The 39-year-old Renzi has named a low-profile list of ministers with a mix of politicians and technocrats which included no figures capable of challenging his control of the government. Its success or failure will therefore be seen as his responsibility alone.

With an average age under 48, the 16-member cabinet is one of the smallest and youngest in recent Italian history. Half its members are women, the highest proportion ever, underlining the image of a fresh start on which Renzi has built his reputation.

But he faces a huge challenge with the euro zone's third largest economy struggling to emerge from its worst slump since World War Two, weighed down by a 2 trillion euro ($2.75 trillion) public debt and an industrial base that has crumbled over the past decade.

Business and union leaders have repeatedly warned that the government must take urgent action to save Italy's ailing industry, with thousands of companies going out of business and millions put out of work.

"The responsibility is enormous and this must not fail," said Rocco Palombella, secretary general of the UILM union, which represents workers in the engineering sector. "If it does, there will be no appeal," he said in a statement.

Renzi, who won the leadership of the center-left Democratic Party (PD) only in December, forced his party rival Enrico Letta to resign the prime ministership last week after repeatedly attacking him for not moving more quickly on economic reforms.

 The new prime minister has laid out an ambitious agenda for his first months in office, promising a sweeping overhaul of the electoral and constitutional system to give Italy more stable governments in future, and reforms to the labor and tax systems as well as the bloated public administration.

However, the unwieldy coalition with the small center-right NCD party, on which he will depend for a majority, remains unchanged from the one which hampered Letta's efforts at reform and Renzi faces a fractious parliament which has proved difficult for past governments to control.

The newly installed cabinet met for the first time on Saturday and Renzi is expected to go before the Senate on Monday for the first of two parliamentary confidence votes next week where he will give more details of his policy program.

His rapid rise has been watched closely outside Italy and within hours of taking office he spoke to French President Francois Hollande as well as to two Italian marines facing trial in New Delhi over the deaths of two Indian fishermen during an anti-piracy operation.

UNELECTED

Renzi becomes the third prime minister in succession to be appointed without winning an election and, although the constitution does not formally require it, his lack of a mandate from voters may limit his ability to push through tough reforms.

The bitterness left by the leadership struggle was palpable in a handover ceremony that was over in seconds, with a stony-faced Letta offering the briefest of handshakes before leaving the prime minister's office for the last time.

Renzi's main experience in government has been as mayor of Florence and many of his ministers will also be learning on the job.

But media commentators and opposition politicians were quick to point to similarities between the new and old governments - five ministers have remained in the cabinet and another, Graziano Delrio, has become Renzi's chief of staff.

The oldest member of the cabinet, 64-year-old Economy Minister Pier Carlo Padoan, former chief economist at the Organisation for Economic Cooperation and Development, will play a key role in maintaining the confidence of partners ranging from the European Central Bank to foreign investors.

The other main economic ministers, Industry Minister Federica Guidi, a former official at employers' association Confindustria, and Labour Minister Giuliano Poletti, former head of the cooperative association Legacoop, will face pressure on industrial policy.

Underlining the stakes, UILM union leader Palombella said Italy risked joining Greece in being placed under special administration by European authorities and the International Monetary Fund if its industrial decline is not halted soon.

Among the new government's priorities will be cutting taxes on business and overhauling labour market rules that deter employers from taking on new permanent staff, but in both cases it will be bound by tight constraints.

Italy's European Union partners have made clear they are unwilling to give the new government room to breach borrowing limits, while unions have opposed moves to loosen strict hiring and firing rules. ($1 = 0.7275 euros)