Kenyan president Mwai Kibaki has announced the formation of a new power-sharing government, including his main rival in December's elections, Raila Odinga, as prime minister. The announcement breaks a deadlock that had raised fears in recent days about the viability of the coalition. Derek Kilner reports from Nairobi.

Following a one-on-one meeting Saturday between President Mwai Kibaki and opposition leader Raila Odinga, President Kibaki announced the formation of a new coalition government.

"The announcement of the new Cabinet today demonstrates the commitment of the political leadership to move ahead and pay more attention to addressing the challenges facing our country and people," said Mwai Kibaki.

Discussions on the division of ministries between the country's two main parties had broken down last week, setting off protests in Mr. Odinga's strongholds and prompting a flurry of statements from foreign diplomats.

As expected, President Kibaki named Mr. Odinga, who charges December's presidential election was rigged to rob him of victory, as prime minister, a newly created position under the terms of a power-sharing agreement negotiated by former U.N. Secretary General Kofi Annan in February.

Vice President Kalonzo Musyoka, who split from Odinga's Orange Democratic Movement, known as ODM, during the campaign, and who has since allied with President Kibaki's Party of National Untiy will keep his position.

Two deputy prime minister positions have also been created. They will go to the ODM's Musalia Mudavadi, who was also named local government minister, and Kibaki ally Uhuru Kenyatta, who will also serve as minister for trade.

Members of President Kibaki's Party of National Untiy will hold on to many of the key ministries, including finance, defense, foreign affairs, internal security and justice.

ODM ministers will be in charge of land, agriculture, tourism, and local government.

ODM's William Ruto and Anyang' Nyong'o, whose presence in the government had been opposed by some in the president's party, were both named as ministers. Ruto, who has been accused of involvement in post-election violence in his Rift Valley region, will serve as minister of agriculture. ODM Secretary-General Anyang' Nyong'o whose threats of mass protests have irritated the government, will serve as minister for medical services.

The Medical Services ministry is one of several new positions in the 40-member Cabinet.

Many Kenyans have opposed expanding the Cabinet from 34 to 40 ministries, saying it is a waste of government resources.

The new Cabinet will include separate ministries for cooperative development, Northern Kenya development, Nairobi metropolitan development, and Vision 2030 - a national government development plan. But civil society groups, religious leaders and newspaper editorial boards have argued that development would be better served by sending money directly to projects, rather than by spending it on salaries, vehicles and office space for new ministers, assistant ministers and other staff.

Discussions over the naming of ministers broke down last week, with Mr. Odinga accusing president Kibaki of refusing to give up a fair share of powerful positions. A number of foreign diplomats called on the sides to break the impasse in recent days, including U.S. Secretary of State Condoleezza Rice, U.K. foreign secretary David Miliband and Mr. Annan.

Now the country's leaders will turn their attention to an ambitious reform agenda aimed at avoiding a repeat of this year's post-election political and tribal violence. The main goal is an overhaul of the country's constitution that would involve reducing the president's powers and addressing land distribution.

But the struggle over the naming of the Cabinet has provided a reminder of the lingering distrust between the two sides and the difficulty of the task ahead.