John Aglionby, Jakarta – The United Nations' transitional administrator in East Timor, Sergio Vieirade Mello, appointed the territory's first entirely East Timorese government yesterday to lead the fledgling country to full independence next year.

Mari Alkatiri, the leader of East Timor's largest political party, Fretilin, is the new chief minister and also finance minister in the 20-member team. He is joined by eight other members of his party – which won a convincing majority inlast month's first-ever fair election – plus two members of the second-placed Democratic party and nine independents.

"This is the first truly representative and democratic government in the history of East Timor," Mr Vieira de Mello said at the swearing-in ceremony. Although he holds ultimate executive authority until independence, he has stressed that he will now take a hands-off role, as he sees this period as a dress rehearsal for after the UN's departure. The UN has been running East Timor for the past two years since its people voted overwhelmingly in a referendum to end 24 years of brutal Indonesian occupation. It has had to build a country from scratch because the Indonesian military and its local militias destroyed most of the territory after the referendum.

Mr Alkatiri, 51, said his goal was to create a new basis of national unity. "In the past, national cohesion was built upon opposition to the occupant," he said. "Today it must be built around the goal of reconciliation and social justice." Jose Ramos-Horta, a Nobel peace laureate, keeps his position as foreig nminister from the previous cabinet, which was a mixture of East Timorese and UN officials.

Last month's election was for a constituent assembly which will write East Timor's constitution and then most probably turn itself into the state's first parliament. Fretilin has 55 of the 88 seats and the Democratic party seven. Sixty votes are needed to pass the constitution. Then presidential elections will be held. The former resistance leader, Xanana Gusmao, is expected to win. The economy is guaranteed in the medium-term by 20 years of offshore oil and natural gas reserves, but these pounds 125m annual windfalls will only come on stream in four years' time.