Supreme Court Justice John Roberts administered the oath of office, as Obama laid his hands on a stack of two Bibles - one used by President Abraham Lincoln at his first inauguration and another that belonged to slain civil rights leader Reverend Dr. Martin Luther King, Jr.

Monday also marked Martin Luther King Jr. Day, a federal holiday in the US.

President Obama outlined his second-term agenda in his 18-minute inaugural address. He said "hard choices" were needed to reduce the federal deficit, a reference aimed at the divided Congress.

“We must make the hard choices to reduce the cost of health care and the size of our deficit. But we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future.”

He also said America "must lead" the transition to sustainable energy and "cannot cede to other nations the technology that will power new jobs and new industries."

Obama, 51, also spoke in favor of gay rights and same-sex marriage. "Our journey is not complete until our gay brothers and sisters are treated like anyone else under the law - for if we are truly created equal, then surely the love we commit to one another must be equal as well."

Shortly after the ceremony ended Obama signed documents officially submitting top administration nominations to the Senate, a tradition set by former President Ronald Reagan.

Obama affirmed the nominations of John Brennan for director of the CIA, former Sen. Chuck Hagel for secretary of defense, Sen. John Kerry for secretary of state and Jack Lew for Treasury secretary.

Four more years

Secretary of State Hillary Rodham Clinton and her husband former President Bill Clinton were in attendence along with former President Jimmy Carter. Both men are the only living Democrats who have previously occupied the White House.

American musicians Kelly Clarkson, James Taylor and Beyonce performed patriotic songs at Monday's public spectacle.

Hundreds of thousands had gathered at the National Mall to watch Obama take the oath of office for his second four-year term. The crowd was smaller compared to the 1.8 million who gathered for his 2009 inauguration.

President Obama and his family began Monday by attending services at St. John's Episcopal Church near the White House. Vice President Joe Biden and his family were also in attendance.

In line with the US constitution, Obama had been officially sworn a day earlier - on Sunday - by Justice Roberts at a small ceremony in the White House. The constitution requires that the president and vice president take their oaths by noon on January 20.

Vice President Joe Biden was also officially inaugurated on Sunday by Supreme Court Justice Sonia Sotomayor at his official Washington residence.

German President Joachim Gauck congratulated President Obama on his second term Monday and invited him for a visit to Germany.

“The Germans have a great appreciation for you and your country,” Gauck said in a congratulatory letter.

hc/ipj (Reuters, AP, AFP)