I love Oxford. I spent some of the happiest years of my life here and it's great to be back

Bill Clinton

The visit generated great excitement in the city with a sign in one office window saying "Howdy Bill".

It was during his time as as a Rhodes scholar in Oxford between 1968 and 1970 that he smoked marijuana although, as he said so famously during the 1992 election campaign, he never inhaled.

Chelsea meetings

Daughter Chelsea, due to complete a degree at Stanford University in California, remained tightlipped about whether she might be the latest Clinton to apply to Oxford.

His daughter, who is believed to want to study economics at his former college, spent much of the day chatting with academic staff, undergraduates and the Master of University College, Lord Butler, the former head of the civil service.

There has been speculation that Chelsea is coming to Oxford

She also met for discussions with members of the Oriel College academic staff.

After abandoning their motorcade to walk the short distance to the new institute, Mr Clinton was harangued by a young student over the deaths of thousands of Iraqis during his presidency.

Wagging his finger at the woman he said: "Saddam Hussain spent millions on building himself a palace when he could have spent it on his people."

He was, however, less forthcoming when asked about his daughter's educational future saying: "It's a decision she'll have to make for herself."

Special relationship

A leading Oxford academic, Professor Alan Ryan, who will be the new institute's director, has said the Clintons are keen to preserve their Oxford connections and Chelsea will "probably" study at the university.

Mr Clinton said he hoped the institute would help cement Britain's special relationship with the US and called for governments to recognise global interdependence in the 21st century.

As he opened the institute, Mr Clinton made a plea for leading industrial nations to work together with the developing world to meet challenges including Aids, poverty, Third World debt relief and the lack of education and information technology in poorer nations.

His speech was an apparent sideswipe at his successor US President George W Bush who has adopted a more isolationist approach to foreign policy since taking office.

He was also critical of policy changes on climate change, describing the 1990s as the hottest decade in the last thousand years.

Familiar weather

He added: "You may have noticed, I'm somewhat out of step with my government on this."

But Clinton said the surroundings and weather were familiar.

"It was an Oxford morning - foggy and rainy, cloudy and dark.

"Then the sun came out. ... I shook hands with all the young people and I find it almost impossible to be serious."

On Saturday Mr Clinton is due to move on to the Welsh town of Hay-on-Wye, home of a world-famous literary festival.