Dmitry Medvedev was sworn in Wednesday as Russia's third president since the fall of the Soviet Union at a glittering Kremlin ceremony overshadowed by his powerful mentor Vladimir Putin.

After taking the oath in the Kremlin's gold-leafed Great Palace, Medvedev, 42, said his most important task would be to ensure "civil and economic freedom" and to strengthen Russia's role on the international stage.

Goose-stepping guards in Tsarist-style uniforms brought the Russian flag, the presidential flag with the double-headed eagle symbol, a red-bound copy of the Russian constitution, and the golden chain of the presidential office.

Putin, who is to become a powerful prime minister from Thursday, underlined his enduring influence by giving his own speech at the pomp-filled ceremony.

"It's extremely important for everyone together to continue the course that has already been taken and has justified itself," said Putin, who has ruled for the last eight years.

The inauguration marked the peak of Medvedev's abrupt rise from obscurity as a Putin-era bureaucrat to commander-in-chief of a vast nuclear arsenal and leader of the world's largest energy producer.

Medvedev inherits a booming economy fuelled by massive oil and gas exports, and a country at its most confident since the 1991 collapse of the Soviet Union.

However the mild-mannered bureaucrat, who has never before held elected office, will have to grapple with politically explosive price rises, unbridled corruption, and turbulent relations with the West.

Just Tuesday, the government approved big hikes in utility prices, with gas going up by 29 percent and electricity by 17 percent.

Medvedev, whose March 2 election landslide was criticized by independent monitors as partly staged, will also have to deal with Putin looking over his shoulder.

The outgoing president will switch to prime minister -- parliament is to confirm his nomination on Thursday -- and Putin has made clear that the post will be a second centre of power.

Although the former KGB agent was barred by the constitution from seeking a third consecutive presidential term, he is only 55 and could run again in 2012, or even before, if Medvedev were to leave office early.

Some see Medvedev's lack of a KGB past -- a rare thing in the current political elite -- as a sign that Russia could be in for a post-Putin thaw.

The trained lawyer, who has a bookish manner and professes a liking for the veteran British rock group Deep Purple, is seen as more relaxed than the austere Putin.

In pre-election speeches, Medvedev called for the defense of human rights and spoke strongly against corruption and "legal nihilism."

However, critics question his liberal credentials , pointing to his chairmanship of Gazprom, Russia's gigantic and highly opaque natural gas monopoly, as well as a close relationship with Putin stretching back to the early 1990s.

On the eve of his inauguration, dozens of opposition activists were detained in Moscow for trying to stage a rare anti-Kremlin rally.

Medvedev has said little about his foreign policy stand and it is unclear how much influence the hawkish Putin will continue to exercise from his government office.

The change of power comes at a difficult time in East-West relations, with the United States condemning Moscow's support for separatist rebels inside neighboring Georgia, and Moscow furious over NATO's promise to give membership to Georgia and Ukraine.

Mikhail Gorbachev, the last Soviet leader, said in an interview published Wednesday that Medvedev would not "start a war with the United States or any other country," but that Washington was increasingly aggressive.

Medvedev has said his first foreign trips will be to oil-rich Kazakhstan and to China, a growing partner and energy customer of Russia. He will also be attending the Group of Eight summit in Japan in July.

On Friday, the two men, dubbed the "tandem" by Russian newspapers, will star at an annual Red Square military parade featuring tanks and nuclear missiles for the first time since the Soviet crash.

PHOTO CAPTION

TV grab shows Dmitry Medvedev taking the Russia presidential oath at the Kremlin.

AFP