I have the firm determination to dedicate every minute of my life and of my government to initiating a head-on war on poverty. This is my pledge

Alejandro Toledo

Mr Toledo, who started his working life as a shoeshine boy and later became a World Bank consultant, took an oath on "God, the nation and the poor of Peru".

"I have the firm determination to dedicate every minute of my life and of my government to initiating a head-on war on poverty. This is my pledge," he said.

"People want this government to deliver its promise of more work," he said, pointing to the presidential sash he inherited from acting President Valentin Paniagua.

In the hours before the ceremony, he made a point of serving breakfast to children in a Lima shantytown.

And afterwards he toured the streets of the city in an open-topped car blowing kisses and saluting, as hundreds of fans ran behind.

His most pressing task is to address the country's crushing poverty, in which Peru's people hope he will be aided by his humble background.

Figures just out show that Mr Toledo will lead a nation where almost half the population live below the poverty line.

International respectability

Twelve heads of state attended the inauguration, in contrast to the two who came last year, when the now disgraced former President Alberto Fujimori began his third term in office.

Mr Toledo was planning to go to the charred ruins of the national bank in Central Lima to place a commemoration wreath.

A year ago: Unrest on the streets of Lima

Exactly a year ago, six people died when the building burned down in the demonstrations which followed the swearing in of Mr Fujimori after an election widely condemned as fraudulent.

Mr Toledo's inauguration will be followed by an Andean celebration on Sunday in the ruins of the ancient Inca fortress of Machu Picchu.

Money matters

The experience will be far removed from Mr Toledo's early life as a goat-herder, but his training as an economist will be essential to resurrecting Peru's monetary affairs.

According to the National Institute of Statistics, now almost one in two Peruvians are having to survive on just $1 a day.

But analysts say Mr Toledo could face strikes and protests if he fails to honour promises such as public sector pay increases and tax cuts.

It will also fall to the new president to overhaul both Peru's scandal-scarred image after former President Alberto Fujimori was ousted last year following corruption allegations, and to eradicate his own reputation for impulsiveness.

In his campaign the new leader fended off charges that he tested positive for cocaine and was seen with women in a seedy hotel.

Among the foreign leaders who attended the inauguration ceremony was Venezuela's President Hugo Chavez, who said he considered a diplomatic row between the two countries over.

The two countries fell out over the capture in Venezuela of the Peruvian former intelligence chief, Vladimiro Montesinos.