government, which would feed, clothe and pay them.
President Domitien Ndayizeye signed two laws on Friday setting up the new army and a new police force.
The Burundi Armed Forces will now be known as the National Defence Force.
President Ndayizeye, a Hutu, leads a transitional government
The BBC's Prime Ndikumagenge in Bujumbura says that from now on the term rebel will only apply to the National Liberation Forces (FNL).
The rebel movement led by Agathon Rwasa are still active on the outskirts of Bujumbura.
Reform of the army was one of the key demands of Hutu rebels, and the peace deal specified that there should not be more than 50% of Hutus or Tutsis in the army.
In December, the government and the United Nations began the process of disarming some 40,000 soldiers and former rebels.