U.S. President Barack Obama called on Americans to enter a "new era of responsibility" during his inauguration speech on Tuesday, saying all citizens must pull together to overcome the current challenges.

Obama, the 44th president of the United States, delivered his speech after accepting the oath of office on the steps of Capitol Hill on Tuesday.

More than one million people watched the ceremony live or on massive projection screens in the National Mall.

Among the crowd were dignitaries, Hollywood stars, former presidents and Obama's wife Michelle and daughters Malia and Sasha.

Obama, the first black president, described America as a nation built by hard-working immigrants and those willing to die for the freedom they so strongly believed in.

But he acknowledged that the country is "in the midst of crisis," citing the war against terrorism and the "badly weakened" economy as major hurdles on the track ahead.

"Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America," he said.

"For everywhere we look, there is work to be done. The state of the economy calls for action, bold and swift, and we will act - not only to create new jobs, but to lay a new foundation for growth," Obama said.

He vowed that America will overcome the obstacles on the path ahead, no matter how daunting they may seem.

"We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together. We will restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost. We will harness the sun and the winds and the soil to fuel our cars and run our factories. And we will transform our schools and colleges and universities to meet the demands of a new age."

He said the economic recession is a "consequence of greed and irresponsibility on the part of some," but said everyone has a share in the blame due to "our collective failure to make hard choices and prepare the nation for a new age."

Obama, who was sworn into office using the same Bible as Abraham Lincoln, hearkened back to the ideals set out by his political hero.

He said Americans have "chosen hope over fear" and called on citizens to put an end to the "petty grievances and false promises, the recriminations and worn-out dogmas, that for far too long have strangled politics."

'All are equal'

He then quoted scripture, urging Americans to "set aside childish things" and to stand together in unity.

"The time has come to reaffirm our enduring spirit, to choose our better history, to carry forward that precious gift, that noble idea, passed on from generation to generation: the God-given promise that all are equal, all are free, and all deserve a chance to pursue their full measure of happiness."

He then recalled the very birth of the United States, asking Americans to remember the words of Gen. George Washington, then the commander of the Revolutionary forces, at a time when the American Revolutionary War was on the cusp of being lost.

Washington called on Americans to unite in courage and action at a time when it was most needed.

In the stirring, emotional finale to his speech, Obama said it is once again time for Americans to rally to meet the challenges that lie ahead.

"With hope and virtue, let us brave once more the icy currents, and endure what storms may come," Obama said.

"Let it be said by our children's children that when we were tested we refused to let this journey end, that we did not turn back nor did we falter; and with eyes fixed on the horizon and God's grace upon us, we carried forth that great gift of freedom and delivered it safely to future generations."

In a quirk of the U.S. Constitution, Obama actually became president at the stroke of noon on Tuesday, before he had taken the oath of office a few minutes later.

The constitution states that the president-elect becomes Commander in Chief at the top of the hour, regardless of whether the oath is administered.

While the inaugural ceremony was nearly flawless, there was a briefly awkward moment when Obama was sworn in by Chief Justice John Roberts, who mixed up parts of the 35-word presidential oath.

While both men attended Harvard's law school and are nearly the same age, Obama was among the 22 senators who voted against Roberts' Supreme Court confirmation in 2005.

Tuesday's brief encounter was the first time that the president has been sworn in by a chief justice he voted against.

Later, the day's celebratory tone was dampened when Democratic Sen. Ted Kennedy collapsed at a luncheon at the Capitol. Kennedy, who recently had a brain tumour removed, was in a Washington hospital recovering Tuesday evening.

Massive security operation

The historic day included a massive security effort described as the largest in U.S. history. Amid the security was news Tuesday of a possible threat from an East African radical Islamic terrorist group.

Intelligence officers received information that the Somalia-based group al-Shabaab might try to disrupt the inauguration, according to a joint FBI/Homeland Security bulletin Monday night.

The charismatic former state senator from Illinois, a husband and father of two young girls, will come into office with great challenges ahead of him.

He follows George Bush, one of the most unpopular and divisive presidents in U.S. history, into office, and will have to deal with the baggage of two unpopular wars, Guantanamo Bay, and a limping U.S. economy.

Avis Jones-DeWeever, of the National Council of Negro Women, told Canada AM Obama has major hurdles to overcome, and change won't happen overnight.

"At times like this we need the American people to rally around each other, work together and say that we're going to pull each other up and make a better tomorrow, and I think he's exactly the leader we need to make that happen," she said in Washington, D.C.

During the afternoon presidential inauguration parade along Pennsylvania Avenue, Obama got out of his limousine to walk part of the route with his wife.

The festivities will wrap up late in the night after 10 inaugural balls that will carry on late into the night.

Hopes are high for Obama when he moves into the White House. He will do so as the fourth youngest president, at 47.