A new Belgian government has been sworn in, ending months of political deadlock which threatened to split the country.
Mr Leterme will be heading a five-party coalition
Yves Leterme, of the Flemish Christian Democrats, will head a coalition of Dutch and French-speaking parties.
Mr Leterme's party had been seeking more devolution for the Dutch-speaking regions - a move strongly resisted by the French-speaking groups.
But an agreement with the Francophone parties was hammered out after marathon talks on Tuesday.
Political time bomb
Mr Leterme and his five-party coalition government were officially sworn in by King Albert II at the royal palace in Brussels.
The coalition includes Mr Leterme's Flemish Christian Democrats from the north as well as Socialists from the French-speaking region of Wallonia in the south.
The new cabinet replaces that of caretaker PM Guy Verhofstadt, whose resignation was accepted by the king.
The new government agenda, which is still to be approved, leaves out references to constitutional reform, concentrating instead on immigration, tax-cuts and pension benefits.
That constitutional reform issue will be handled by a special panel of elder statesmen who will try to come up with a set of proposals.
But Mr Leterme's party has warned that if it does not get what it wants by mid-July it will walk out of the government.
So even as new ministers are being sworn in, a political time bomb is ticking, the BBC's Dominic Hughes in Brussels says.
Mr Leterme had promised his supporters even more devolved powers for regional governments in a country that is already Europe's most decentralised state.
In Wallonia - where unemployment is higher and the economy sluggish - there were fears this would leave their region worse off.
The Flemish Christian Democrats won elections in June 2007 but until Tuesday was unable to reach agreement on a coalition.
In December, thousands of trade unionists took to the streets in Brussels, complaining about the political stalemate and rising food and fuel prices.
The European Commission had warned that the political paralysis was beginning to affect Belgium's economy.
Read a selection of your comments in reaction to this story below:
You can feel a sense of relief and cautious optimism here, disbelief even. Looking back at the sheer number of important issues neglected during the six-month impasse last year, it is fair to say that the interim government did a good job. Now Mr Leterme was at the centre of last year's political turmoil and he will have a hard time restoring trust with the public. To his credit, he managed to form a coalition in time, which is an achievement in itself, after two successive failures.
Sebastian W, Brussels, Belgium
Feeling glad and relieved that we have a government after all, but wondering, really wondering, if this will last. For people from outside Belgium, it looks as if the two communities cannot live together, but this is far from being true. We Belgians can only wish and pray that the new government will try to work for both communities and for the sake of our beautiful little country.
Caroline Vanherpen, Ronse, Belgium
A new government will not solve the issue. We have been here before. As long as the Dutch speaking region requests more and more powers and the separation of the country, things will remain the same. The Belgian political system is already way too complicated and has been modified several times. Either, they accept they are part of a bilingual country (50/50) or unfortunately the country will have to split, but there is no way Brussels will become Dutch speaking when it's 90% francophone.
Francesca Rattacaso, Brussels, Belgium
This new government is a farce as is the agreement. All issues that the parties could not agree upon have been put forward in time. Even those issues for which there is an agreement remain so vague that they are without any real value. The first real deadline is mid-July, if there is no agreement by then, we will be back at square one. A new election this autumn would not surprise me but such an election would not solve the problems, as due to radicalisations on both sides there is an enormous risk that it will only make matters even more complex. In reality we have two completely different cultures, political and economic systems in this country.
Filip Michielsen, Antwerp, Belgium
We are still living in a time-bomb. This government has a lot of plans but no real consensus on how to pay for these plans. Add the problems of constitutional reform to that and you've got a government working underneath Damocles' sword. The biggest problem is that under current law no new elections can take place in Belgium. So what happens if this government falls?
Bram Van Laeken, Eppegem, Zemst, Belgium
This government will only stand until the summer. Meanwhile, the big constitutional reforms will not be decided and it will get a "no" from all Walloons. It's time to form a United Kingdom of the Netherlands, including Flanders. The Walloons can create their own country or join France.
Jan, Antwerp, Flanders, Belgium
I think one of the reasons it took so long is thanks to the introduction of the euro. In the old days this crisis would've weighed too hard on the Belgian franc which would result in the Flemish giving in or maintaining the status-quo. Another thing is that Brussels was supposed to be bilingual but in practice you have to know French. Police, administration and hospitals employ few people who know Dutch. I don't need to tell you what could go wrong if you don't speak French and have to go to go to a hospital in Brussels for an emergency.
Jan Verboven, Antwerp, Belgium
I am glad we finally have a government. The last nine months have been rather devastating for the Belgian economy, since we only had a caretaker without any actual power to guide this country through rough times. Mr Leterme is not my choice, but I'd rather give him a chance than sink into political oblivion again.
Andy Surleraux, Hasselt, Belgium
I think it is great that a new government has finally been formed as it will prevent the economy from going into the predicted downturn. In addition, the fact that the government has decided to concentrate on real economic problems rather than constitutional talk is reassuring. I do not want my country to separate and to be honest, I hope Leterme does not get what he wants by July and leaves the government as he is the source of all problems and doesn't even know his country's national anthem!
Camille, Brussels, Belgium
We live in a small country and we also have a small mentality. We host the capital of Europe and sadly we do not see beyond the language boundaries of Flemish and Walloon in our own country. Welcome to Belgium. Come visit us before there's no more Belgium.
Catherine, Brussels, Belgium
I think one of the worst consequences of this nine-month-long deadlock is the further alienation of the Belgians from politics. A very commonly heard phrase in Belgium is that the country just kept going as it always did, even without proper government. Instead, Belgians saw their electives debating about constitutional refinements, and not about issues that really mattered, like the soaring prices.
Floris Bernard, Ghent, Belgium