Barack Obama was on the stump in North Carolina on Sunday
US President George W Bush's first Secretary of State, Colin Powell, has endorsed Democratic election candidate Barack Obama for the White House.
Backing Mr Obama over John McCain, the Republican Party's choice to succeed Mr Bush in November, he said the Democrat had the "ability to inspire".
"All Americans... not just African-Americans" would be proud of an Obama win, he argued.
Mr McCain said he was not surprised at his "long-time friend's" decision.
He pointed out that other former secretaries of state had backed his own candidacy, naming them as Henry Kissinger, James Baker, Lawrence Eagleburger and Alexander Haig - all Republicans.
Addressing a rally in Fayetteville, North Carolina, Mr Obama said he was "deeply humbled" by Mr Powell's support.
"He knows, as we do, that this is a moment where we need to come together as one nation - young and old, rich and poor, black, white, Hispanic, Asian, Native American, Republican and Democrat," he added.
His campaign said earlier that the two men had spoken for 10 minutes by telephone.
The Obama campaign also announced it had raised a record monthly total of more than $150m (Ł86m) in September, reaching a total of $605m and dwarfing the total of Mr McCain, who chose to stay within the public campaign financing system.
The Powell endorsement is an important moment in the campaign, BBC North America editor Justin Webb says.
It [an Obama victory] would not just electrify our country, it would electrify the world
Colin Powell does not bring a state and he probably does not bring many additional supporters, our correspondent says.
But what he does do is solidify Barack Obama's appeal with the middle-of-the-road voters who are worried about whether or not he has sufficient experience for the job.
To hear these words from Colin Powell in a television interview this morning, will have been deeply reassuring to many American voters, our correspondent adds.
One interesting sideline to the Powell endorsement is that he gave as one reason for his choice Sarah Palin's presence on the Republican ticket, arguing she was not ready for the White House.
That is a view that is likely to add to the rumblings of discontent on the Republican side about John McCain's choice of running mate, our correspondent adds.
"I think he [Barack Obama] would be a transformational president," Mr Powell told NBC's Meet The Press.
Colin Powell attacked John McCain's campaign
An Obama victory would "not just electrify our country, it would electrify the world", he said.
Mr Obama was better suited to handle America's economy, the former secretary of state argued:
"In the case of Mr McCain... you got the sense that he didn't have a complete grasp of the economic problems that we had."
President Bush's first secretary of state criticised his own party for allowing the campaign to turn negative.
"I'm also troubled by, not what Senator McCain says, but what members of the [Republican] Party say... such things as 'Well, you know that Mr Obama is a Muslim'.
"Well the correct answer is, 'He's not a Muslim, he's a Christian, he's always been a Christian'. But the really right answer is, "What if he is?' Is there something wrong with being a Muslim in this country? The answer is 'No', that's not America."
Mr Powell said he remained a Republican though he thought his party was moving too far to the right.
"It isn't easy for me to disappoint Sen McCain in the way that I have this morning, and I regret that," Mr Powell added.
Speaking on Fox News, Mr McCain said he had "always admired and respected Gen Powell".
"We're long-time friends," he said. "This doesn't come as a surprise."
Later, addressing a cheering crowd of supporters in Ohio, Mr McCain said the media had "written off" his campaign but he would fight on with their support.
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