Watch David Willis's report from Jakarta

Indonesia is preparing for a new political era without President Suharto, who has resigned after weeks of mounting opposition to his rule and 32 years in power.

He made the announcement in a televised address surrounded by politicians and military leaders. His vice-president, B.J. Habibie, who is seen as a close associate, was immediately sworn in as the new president for the remainder of Suharto's term, which ends in 2003.

Protesting students cheer as Suharto goes

The news was greeted with cheering by protesting students but Amien Rais, the man who has emerged as the main leader of opposition to Mr Suharto, said he would wait to see if corrupt people join the new government before giving his endorsement to the new president.

Mr Habibie received the backing of the head of the Indonesian armed forces, General Wiranto, straight away. General Wiranto also said that the Indonesian armed forces would safeguard the "former leaders of this country including Mr Suharto."

President Suharto had been under escalating domestic and foreign pressure to step down amid the country's worst political and economic crisis since he came to power in 1966.

BBC correspondent David Willis reports from Jakarta as the president steps down (3'08)

Mr Suharto said he was standing down because he was unable to enact the gradual reforms he had proposed earlier.

"I ask for forgiveness if there were any shortcomings," said the president, who looked grim and tired. "May Indonesia remain victorious."

Opposition scepticism

The resignation announcement was greeted with cheering and singing from thousands of students, who have been occupying the parliament building in Jakarta since Monday in a peaceful protest against Mr Suharto's rule.

Student leader Alexander Yahya Datuk: "We must make sure that also the system is reformed" (1'23")

Some students flung themselves into fountains while others knelt in prayer.

But at the same time, few of the demonstrators seem to believe that the occupation of the parliament could now be brought to an end.

B.J. Habibie is seen as a close associate to Suharto

The agenda of the students, professional people, and other protest groups, is lengthening to include changes to the electoral law, a limit to the presidential term of office and the release of political prisoners.

Opposition figurehead Amien Rais said he would support the new government if it was clearly made up of "honest people in touch with community feelings".

A list of new ministers is expected on Thursday.

Amien Rais: "Conditional endorsement" (0'16")

Dr Rais heads a moderate muslim organisation that has nearly 30 million members. He has called for fresh elections soon and later an investigation of Mr Suharto's record once stability has returned to the country.

Dr Rais said if presidential elections were called, he would stand himself.

Habibie spokeswoman Dewi Fortuna Anwar: "No need for fresh elections" (1'36")

It is still not clear if elections promised before Mr Suharto resigned will go ahead. An adviser to Mr Habibie, Dewi Fortuna Anwar, said this would be unconstitutional as polls were held on nine months ago.

Calls for calm in East Timor

East Timor's Nobel Peace prize winner, Jose Ramos Horta, has appealed to the people of East Timor to respond calmly to the news of President Suharto's resignation.

Students say they will continue their protest

Speaking to the BBC, the exiled East Timorese opposition leader said his people were the first victims of the Suharto regime and he said it was important to avoid unnecessary bloodshed.

He called for Indonesia to transform itself into what he called a true democratic country, a place where the army could not dictate the future.

East Timor was invaded by Indonesia in 1975 and later annexed.

The human rights organisation Amnesty International says hundreds of thousands of people have died in East Timor since the occupation began.

Economic reforms to continue

The Indonesian information minister, Alwi Dahlan, said planned economic reforms would continue under President Habibie.

BBC Correspondent Jonathan Head: Jakarta is relieved but still a little uncertain (1'17")

The financial markets reacted with caution to the announcement, with the rupiah slightly up against the dollar.

"News of his resignation are positive for Indonesia, but the markets will still probably look for clearer leads," said a currency dealer with a European bank in Singapore.

Mohammed Billah from Indonesian commission of human rights: Responsibility has to be given to the parliament (0'59")

The BBC Jakarta correspondent says there will be huge relief that Mr Suharto has agreed to go without further bloodshed.

But with the new president so close to Mr Suharto, he is expected to head only a transitional government.
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