New Italian government sworn in

Mr Berlusconi had said he would not be a minister, but had pushed for leading figures from his party to be given top posts.

Angelino Alfano, the PDL's secretary and one of Mr Berlusconi's closest political allies, will become deputy prime minister and interior minister in the new government.

Among the other key appointments proposed is Bank of Italy director general Fabrizio Saccomanni to head the powerful economy ministry.

Women prominent

Mr Letta said the cabinet would have a record number of women.

Former European Commissioner Emma Bonino will become Italy's first female foreign minister.

Other women given government jobs include Olympic kayaker Josefa Idem who becomes minister of equal opportunity and sports, and Anna Maria Cancellieri at the ministry of justice.

The announcement of the formation of a new government comes at the end of a long and painful process, says the BBC's Bethany Bell in Rome.

February's inconclusive election heralded a two-month political deadlock in Italy - still plagued by economic woes after becoming one of the first eurozone victims of the global financial crisis of 2008.

President Napolitano said the government would have the support of both chambers of parliament.

"I hope that this government can get to work quickly in the spirit of fervent co-operation and without any prejudice or conflict," he said.

"It was and is the only possible government."

The BBC's David Willey, in Rome, says the new government has to deal with a rapidly declining economic situation, rising unemployment - particularly among the under-35s - and lack of growth, despite some draconian austerity measures passed by the previous government of technocrats.

'Sober satisfaction'

Mr Letta, 46, is considered a moderate within the PD and is linked to Mr Berlusconi through his uncle, Gianni Letta, who is one of Mr Berlusconi's closest aides.

Mr Berlusconi is still contesting charges of tax fraud and sex with an underage prostitute, but recent opinion polls suggest his popularity has increased, giving him greater bargaining power.

Mr Letta expressed "sober satisfaction over the team we put together".

He has said he will shift the focus away from austerity to resolve Europe's economic problems.

His candidacy for prime minister emerged after the PD leader, Pier Luigi Bersani, announced his resignation following a party rebellion over his choice for Italian president and his refusal to work with Mr Berlusconi.

The third strongest force to emerge from the Italian election, the Five Star movement led by former comedian, Beppe Grillo, has refused to take part in a coalition with the two main parties.

He likened such a coalition to "an orgy worthy of the best of bunga bunga" in a barb directed at Mr Berlusconi's renowned private parties.

President Napolitano, who is serving an unprecedented second term, has suggested he might resign if the new government fails to enact reforms.

- BBC