The speech in full | Opinion: Gerard Baker | Americans of all colour celebrate | It's our moment, say black Britons | Obama attacks worn-out dogmas | Vote: What was your favourite part of the speech? | Comment: Daniel Finkelstein |

Barack Obama promised a new era of American leadership yesterday in which military might would be tempered by humility and restraint.

After being sworn in as the 44th President of the United States in front of an estimated crowd of two million people, Mr Obama reached out to the Muslim world and said that America must earn its greatness once again.

In a clear repudiation of the past eight years, he said that he would not abandon the principles of America’s founding fathers for expedience’s sake. “We reject as false the choice between our safety and our ideals.”

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President Roosevelt assumed office on Saturday and delivered an inaugural speech remarkable for its candour and courage

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Mr Obama promised to rebuild alliances and said that Americans must recognise their duties “to ourselves, our nation and the world”. He said that the military might of America did not entitle the US “to do as we please”.

In a sombre speech that had little of the soaring rhetoric with which he is associated, he acknowledged that his nation was in the midst of a crisis and that its challenges would not be easily met. “But know this, America: they will be met. On this day, we gather because we have chosen hope over fear, unity of purpose over conflict and discord,” he said. “Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.”

To underline the challenges that he faces, the US stock market fell 4 per cent, its worst ever Inauguration Day fall, eclipsing the 2.3 per cent decline in 1929 for Herbert Hoover and the advent of the Great Depression.

Amid scenes of euphoria, America’s first black president strolled down Pennsylvania Avenue before moving his family into the White House, which was built more than 200 years ago by slaves. Mr Obama said that the “meaning of our liberty” was demonstrated by people of “every race and every faith” celebrating yesterday in a city where 60 years ago his father “might not have been served at a local restaurant”.

To Muslims he offered a “new way forward, based on mutual interest and mutual respect”, but warned terrorists that they would be defeated. To those watching, he added, “know that America is a friend of each nation and every man, woman and child who seeks a future of peace and dignity; and that we are ready to lead once more.”

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