Bill Hughes will lead the new squad

Home Secretary David Blunkett appointed him as director general of the Serious and Organised Crime Agency (Soca).

Ex-MI5 boss Sir Stephen Lander will be the agency's chairman.

Soca's 5,000 special officers will focus on drug smugglers, people traffickers and web paedophiles and is a merger of two current squads.

'Global challenges'

Soca will be formed by joining the National Crime Squad, National Criminal Intelligence Agency and investigations units at Customs and Excise and the immigration service.

Organised crime is big business Home secretary David Blunkett Profile: Bill Hughes

The agency's new director general is likely to be one of the most high profile jobs in British policing, earning up to �150,000 a year.

Announcing both appointments, Mr Blunkett said the men would give "strategic vision and firm direction" to the new agency.

"Organised crime is big business. It causes untold harm on our streets, damage to our communities and nets billions of pounds each year for those responsible.

"As criminals become more sophisticated, so we must raise our game to fight it. We must make better use of technology to stay ahead," he said.

"Sir Stephen and Bill Hughes between them link the important work of tackling organised crime at the local and regional levels with international intelligence and global challenges ahead in a unique partnership," Mr Blunkett added.

'Godfathers'

Accepting the new job, Mr Hughes said the creation of Soca would mark a "step change" in the way major criminal gangs are tackled.

"That means building an organisation that will attack the often very complex and multi-faceted world of serious and organised crime.

"It means working with our international partners to tackle the criminal across borders as well as national organised gangs," Mr Hughes added.

Sir Stephen Lander said he was determined, along with Mr Hughes, to ensure the agency is well-placed to disable and disrupt crime networks that are damaging the country.

He pledged to make the best use of talents, exploit new technologies and make effective use of intelligence.

'Supergrass' plan

The Home Office has described Soca's creation as the biggest shake-up of the way British police is organised in 40 years.

It will require legislation, however, before it can become operational, a move planned for 2006.

It is not yet clear how much Soca will have to spend, but the organisations that are being merged to form it have a combined budget of �375m.

In March, Mr Blunkett revealed plans to force convicted criminal "godfathers" to show they are not profiting from criminal activities for up to a decade after they have been released from prison.

The Home Office has also suggested giving criminals who turn "supergrass" immunity from prosecution or reduced sentences.

A new offence of belonging to an "organised crime group" is also proposed.

Plans to allow evidence gained by phone taps to be used in court could give Soca officers a powerful new tool.

Earlier this year the home secretary met US Attorney General John Ashcroft to find out how the FBI tackled organised crime.