Hillary Clinton today became the most powerful woman in the U.S. government after Barack Obama appointed her Secretary of State.

Mrs Clinton said America was `reaching out to the world` as Mr Obama called her appointment part of a `new dawn of American leadership`.

The President-elect introduced his former Democratic election rival as part of his national security team in Chicago today, saying her appointment was `a sign to friend and foe of my seriousness` in fighting terror.

He described her as a friend and colleague, as well as a source of counsel and a tough opponent. He added that she is someone of tremendous stature who can advance America`s interest around the world.

He also announced that Robert Gates will stay on in his capacity as Defence Secretary as he revealed his new national security team.

Mr Obama said he aimed to implement a `new dawn of American leadership` that integrates military, diplomacy, law enforcement and the economy.

`The team that we have assembled here today is uniquely suited to do just that,` he said in a statement.

"They share my pragmatism about the use of power, and my sense of purpose about America`s role as leader in the world,` Mr Obama said.

Bill Clinton praised his wife`s appointment, saying she was `the right person for the job`.

He said she will work to restore America`s image abroad, end the war in Iraq, advance peace and increase the nation`s security.

The former president said his wife has already earned the respect of foreign leaders and diplomats. He added she`s shown through her work in the Senate that she`ll put the nation`s security, its values and the interests of its people first.

Mrs Clinton, who waged a fierce battle against Mr Obama for the Democratic presidential nomination, has served more than four decades in public service.

Aides have said Mr Obama admires Mrs Clinton`s work ethic and also believes the former first lady`s star power would boost his vision of improving America`s global standing.

The appointment of Mr Gates to such an important position fulfills Mr Obama`s promise of including Republicans in his administration. The 65-year-old defense secretary has been lauded by members of both parties since taking over the Pentagon from Donald Rumsfeld in late 2006.

Mr bama also introduced retired Marine Gen. James Jones - a former top commander of NATO - as White House national security adviser, former Justice Department official Eric Holder as attorney general and Arizona Gov. Janet Napolitano as secretary of homeland security.

Mrs Clinton`s first priority will be to get up to speed on the crisis in India where terrorists killed more than 170 people with a co-ordinated assault on the city of Mumbai.

Mrs Clinton will have frequent briefings from Condoleezza Rice, the woman she will replace as the top foreign diplomat in the US government. Ms Rice has been dispatched to India by President Bush in what is likely to be his last foreign policy decision before he steps down from power on 20 January.

Mrs Clinton and Mr Gates, who have been at odds with Mr Obama in the past over foreign policy and defence issues, will have the task of implementing his vision for `renewing` America`s leadership in world affairs, rebuilding its image abroad, and overseeing two wars in Iraq and Afghanistan.

The appointments are given added emphasis by last week`s rampage in India`s financial capital of Mumbai when gunmen killed nearly 200 people, including at least five U.S. citizens.

The attack has ratcheted up tensions with nuclear-armed rival Pakistan, which New Delhi said was linked to the attacks.

Ms Rice has been in contact with the foreign ministers of India and Pakistan in recent days to ease tensions between the states, and this is expected to be a dominant theme in her meetings with Indian officials.

Analysts say the United States could get ensnared in tension between New Delhi and Islamabad, and it may prove to be a setback in the war on Islamic radicals on the Pakistan`s western border with Afghanistan.

There is also talk in Washington that Mrs Clinton`s husband, former president Bill , could be made a special envoy to try and mediate between India and Pakistan over the disputed Kashmir region.

Bill Clinton will disclose the names of more than 200,000 donors to his foundation as part of a deal with Mr Obama that clears the way for his wife to become Secretary of State.

The former president, who is allowed to keep contributor list secret under U.S. federal law, has decided to publish it to avoid any conflict of interest with his wife`s duties as Secretary of State.

The conditions of the agreement for Bill Clinton to reveal his contributors` list has been confirmed by Mr Obama`s transition team, according to the New York Times.

The contributors` list is one of nine conditions that Clinton agreed to in his discussions with Mr Obama`s representatives, the newspaper reported.

Mr Clinton turned over the names of all 208,000 individuals and organisations that have given money since 1997, while the agreement holds that his foundation will release them publicly by year`s end.

Future donors will also be disclosed as long as Hillary Clinton is in the cabinet.

Mr Clinton has also agreed to submit his speeches and business dealings in advance to State Department ethics officials for their review, as well as to the White House counsel`s office if need be.

He has previously pledged to do whatever the Obama team asked in order to make it possible for his wife to serve without questions.

The team said it expected Mr Clinton`s concessions would defuse any potential controversy, the report said.

Since leaving the White House eight years ago, Mr Clinton has built a new life as a businessman and international philanthropist fighting causes such as AIDS, malarie and malnutrition.

He formed the William J. Clinton Foundation a decade ago, and has since raised more than $500 million to build a presidential library and to finance charitable programs.

Among high-profile identities rumoured to have donated to Mr Clinton`s foundation are the Saudi royal family, the king of Morocco, a foundation linked to the United Arab Emirates, the governments of Kuwait and Qatar and a tycoon who is the son-in-law of Ukraine’s former authoritarian president.

Mr Clinton can earn up to $425,000 for a one hour public speech, which he gives dozens of every year around the world.

Daily Mail