US President Bush has welcomed Iraq's new interim administration, saying it represents a broad cross-section of society and has the "talent" to govern.
The cabinet's appointment followed days of political wrangling
He said the first priority for the new leadership would be to pave the way to nationwide elections by January.
The US and Britain are to submit a revised resolution to the UN Security Council on Tuesday, stating that the new government will be fully sovereign.
The coalition is due to hand over on 30 June - but US-led forces will stay on.
Elections for a transitional government are to be held in
January 2005, with a permanent government envisaged to be in office around December 2005.
Mr Bush insisted the US had played no role in selecting the new cabinet, and instead praised the UN for its input.
But he also warned that the transfer of sovereignty could be accompanied by increased violence.
'More violence likely'
"This is a very hopeful day for the Iraqi people and the American people. It's going to send a clear signal that terrorists can't win," Mr Bush said.
KEY CABINET POSTS
Interior minister: Falah al-Naqib
Foreign minister: Hoshiyar Zebari
Defence minister: Hazim al-Shalaan
Finance minister: Adel Abdul Mehdi
"Mr Brahimi has recommended a team that possesses the talent, commitment, the resolve to guide Iraq through the challenges that lie ahead," Mr Bush said, referring to UN envoy Lakhdar Brahimi, who was asked by the Americans to oversee the selection process.
The dramatic change of leadership occurred just hours after Ghazi Yawer was named as Iraq's president.
Both Mr Yawer and interim Prime Minister Iyad Allawi were the favoured candidates of the Iraqi Governing Council.
UN Secretary General Kofi Annan said the process of choosing the new government was not perfect, but the UN did "exactly what we set out to do".
The US officials, along with Mr Brahimi, would have preferred veteran Sunni politician Adnan Pachachi to take over the largely ceremonial role of president.
Earlier reports said Mr Pachachi, an ex-foreign minister, had been chosen as president but had declined the job, reportedly because he had little backing among his fellow council members.
BBC Middle East analyst Roger Hardy says that in the three-way tussle between the council, chief US administrator Paul Bremer and the UN special envoy, the council has proved remarkably successful in getting its way.
Senior US officials such as National Security Adviser Condoleezza Rice and Secretary of State Colin Powell have joined Mr Bush in denying that there is any rift between the IGC and the US-led coalition and heaping praise on the UN for its part in shaping the cabinet.
Mr Bush said Mr Brahimi made the decisions and brought the names of the candidates for the future government to the IGC.
"He was the quarterback," Mr Bush said.
At the swearing-in ceremony, Mr Yawer said his goal was to make Iraq one nation, "without murderers and criminals".
IRAQ SELF-RULE TIMETABLE
30 June: Handover from Coalition Provisional Authority to interim government
End of Jan 2005: Elections to National Assembly
Autumn 2005: New constitution voted on in referendum
December 2005: Full elections for new government
January 2006: Directly elected government takes office
He said he wanted a pluralistic, democratic and federal Iraq that would live in peace and co-operation with its neighbours.
Mr Allawi for his part said that while he wanted the US occupation of Iraq to end as soon as possible, for now coalition forces would remain in place.
He expressed gratitude for what the coalition forces had done thus far in Iraq.
"We will need the participation of the multinational forces to help in defeating the enemies of Iraq," he said.
Mr Allawi said 30 June would mark a major step in creating a new, sovereign Iraq.
The rapid political developments came as a car bomb exploded near the Baghdad headquarters of the Patriotic Union of Kurdistan Party, close to the Iraqi Foreign Ministry.
At least three people died, and more than 30 were injured.