Jose Miguel Insulza is seen as a tough negotiator

In his inaugural address, Mr Insulza said he wanted to make the group more politically relevant.

Mr Insulza was elected in May when a US-backed Mexican rival withdrew after months of diplomatic stalemate.

The appointment of the former Chilean minister is still controversial among some member states.

Peru, which has a territorial dispute with Chile, objected to the appointment and it also annoyed Cuban leader, Fidel Castro, although the country is not a OAS member.

'Tough negotiator'

Pledging to build consensus, Mr Insulza said that bridging the gap between the hemisphere's rich and poor needed more than just economic growth.

"Now what is needed are effective public policies that foster equality of opportunity and engage all sectors," he said.

Mr Insulza called on member states to strengthen democracy in the region and said the body should be prepared to intervene to preserve it.

"We must be able to react and go to the defence of democracy whenever its principles and values collapse," he said.

Correspondents say Mr Insulza built his reputation as a tough negotiator while Chile's foreign minister.

In the late 1990s he led a successful fight for former military ruler Gen Augusto Pinochet to be returned to Chile, following his arrest in the UK.