The lavish celebrations were planned despite the nation's dire economic hardship which is believed to have caused 2.4 million people to die of starvation in the past three years.

``When it comes to the great leader, no expense is spared,'' a South Korean monitor of the North said. ``He must be publicly revered at all costs, even if the money must be diverted from civilian needs.''

Television pictures from the isolated hermit state showed hundreds of thousands of people in brightly coloured-traditional costumes dancing and giving cultural displays in Pyongyang's giant squares.

The dancers wearing coloured ribbons were bathed in bright light against the backdrop of illuminated displays of the nation's hammer and sickle-like insignia.

Pyongyang said on Monday that around 100,000 people had already arrived in the monumental capital to celebrate Wednesday's foundation day and Saturday's elevation of Kim Jong-Il.

According to North Korea's propaganda machine, Kim is seen as the centre of the celebrations following his re-election as head of the powerful National Defence Commission (NDC) on Saturday.

While he was already head of the body, his powers were significantly boosted when parliament executed the most sweeping overhaul of the state in nearly three decades on Saturday.

The constitutional amendment abolished the presidency, to which Kim was widely expected to accede, instead leaving him with all the powers in the military-dominated nation without the ceremonial duties.

But the state media made it clear that the shake-up effectively signalled his official inheritance of the role of his father, the late President Kim Il-Sung, as the nation's patriarch.

``Performers sang of the enduring feats of the respected marshal Kim Jong-Il, who has led the Korean revolution to victory and glory for 30-odd years,'' the official Korean Central News Agency

(KCNA) said on Tuesday.

Kim Il-Sung, who died in 1994, became ``eternal president'' after Saturday's change.

The agency described Kim Jong's position as the ``highest'' office of state with the power to direct the military as well as the economic and political life of the country.

But the crowning gift to mark Kim's ordination was the August 31 launch of what North Korea insisted on Tuesday was its first satellite -- said to be beaming revolutionary hymns into space.

As Pyongyang boasted of the launch, experts around the world were trying to establish whether the missile launched that day was a satellite launch as North Korea claims or a ballistic weapons test.

Pyongyang said Kim's first message since being re-elected was to the scientists who built the satellite and rocket, praising the feat as a ``brilliant victory'' for socialism.

Official opinions however appeared privately to be slowly retreating from their initial position that the blast was a weapons test, indicating that something had been put into orbit. Either way, the launch stunned intelligence and scientific experts did not realise that Pyongyang had the capability to produce a multi-stage rocket.