Rishi Sunak has pledged to fix "mistakes" made under Liz Truss's leadership and warned of "difficult decisions" ahead, in his first speech as prime minister.
He said he would restore trust, rebuild confidence and lead the UK through "a profound economic crisis".
Mr Sunak promised to deliver the manifesto that won the Conservatives a landslide election victory in 2019.
His speech outside No 10 came after he was appointed PM by King Charles.
The UK's first British Asian prime minister, Mr Sunak announced his cabinet this afternoon, after telling Tory MPs to unify or face electoral oblivion.
In major reshuffle, Dominic Raab returned as deputy PM, and Grant Shapps became business secretary, while Jeremy Hunt remained as chancellor.
A large majority of MPs backed Mr Sunak for the leadership and when his only remaining rival Penny Mordaunt withdrew, there was no need for a ballot of Tory members.
Following Mr Sunak's speech, opposition parties repeated their demand for an immediate general election and argued Mr Sunak had no mandate from the public.
Mr Sunak's effective coronation as Tory leader on Monday spelled the end of Ms Truss's turbulent premiership, just 49 days after she took office.
Ms Truss became prime minister after defeating Mr Sunak in a ballot of Tory members during the summer, winning over members with her tax-cutting economic agenda.
But her government was destabilised by political and economic turmoil, exacerbated by her mini-budget, whose package of unfunded tax cuts has mostly been ditched.
In her farewell speech, Ms Truss defended her economic policies and said her time as prime minister convinced her of the need to be "bold".
In his own speech, Mr Sunak paid tribute to his predecessors Boris Johnson and Ms Truss, saying she "was not wrong to want to improve growth in this country - it is a noble aim".
"But some mistake were made," Mr Sunak said. "Not born of ill will or bad intentions, quite the opposite, in fact. But mistakes nonetheless.
"I have been elected as leader of the party and as prime minister in part to fix them. And that work begins immediately."
Mr Sunak - who was chancellor until July this year - said he would place "economic componence and stability at the heart of this government's agenda", warning that "will mean difficult decisions to come".
He gave no details about what those decisions were, but how to fund support for energy bills, and bring down government debt, are likely to be among them.
Mr Sunak is expected to cut public spending to plug an estimated £40bn hole in the public finances.
On his first day in office Mr Sunak spoke to Ukrainian President Volodymyr Zelensky "to underline the United Kingdom's steadfast support for Ukraine", a Downing Street spokesman said.
United States President Joe Biden said "that the UK remains America's closest ally" in another call, according to Downing Street.
The prime minister and President Biden also agreed to "preserve" the Good Friday peace deal, which set up power sharing in Northern Ireland.
It comes amid an ongoing row over the Northern Ireland Protocol - part of the post-Brexit deal between the UK and EU.
