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Beatriz Merino began her work as Peru's first female prime minister on Sunday to replace Luis Solari, who resigned last Monday for failing to end the crisis in the country.
Merino's cabinet includes six new faces as well as 10 retained from the previous cabinet.
Merino was named by President Alejandro Toledo to the top cabinet post amid a wave of social protests and crippling strikes by teachers, health care workers and judicial workers, which led Toledo to declare a 30-day state of emergency in May.
However, the state of emergency failed to quell the strikes and incurred more anti-government protests instead.
Toledo suffered another setback after lawmakers refused to approve a tax hike, a measure submitted by Solari's cabinet to pay the striking teachers, who demanded doubled salaries.
Toledo's approval rating fell to a record low of 11 percent as a result.
The opposition last week demanded the resignation of Toledo, accusing him of failing to live up to his promise to improve the living conditions of the people in poverty. Toledo's tenure of office is due to end in 2006.
Troubled Toledo recognized the need to make changes, vowing to win back "the faith and lost hopes of Peruvians."
Merino, 54, is a respected lawyer and a former congresswoman. She is also respected for raising tax revenue in Peru, where 54 percent of its 27 million population lives in poverty.
"I have great expectations of working together and sharing power with Doctor Merino," Toledo said.
(Xinhua News Agency June 30, 2003)
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