Day Two – and it's down to business in the Oval Office for Obama

Moving without pause from the pageantry of his inauguration to the business of government, Barack Obama embarked on a series of steps yesterday to show America and the world he was making a clean break from the widely discredited priorities and policies of George Bush's administration.

With his chair in the Oval Office barely warm, the 44th US President prepared to sign an executive order today to close the military prison camp at Guantanamo Bay in Cuba - a complex of ad hoc court rooms, barren cells and razor wire widely regarded as a scar on the country's conscience - within a year.

Mr Obama also plunged directly into the treacherous waters of Middle East diplomacy, demonstrating his intention to help cement the fragile ceasefire in Gaza and engage immediately with the search for peace.

He placed calls to Mahmoud Abbas, President of the Palestinian Authority, and to the leaders of Egypt, Jordan and Israel, as well as preparing to name the veteran Democratic senator George Mitchell as his new Middle East envoy. Mr Mitchell is an experienced conflict negotiator, following his time in Northern Ireland, and his expected appointment raises hopes that US policy in dealing with the Palestinian factions could now become more flexible. Mr Obama also issued new ethics orders that will radically tame the influence of lobbyists in Washington and freeze the pay of senior White House staff.

Arriving at his desk at 8.45am after a long night of appearances with his wife, Michelle, at 10 inauguration balls, Mr Obama spent his first 10 minutes alone, reading a note left for him by his predecessor and placed in an envelope saying: "To: No.44 From: No.43".

Among his first actions was to call a 120-day halt to the prosecutions of suspected terrorists at Guantanamo. Yet another repudiation of Mr Bush's policies, the order was widely seen as a signal from the new President that he intends to honour his promise to voters to shut the camp. The executive order setting an end-of-year deadline for its closure remained only in draft form last night, but was circulated to at least two news agencies. It was not known when it would be issued.

Also on Mr Obama's crowded agenda yesterday was a prayer service at the National Cathedral, ceremonies to swear in White House staff and sign new executive orders on ethical standards. Those standards targeted lobbyists, in particular, and on making the government more transparent by fully respecting existing freedom of information laws. "What an opportunity we have to change this country," Mr Obama told his new aides. He was also monitoring Senate hearings on the confirmation of some of his cabinet nominees.

At the White House staff ceremony, Mr Obama reflected on seeing so many Americans on the Mall for his swearing-in. "They were there because they believe this a moment of great change. They have entrusted all of us with a great responsibility," he told his staff. Service, he added, "was not about advancing yourself, it is about advancing the interests of Americans".

On Capitol Hill, the confirmation hearing of Timothy Geithner, Mr Obama's pick for Treasury Secretary, hit more bumps as he found himself apologising to senators for failing to pay some of his taxes in previous years. "These were careless mistakes, they were avoidable mistakes, but they were unintentional," he said. "I take full responsibility for them." There were no such hiccups with Hillary Clinton, however, as the Senate approved her as the Secretary of State last night.

But in a surprising move it was revealed that Caroline Kennedy was planning to withdraw from consideration for the New York Senate.

Mr Obama's talks with leaders from the Middle East were important. On Tuesday, Mr Obama pointedly extended a hand of friendship from the US to the Muslim world.

One of the military judges presiding at Guantanamo had already accepted a request to suspend the case against a young Canadian national, Omar Khadr, who was accused in connection with a gun battle in Afghanistan in which a US soldier was killed. Mr Obama's order should also freeze similar proceedings against five detainees accused of direct involvement in the 11 September attacks on the US in 2001. "We welcome our new commander-in-chief and this first step towards restoring the rule of law," said Major Jon Jackson, the defence lawyer for one of the 9/11 defendants, Mustafa Ahmed al-Hawsawi.

Mr Obama's order called for a suspension of proceedings until 20 May to "permit the newly inaugurated President and his administration time to review the military commissions process, generally, and the cases currently pending before military commissions, specifically".

Both he and his opponent in the election, John McCain, promised voters that closing Guantanamo would be among their foremost priorities. In recent interviews, however, Mr Obama had indicated the process would be complicated and would take longer than he at first supposed.

Mr Bush established a harsh prison compound inside the Guantanamo complex, named Camp X-Ray in early 2002, to house what he came to call "enemy combatants" in the "war on terror". The aim also was to establish their guilt or innocence in a series of special military proceedings that were detached from the regular court system on the US mainland.

Hearings in Mr Khadr's case and those of the 9/11 detainees were due to be held this week but the military prosecutors are unlikely to defy the motion from their new commander-in-chief. "This is a good step in the right direction, although we still think the unconditional withdrawal of all charges and shutting down this tainted system is warranted," said Jamil Dakwar, the human rights director of the American Civil Liberties Union. "The President's order leaves open the option of this discredited system remaining in existence."

Joanne Mariner, of Human Rights Watch, which is allowed to observe the tribunals at Guantanamo, said: "President Obama knew better than to start his presidency with the spectacle of unfair and chaotic military commission proceedings."