PRESIDENT Barack Obama told America it must make "hard choices" to reduce the cost of health care and the size of its financial deficit.

But the President said every citizen deserved a basic measure of security and dignity, and he held up Medicare, Medicaid and Social Security as commitments that strengthen the country.

Speaking in his inaugural address in front of an estimated crowd of 700,000, Mr Obama said he rejected the belief the country must choose between caring for the generation that built the country and investing in the generation that will build the future.

Struggles with Republicans over reducing the deficit and paring back costly entitlement programmes loom for him in his second term.

Mr Obama promised to respond to the "threat of climate change" and lead the way on renewable energy sources.

And he said a decade of war was ending, the economy was recovering and "America's possibilities are limitless".

He told onlookers: "My fellow Americans, we are made for this moment, and we will seize it, so long as we seize it together."

Trumpets blew a fanfare and cannons fired as the country watched the President take the oath of office as the world's most powerful elected leader.

Mr Obama, who has become increasingly outspoken in favour of gay rights and same-sex marriage, also said the nation's journey is not complete "until our gay brothers and sisters are treated like anyone else under the law."

He was officially sworn in on Sunday, as required by law, but the glitter of Inauguration Day – the parade down Pennsylvania Avenue to the White House, the night of balls and the ceremony – still enlivened Washington.

The celebration was pushed to yesterday because January 20 fell on a Sunday. That placed the grand ceremony on the US holiday marking the birthday of civil rights leader Martin Luther King.

Mr Obama, who rose improbably from being a community organiser in Chicago and a professor of constitutional law to the pinnacle of power, faces a nation riven by partisan disunity, a weak economy and an array of challenges abroad.

The President, First Lady Michelle Obama and daughters Sasha and Malia began the day at St John's Episcopal church, which was built in 1812 and is known as the Church of Presidents.

Mr Obama later had coffee at the White House with congressional leaders, who play major roles in how the country is governed.