New President Hassan Rowhani, a reputed moderate, told the West after taking the oath of office on Sunday the only way to interact with Iran is through dialogue, not sanctions.

The 64-year-old cleric took over from hardliner Mahmoud Ahmadinejad, whose provocative policies in two turbulent four-year terms left Iran divided domestically, isolated internationally and struggling economically.

The West is hoping that Rowhani will take a more constructive approach in long-running talks on Tehran's controversial nuclear drive, which despite Iranian denials is suspected by world powers of having military objectives.

"The only path to interact with Iran is through negotiations on equal grounds, reciprocal trust-building, mutual respect and reducing hostilities," Rowhani said in a speech after being sworn in before parliament.

"If you want a proper answer, do not speak with Iran with the language of sanctions but with the language of respect," he said, adding Iran would "not surrender to sanctions, nor be threatened with war".

He was referring to years of unsuccessful negotiations with the so-called P5+1 group of the United States, Britain, France, China and Russia plus Germany over Iran's nuclear activities.

Washington was quick to respond, saying Iran would find the United States a "willing partner" if Rowhani was serious.

"Should this new government choose to engage substantively and seriously to meet its international obligations and find a peaceful solution to this issue, it will find a willing partner in the United States," the White House said in a statement.

In Tehran, Rowhani said his goal was to improve the livelihood of ordinary Iranians whom he acknowledged were under "a lot of economic pressure" because of tough US and EU sanctions over Iran's refusal to stop uranium enrichment.

"The people want to live better, to have dignity and to enjoy a stable life. They want to regain their deserved position among nations," said Rowhani, who has promised above all else to stick to the path of moderation.

He said his government will take the path of detente, "creating mutual trust and constructive interaction. I say this frankly that Iran has never been bent on war with the world."

His remarks contrasted starkly with Ahmadinejad, whose anti-Israel diatribe and provocative rhetoric sparked repeated global condemnation.

Rowhani formally took office on Saturday at another ceremony in which he received the endorsement of supreme leader Ayatollah Ali Khamenei, who has final say on all key state affairs, including the nuclear issue.

Considered a regime insider for his service record since the Islamic republic's inception in 1979, Rowhani said in a speech on Saturday broadcast live on state television that he would work to lift "the oppressive sanctions".

The measures have crippled Iran's once lucrative oil sector, cut its access to global banking, and contributed to soaring inflation and a shrinking economy.

In defiance of its international isolation, Iran for the first time invited top representatives of several countries, except for the United States and Israel, to Sunday's swearing-in.

Nine regional leaders attended, including the prime minister of close ally Syria, as well as former EU foreign policy chief Javier Solana, who represented world powers in nuclear talks with Iran in the past.

But Sudanese President Omar al-Bashir, who is wanted by the International Criminal Court, failed to show because Riyadh denied permission for his plane to cross Saudi airspace en route to Tehran.

After his speech, Rowhani presented parliament with his male-dominated cabinet line-up, mostly experienced technocrats seen as close to his mentor, pragmatic ex-president Akbar Hashemi Rafsanjani.

Officially, he had two weeks from Sunday to name his cabinet, the political breadth of which is seen as a testament to his priorities.

The conservative-dominated parliament now has 10 days to review the nominations, but media reports say MPs are keen to start voting within a week or less.

Rowhani's first staff appointment was Mohammad Nahavandian, a US Green Card residency holder with a PhD in economics from George Washington University, as chief of staff.

Nahavandian is expected to play a leading role in coordinating Rowhani's economic policies.

Other key nominees were veteran retired diplomat Mohammad Javad Zarif as foreign minister and ex-oil minister Bijan Namdar Zanganeh, for the same portfolio again.

Zarif's nomination is attracting attention with media speculation rife that Rowhani seeks to transfer responsibility for nuclear negotiations to the foreign ministry, enabling the president to have direct supervision over the talks.

Rowhani's swearing-in also sparked reaction from Israel, the Middle East's sole if undeclared nuclear power, and Iran's arch-enemy.

"The president of Iran may have been changed but the aims of the regime there have not," Israeli Prime Minister Benjamin Netanyahu said at a weekly cabinet meeting.