Gerhard Schröder was sworn in as chancellor by President Roman Herzog on Tuesday afternoon, after the confirmation of his appointment in the morning sitting of parliament.

The new cabinet was due to meet before the end of the day.

During the four weeks since the general election, Mr Schröder's Social Democratic Party has been engaged in coalition talks with the Green Party. The resulting coalition holds a 21-seat majority in parliament.

The coalition agreement has seen the appointment of Germany's first-ever Green Party cabinet ministers. Party leader Joschka Fischer secured the position of foreign minister, which also means he will deputise as chancellor when Mr Schröder is absent.

Caroline Wyatt reports from Gerhard Schröder's inauguration

SPD chairman Oskar Lafontaine is to take over an expanded finance ministry, which will oversee Germany's adoption of the euro.

Social Democrat Wolfgang Thierse has been selected as speaker of parliament. He started out as an opposition activist in the former East Germany.

Mr Thierse is the first East German to hold this important office, which in terms of protocol is second only to the presidency, although the chancellorship is more powerful.

Jobs promised

A back bench seat for Helmut Kohl

Mr Schröder has said his main task will be to fight record unemployment - the issue which finally brought down former Chancellor Helmut Kohl.

The "red-green" coalition is to raise tax on fuel and begin phasing out nuclear power - proposals which have already earned criticism from business leaders.

But overall, the government intends to reduce the tax burden on Germans by $6bn.

Germany's central bankers have rejected calls for cuts in interest rates from the left-leaning Mr Lafontaine. They fear the government could continue to apply more political pressure in the run-up to the launch of the euro in January.

The new government also plans to amend the nationality laws, which currently do not guarantee citizenship to German-born children of immigrant parents.

The new government has said another new priority is to bring the eastern and western parts of Germany closer together - a task which will be helped by the move scheduled for next year of the German capital from Bonn to Berlin.