Obama Inauguration: President-elect honours Martin Luther King

"Tomorrow, we will come together as one people on the same mall where Dr King's dream echoes still," Mr Obama said on the eve of his historic inauguration, as he marked the national holiday commemorating the slain civil right leader's birth.

Meanwhile, President George W. Bush, with just one day left in his term, made telephone calls from the White House to Russian Prime Minister Vladimir Putin and a dozen other world leaders to thank them for their work with him over the last eight years. He has designated Robert Gates, the defense secretary who will be continuing his role as part of Mr Obama's cabinet, to stay away from Tuesday's inaugural festivities "in order to ensure continuity of government," said Mr Bush's spokesman.

One official traditionally stays away when others in the line of presidential succession are gathered together, in case of a calamitous attack.

Hundreds of thousands of visitors streamed into Washington for inaugural festivities but the celebration was tempered by the challenges Mr Obama will face, including unfinished wars in Iraq and Afghanistan and the worst financial crisis since the Great Depression.

The President-elect began a day designed to highlight the importance of community service, with a low-key visit to wounded troops in the Walter Reed army medical centre, where revelations of squalor and neglect emerged a year ago.

Later on Monday, Mr Obama was to attend three dinners honouring the spirit of bipartisanship that he says he will restore to Washington. Those honoured will be Mr Obama's Republican rival for the presidency, John McCain, Joe Biden, the vice-president-elect, and Colin Powell, the former secretary of state.

On Sunday, Mr Obama stood in the shadow of the memorial dedicated to former president Abraham Lincoln to deliver a sombre overview of the perils ahead.

The site was where Dr King in 1963 gave his legendary "I Have a Dream" speech, a dream where his children would be judged by the content of their character and not the colour of their skin.

"In the course of our history, only a handful of generations have been asked to confront challenges as serious as the ones we face right now. Our nation is at war. Our economy is in crisis," Mr Obama said.

"But never forget that the true character of our nation is revealed not during times of comfort and ease, but by the right we do when the moment is hard," he said, after a star-studded concert to kick off the inaugural party.

Hundreds of thousands attended the concert, the advance guard of an inaugural crowd expected to number millions, as an elaborate security operation began with police and army reservists taking up position across the US capital.