The accord between Lebanon's political rivals sealed in Doha on May 21 allocated 16 cabinet seats to the Western-backed parliamentary majority and 11 to the opposition led by Hezbollah, giving it veto powers.
"The government of national unity is the government of all the Lebanese," Siniora told reporters at the presidential palace.
The opposition took the coveted posts of foreign minister, telecommunications minister and deputy premier in the new cabinet, while the ruling bloc kept the finance ministry.
The president, who himself only took office four days after the Doha accord, filling a post left vacant since November, made three appointments, including Elias Murr, who kept the defence portfolio despite opposition reservations.
He also appointed lawyer and electoral law expert Ziad Baroud to head the interior ministry which is responsible for organising legislative elections next year.
Finance Minister Mohammed Shatah, who was appointed by the ruling bloc, served as Siniora's senior advisor in the previous cabinet.
The government announced more than a year-and-a-half into Lebanon's political crisis includes one woman, Bahia Hariri, sister of slain former prime minister Rafiq Hariri. She is to head the education ministry.
Christian opposition leader Michel Aoun, whose party was not represented in the previous cabinet, took four cabinet posts plus the deputy premiership.
The Iranian- and Syrian-backed Shiite militant group Hezbollah was allocated three seats in the cabinet, with Mohammed Fneish of Hezbollah to serve as labour minister alongside two allies.
Siniora, who was appointed by Sleiman, said the new government would have two key tasks: "To restore confidence in political institutions and the Lebanese political system ... and to promote moderation."
"Our differences will not be resolved overnight, but we have decided to resolve them through institutions and dialogue rather than in the streets," said the prime minister, who first came to office in July 2005.
The cabinet's inaugural meeting is to take place on Wednesday.
The European Union's French presidency welcomed the breakthrough.
"The formation of a unity government marks an important step in the implementation of the Doha agreement" between the Lebanese parties in May, French Foreign Minister Bernard Kouchner said.
Iranian Foreign Minister Manouchehr Mottaki also welcomed the development, saying in Tehran he hoped it would result in the strengthening of national unity among Lebanese and bring internal stability to their country.
The breakthrough in forming a government which includes the Syrian-backed opposition came as Syria's President Bashar al-Assad prepared to join a Paris summit of European and Mediterranean leaders this weekend.
It follows a political crisis which broke out when Hezbollah, which Washington brands a terrorist group, and its allies stepped down from government in November 2006, shortly after a devastating Hezbollah-Israel war.
Parliamentary majority leader, Saad Hariri, said earlier on Friday that the breakthrough in weeks of efforts to form a new cabinet followed a concession to Hezbollah.
"I have asked Prime Minister Fuad Siniora to accept the nomination of Ali Qanso" in the lineup, he said, referring to a figure previously opposed by Hariri's camp. "We are making sacrifices in the interests of the country."
Siniora has struggled since the end of May to form a new government of national unity, under the Doha accord between rival factions following deadly sectarian clashes.
But the rivals were since locked in political bickering over the distribution of key portfolios.
The Doha deal was struck after 65 people were killed in May in sectarian clashes that saw Hezbollah stage a dramatic takeover of mainly Sunni areas of west Beirut, raising fears of a return to Lebanon's 15-year civil war.
The opposition had since its walkout from the government insisted on veto power and dismissed Siniora's last cabinet as illegitimate.
Siniora headed a caretaker administration after the Doha accord which in effect dismantled his last administration in the wake of Hezbollah's military show of force that was unopposed by the Lebanese army.
